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24-04-2006
Evolutions of Supply Chain ManagementAndrea Sianesi show the evolution of Supply Chain Management Over the latest decades, the economic context evolution has led the industrial concerns to be widely aware that the creation of value is influenced by the meeting of customers’ needs. The Management attention has thus been addressed to the capacity to align one’s industrial system to the real needs expressed by customers. Over time, these have become increasingly specific and specialized, the weight of services and immaterial type of offer has increased, and the expected service time has increasingly shortened, both with regard to budgeting and orders carried out. The analysis of such trends leads to the following conclusion: the main critical element for the success of a firm wanting to align its system to the real needs expressed by customers is the capacity to manage the complexity of range widening in an increasingly short time. This calls for shifting the single firm ‘point of view’ to the whole supply chain. As a matter of fact, it can be intuitively understood that operating within the firm boundaries to improve performances allows less freedom than operating on the whole supply chain. The result is the need to manage in a coordinate way a whole of independent activities, which go beyond the single firm boundaries. However, the solution to this problem is made easier by the fact that ‘supply chains are lengthening’. The continuous pressure on costs reduction prompts companies in almost all sectors to realize outsourcing and delocalization projects towards countries, where labor cost is low. This results into a ‘source’ lengthening (both in space and in the number of actors). The growing importance of some markets (the East) adds to the phenomenon mentioned above. In the East millions of new potential consumers represent significative chances of development, and this drives to a further ‘bottom lengthening’. Another phenomenon we are witnessing recently is the customers (both industrial and non-industrial) trend to turn to a single supplier to meet a whole of interconnected needs. In order to cope with this, it is thus important to be able to manage articulated and flexible supply chains, which can be easily made to take a new shape depending on the modified market requirements (like the request to trade some products instead of others). This makes virtually impossible to define deductively the chain components (and thus its length or level numbers) and forces the companies to ‘get equipped’ to manage an increasing number of chain levels, the composition of which can dynamically change in time. Therefore, it is evident that chain lengthening, range widening and time shortening force to reconsider the traditional management regular procedures. In this scenario, one of the main actions of the focal companies leading the production chain business is to reestablish or restructure the supply chain. The restructuring must not be seen negatively. It is in fact a moment to reconsider the management logic and the business relationships taking place in the production chain, with the aim to increase their success and efficiency. The Supply Chain restructuring requires to identify a few ‘true’ production chain partners and reinforce collaboration with them. This can be done not only by aligning the network strategy and interests, but especially through mutual opening to share company data (sale and production plans). From a practical point of view, this lies in starting coordination mechanisms going, for example, from Vendor Managed Inventory to the Collaborative Planning, whose net result is an improvement of the production chain performance, even to the detriment of individual interests. Again within this scope, we point out interesting projects aiming to realize tools to allow the so-called ‘cross-tier communication’. This is the communication between the firm leading the production chain and the second level suppliers. Further Informations:  Go to Politecnico of Milan site |
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