Drivers of Supply Chain Complexity - Essay Example

Supply Chain Complexity Management Name: Instructor: Course: Date: Supply Chain Complexity Management Introduction The rapidly changing global market environment has resulted in increased complexity in many areas of business operations and supply chain is not exceptional. The rise of globalization in major markets has seen stiff competition among market players. Complexity affects supply chain negatively in many ways that include delivery delays, increased operational costs, inventory shortage or excesses, insufficient cooperation among key players in the supply chain departments, and failure to meet customer’s expectations leading to unsatisfied customers. The supply chain systems involve numerous participants who directly or indirectly collaborate to meet the demands of the customers present in the supply chain (Sheel, 2016). The categories of supply chain complexity include, dynamic, static, and decision making that accordingly corresponds to the complexity drivers based on how they are generated. This paper therefore seeks to discuss complexity in the fast moving consumer goods sector, identifying four areas where complexity emanates and providing recommendations of handling these complexities. Drivers of Supply Chain Complexity Supply chain complexity emanates from different sources where materials and the flow of information are the primary complexity drivers along the supply chain system. This is because factors such as diversity, speed, uncertainty and variability among others play a key role in supply chain. The interactions between these factors ca potentially lead to increased complexity and consequently unpredictability within a supply chain system. Therefore, it is important that companies understand the drivers of complexity in supply chain both within and outside the organization in order to effectively handle while at the same time remain competitive in the global market. (McKinsey & Company, 2013). Complexity in supply chain can be divided into both internal and external complexity drivers. The two categories of complexity drivers must be reduced to ensure organizations function effectively in the supply chain system at all times. The internal supply chain complexity drivers are found in information and material flow in single business associates of a specific supply chain. It is normally related with the structure covering processes, production, uncertainties in the organization and products. For instance, machine breakdown, inadequate management, process failures, and material shortfall are some internal complexities in supply chain (Sheel, 2016). Fortunately, the internal supply chain complexity drivers can be prevented through the improvement of information and material flow in a single business partner. On the other hand, the external supply chain complexities arise from the exported material and information flow by other business associates. Some examples of such drivers include stiff competition, technological innovations, varieties in customer demand, and globalization (ADEXA, 2010). These external complexity drivers in supply chain can be prevented through increased corporations amongst the different partners to achieve a more reliable and effective supply chain system within an organization. The four areas facing supply chain complexity in the consumer goods industry include: 1. Inability of the supply chain to integrate product design, manufacturing, and satisfaction within supply chain Most successful companies in the consumer goods industry are constantly competing on areas such as innovative products and superior customer service in a highly segmented market. The ability of a supply chain system to respond to rapid demand increases in the different operational areas is important to ensure supply chain complexities are mitigated. Product design issues in a highly innovative world have called technology led products that can overcome competition with improved features among other benefits that exceed customer expectations. Therefore, the success of a supply chain is largely measured on delivered quality with emphasis on high quality products and services and not just timely delivery to meet the consumer’s needs (Sheel, 2016). 2. Highly demanding consumers and customers The modern customer has rapidly growing expectations and is more informed than ever before necessitating changes in the supply chain to meet these demands. The marketplace is therefore more demanding than ever before, new customers have unique tastes and preferences and brands have to adapt to meet these needs for sustainability. The heightened expectations, a dynamic business environment and unique challenges make supply chain complexities a concern for most supply chain managers. However, developing successful supply chains provides a competitive advantage (KPMG, 2011). 3. Inadequate visibility and collaborations in highly competitive environment Noteworthy, ongoing production network data is difficult to find in today's exceptionally unpredictable, complex, and outsourced buyer products market place. Multi-level visibility can address this complexity by making predictions and orders more visible sooner and permitting bi-directional integration between partners in supply chain. Having information on genuine shipments and receipts as they take place gives a deeper understanding into stock-in-channel supply and point of sale data, which gives brand proprietors the capacity to proactively oversee unstable demand (Drake & Business Expert Press, 2012). 4. Failure to plan effective coordination between supply chain ranks Submitting with certainty to client orders requires demand arrangements and coordinated effort over various levels to guarantee that the right materials are conveyed to the right areas at the right times. In fact, numerous organizations are still not able to effectively harmonize supply and demand since they do not have entry to auspicious, precise information from all players in the supply chain network. Over and over again, they settle for preview information sharing into online platforms that need constant knowledge and the capacity for execution in closed systems (Isik, 2012). Handling Supply Chain Complexity Analyzing and comprehending the complex nature of supply chain drivers empower us to execute right techniques when managing complexity in a supply chain system. Without a deeper view of the drivers, it will be exceptionally hard to build up a reasonable system to bargain with complexity. A viable method for creating systems is making utilization of good practices. A great practice is characterized as any demonstrated working practice which is sufficiently far ahead of the standard to give huge execution picks up if actualized in supply chain systems. Great practices of complex management in nature in supply chain have been distinguished and accumulated from different sources, aggregated through an online manner, for example, reports of organizations, consultant firms, innovation suppliers and other information bases. Some great practices in supply chain were investigated deliberately and data on the accompanying attributes extricated as sort of the organization, kind of supply chain, type of partner, complexities included in the supply chain, and fundamental conditions to accomplish the objective issues identified with the objective (Autry, Goldsby & Bell, 2013). The ability to effectively cope with supply chain complexity, a deeper customer insight is important in order to clearly identify the things that are most valued by the customers to create a competitive advantage. The supply chain processes must as well be aligned to the value proposition. It is also important that supply chain managers realize and exploit the complexity deemed valuable by the customers while at the same time seek to reduce the costs involved (Krafft & Mantrala, 2006). Therefore, supply chain managers have a difficult task considering that they have to factor in numerous risks within their supply chain. Ensuring that a company meets its supply needs effectively and efficiently reduces cases of recalls and other issues related safety among other critical areas of a business. The global economy's significant changes from plant-based sourcing to worldwide far reaching sourcing, has made another interest for expressive offering, in which a more comprehensive discussion happens between the purchaser and supplier. Today, collection of bids frequently requires another level of adaptability, complex cost models and vigorous offer examination. It is evident that companies seek to maximize their income and reducing costs in their operations and supply chain plays a major role in striving to achieve this balance. Several predictable supply chain difficulties will oblige organizations to keep better data on individual expenses and consumers (Shtub & Karni2009). However just around a quarter of respondents expect their organizations will put resources into information technology frameworks throughout the following five years, and just 10 percent of respondents say their organizations currently utilize online networking to recognize clients' service needs effectively. Every issue that faces the supply systems leads to implications not only for the entire organization but also the customers as well as the bottom line. Supply chain complexities drivers must be analyzed and handled at the very early stages to ensure the supply chain systems function optimally while at the same time deliver to consumers’ high quality products at all levels of the business. Conclusion Complexity in supply chain has been categorized as either static or dynamic in terms of distinction. The static complexity mainly describes the supply chain structure, the various components, number, and strengths of relationships between them. The dynamic category of complexity in supply chain is a representation of uncertainty and comprises the elements of time and random nature of things. The static and dynamic complexity difference is also true when categorizing the drivers of complexity in supply chain based on how they are generated. Some of the complexity drivers in supply chain include varieties in customers, interactions, suppliers, and demand increase among others. Supply chain managers are therefore tasked with the role of establishing strategies to cope with supply chain complexity. The main goal of supply chain complexity management is to lower cost, achieving a competitive advantage, improve customer experiences, and ensuring the overall effectiveness of the supply chain systems. The management of supply chain is complicated particularly when operating in highly dynamic and uncertain operating environment since one is necessitated to handle business relations in different firms, processes and relations. All these aspects need a considerable amount of information about the stakeholders, transactions and processes to ensure effective supply chain management that is sustainable. References ADEXA. (2010). The Consumer Packaged Goods: Optimized Supply Network Management Solutions. Retrieved from http://www.adexa.com/pdf/cpg_industry.pdf Autry, C. W., Goldsby, T. J., & Bell, J. E. (2013). Global macrotrends and their impact on supply chain management: Strategies for gaining competitive advantage. Upper Saddle River, New Jersey: FT Press. Chan, H. K., Lettice, F., & Durowoju, O. A. (2012). Decision-making for supply chain integration: Supply chain integration. London: Springer. Chopra, S., & Meindl, P. (2007). Supply chain management: Strategy, planning, and operation. Upper Saddle River, N.J: Pearson Prentice Hall. Drake, M., & Business Expert Press. (2012). Global supply chain management. New York, N.Y.] (222 East 46th Street, New York, NY 10017: Business Expert Press. Isik, F. (2012). Complexity in Supply Chains: A New Approach to Quantitative Measurement of the Supply-Chain-Complexity. Retrieved from http://cdn.intechweb.org/pdfs/15547.pdf KPMG. (2011). Supply Chain Complexity: Managing Constant Change. Retrieved from https://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/supply-chain-complexity-managing-constant-change.pdf Krafft, M., & Mantrala, M. K. (2006). Retailing in the 21st century: Current and future trends. (Springer e-books.) Berlin: Springer. McKinsey & Company. (2013). Perspectives on Retail and Consumer Goods. Sheel, A. (2016). Supply Chain Complexity Drivers and Its Management. IOSR Journal of Business and Management. Retrieved from http://iosrjournals.org/iosr-jbm/papers/Vol18-issue1/Version-2/F018123943.pdf Shtub, A., & Karni, R. (2009). ERP: The dynamics of supply chain and process management. New York: Springer. Read More