NGR's Blog

Small and mid-sized companies today are just now starting to tap the value of developing and executing supply chain excellence strategies as large enterprises have been doing for years.  As the latter companies’ experiences have demonstrated, highly effective supply chains allow a company to operate at peak performance.  Executing supply chain excellence strategies can make favorable contributions to return on assets, margin, improved customer service and competitive advantage while generating more reliable metrics by which to measure success and foresee trouble spots.

Given the preceding, and the fact that supply chain-related costs represent between 55 percent and 65 percent of a company’s gross revenues, the supply chain should be getting plenty of attention.

"Getting there means ditching today's monolithic model in favor of splintered supply chains that dismantle complexity, and using manufacturing networks to hedge uncertainty."

The future has supply chains with global complexity and new business models. We need to firstly change the old supply chain models by "splintering" into smaller nimbler one and secondly by re-configuring their manufacturing foot prints to bear a range of potential outcomes.

Supply chain management is the "chain" linking each element of the manufacturing and supply process from raw materials through to the end user, including several organizational boundaries. As the process involves several organizations, information flow plays a vital role to the success of the supply chain management especially in terms of keeping all the components (i.e. suppliers, manufactures, logistics, warehouses etc.) connected. Innovation in technology has successfully integrated factory automation and enhanced communication devices. These technologies are applied to help supply chain planning, collaboration among customers, manufactures, and suppliers. With the use of web technology, customers may order more easily, manufacturers will forecast demand better given the instant customer feedbacks, upstream suppliers will also have relative correct date and reduce the bull-whip effect.

Global supply chains can increase efficiency, but they can also increase risk. Recent events—including the Japanese earthquake and tsunami, the floods in Thailand and the ash clouds caused by the Icelandic volcano—have demonstrated how far the consequences of such risks can extend. The Japanese earthquake, for example, severely affected global electronics production and led to extended business disruptions for the automotive industry.

The Thai flooding created significant shortages in the hard disk drive market that generated millions of dollars of losses for well-known electronics manufacturers. In addition to these headline events, however, the nature of supply chain risk is constantly changing. New risks and new vulnerabilities can often be better addressed if given close attention from management.

It is hard to talk about supply chain management without mentioning Wal-Mart.

In its relentless pursuit of low consumer prices, Wal-Mart embraced technology to become an innovator in the way stores track inventory and restock their shelves, cutting costs and passing the savings along to customers. In the process the company became synonymous with the concept of successful supply chain management.

"I don't believe there is a university in the world that doesn't talk about Wal-Mart and the supply chain," said James Crowell, director of the Supply Chain Management Research Center at the Walton College of Business. “They are just so well respected because they do it so well, and certainly I know a lot of peer institutions around our country … will bring a Wal-Mart guest to speak.”