Report: How to manage the increasingly complex supply chain

Dive Brief:

  • The challenge of balancing rising costs and increased revenue are growing as supply chains become more complex, a joint study by APICS and Michigan State University (MSU) found. 
  • Tracking product and information data across multi-tiered global supply chains is proving difficult at best, especially when the need to increase price competes with the possibility of growing revenue. In many cases, it seems impossible to unlock higher revenues without supply chain investments.
  • After interviews with 50 global supply chain firms, the study found globalized operations, increased supplier complexity, trends like omnichannel adoption, mergers or technology turnovers, and consumer demands were the main drivers of complexity in supply chains.

Dive Insight:

Although most participants agree on the various roots of supply chain complexity, the study revealed various different strategies for dealing with the challenge. In general, the responses identified by APICS and MSU can be summed up into increased collaboration, leadership and technology.

Increased collaboration took the cake for most prominent strategy in dealing with complexity, identifying the importance of understanding and working with suppliers, buyers and the workforce alike. Strong relationships breed reliability, so when challenges arise a loyal supplier, buyer and workforce may be able to offer extra support and weather the tide of rising costs in partnership. In addition, great partnerships yield excellent communication, which is an indispensable tool for adjusting to market shifts and acquiring the data required to make production, inventory and sales decisions.

The second strategy involves using technology to help a company scale production and analytical capacity. Addressing complexities requires understanding the issue, and technology promises to help in this process. Various stories have noted industry leaders are using Industry 4.0, Big Data, predictive analytics or simply integrating their various technology systems to help optimize their supply chains. 

The third strategy, however, may be the most important. Ensuring buy-in from the C-suite will help secure the investments necessary to upgrade technology, for example. Similarly, leaders at every rung of the corporate ladder — be it the shop floor, procurement department or C-suite — can help ensure workers are flexible, partners are collaborative and directors are innovative. If, at the end of the day, the goal is to avoid complexity over adapting, a strong leader is needed to find other value propositions.

Regardless of the strategy, the study shows that as value chains become increasingly complex the supply chain manager's ability to build relationships, lead innovations and push cost-saving strategies is indispensable. 

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Filed Under: Procurement