Is Your Supply Chain Working?

A decade ago, the marketplace was happily functioning under the Just-in-Time ethos of supply chain management. Pioneered by Toyota and other lean thinking companies, JIT was the highway to efficiency and effectiveness. Suppliers were happy, believing that JIT further integrated them downstream. OEMs, saw it as a path to cost and inventory control. Everyone was happy. Until now.

Vertical and horizontal integration in the supply chain is the next mandate to deliver on the efficiency imperative that the market demands today. Companies want their supply chain to make the process of acquisition, regardless of the good, to be easier, more efficient and more effective. Easier in the sense they want to worry about it at all. Efficient in the sense they want the supply chain to actually manage the supply and the chain that links it together. Effective in the sense that they do not want disruption in production, cost crisis, or quality concerns. They want and are demanding all this because on the one hand, no one has told them no and secondly because they have more critical matters to concern themselves with, and the minutiae of acquiring b and c class items is not worth the time anymore. Everyone has bought into their time having value and it is cost-effective to farm out as much of the process as possible.

This presents the present conundrum for the supply chain. Are you equipped to absorb the demands of the marketplace? Is your supply chain, the vertical and horizontal partners you have, equipped to meet the shifting and increasing demands of the marketplace? If not, you risk being ostracized by the needs of the market. The supply chain has become a risk management exercise in a way that was unthinkable ten years ago. The less risk you introduce into your customer, the more likely you are to have a stronger, more sustained foothold. The more risk you expose your customers to, the more volatile the relationship will become until your value is suffocated by the risk. The supply chain is the one uninsurable aspect of a company's business but the one with the most potential to affect the success or failure for the quarter.

That is the supply chain challenge of the day.