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What has the greatest impact on reducing supply chain complexity?

Posted by Bala Deshpande on Tue, Mar 01, 2011 @ 03:53 PM

It is very fashionable these days to talk about supply chain complexity. But everyone who uses this term assumes that their readers understand what is meant by "complexity". But do they?

For some, this complexity is simply a matter of having too many suppliers or distributors. For some others, complexity arises from having too much product differentiations (SKUs, for example) and for someone else this complexity is due to variability in manufacturing processes. But for others, demand uncertainty was the biggest challenge.

Take the definition of the supply chain itself. According to one text book definition, a supply chain is the "entire network of companies that work together to design, produce, distribute and service products". By virtue of being a network with a large number of interacting components, a supply chain has already satisfied all pre-conditions for being a complex system.  If you now throw in the uncertainty that is a given with any of the component processes (such as manufacturing, demand forecasting, delivery estimation or quality control), you suddenly have a truly complex system!

So the phrase "supply chain complexity" is actually a redundancy. Just like saying DC current. For the next generation ERP systems that integrate business analytics, supply chain complexity management will be a pre-requisite. So what is needed for managing supply chain complexity?

supply chain complexity causes

Our very short survey, indicated that demand uncertainty is the biggest factor that influences supply chain complexity.  Do you agree with these results from your experience? So what do you think are the best ways to address supply chain complexity?

Find out if your experience matches with the results of our survey here.

supply chain survey wp coversupply-chain-wp-cta

Topics: complexity, supply chain complexity, business intelligence tools

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