3 Main Sources of Supply Chain Complexity
The concept of "less is more" does not so easily apply to supply chain management. As organizations look to increase revenues by expanding their product portfolios, they're also introducing complexity and risk into their supply chains. While it might seem like a good idea to just reduce your portfolio overall, that's not always an option.
So what can you do to overcome the challenges posed by an increasingly complex supply chain? The first step is to identify what's causing the problem in the first place. According to the latest research from APICS and Michigan State University, there are three main sources of complexity in the supply chain: complexity, globalization, and supply chain trends and internal pressures.
1. Customer Accommodation. Meeting the needs and demands of customers is by far the biggest challenges facing today's supply chain professionals. Not only do customers expect to receive their products in a timely manner, they also want choices when it comes to when (and how) those products are delivered. Adding further to the complexity is the demand for visibility, which has increased in importance in recent years. Meeting all these demands can be daunting.
2. Globalization. While many supply chains are globalizing, doing so will no doubt introduce more complexity. Beyond juggling transportation logistics, adopting a globalized supply chain means that you will need to stack and modify your products in order to accommodate the cultures of different markets. You will also need to consider legal and regulatory issues that can arise when working with different countries. Working and developing relationships with suppliers outside of your home base can take a lot of time and effort, with no guarantee of results. Understanding your suppliers' customs and dealing with the differences in quality can become a major source of frustration if a proper sourcing structure isn't created.
3. Supply Chain Trends and Internal Pressures. Sometimes the causes for complexity don't come from outside sources. Many issues within your supply chain derive simply from the way the business works. Some organizations require custom processes with specialized suppliers, which can restrict options and make your supply chain less responsive. Other divisions of your organization might also make decisions that greatly impact the supply chain department.
Recently, omni-channel deliveries have become a popular trend that supply chain departments must handle, adding more complexity to the job. Technology trends that trickle down from executives can also play a part in your supply chain. There is a vast spectrum of technology that can benefit your organization, from AI options to the simple pen and paper. Creating a system that allows all technology variations to work together adds to the complications of your business.
Once you understand where the complexities lie in your supply chain, you can get to the source of your problem and streamline issues to help your organization.
This article originally appeared on the ThomasNet blog.