For many enterprises, the supply chain has become the centre of the universe. More important than cool branding, funky product features or any other individual aspect, success is determined by how well an enterprise manages to supply its market with the right product in the right place at the right time and at the right cost. Everything revolves around getting the supply chain right. Complexity means challenges for business continuity, especially as doing better in one area may penalise performance in another. However, business continuity must hold up overall. Some top performers have shown how two aspects in particular can make the difference.
- The first aspect is the proximity of a company to its suppliers. While some corporations have brought their suppliers geographically close to them, for example with “supplier city” type arrangements, others see proximity differently. In particular, Toyota, the world-wide automotive leader, holds shares in a number of its suppliers, and vice versa. Toyota knows in detail how its suppliers are doing on a short term and a long term basis, and its suppliers are motivated to help the Toyota supply chain work well.
- The second aspect is flexibility, often accompanied by a devolution of responsibility to operational and customer-facing teams. By eliminating the communications delay as messages travel up and down the hierarchy, companies with flexible supply chains respond faster to both problems and opportunities. Zara, the apparel company, gives responsibility to young designers to change the design, manufacturing and supply of clothes, according to levels of customer demand. The company avoids being stuck with a poorly selling article, as changes can be made within a few weeks, instead of several months.
In both cases, the supply chain works better by design, rather than through technology. While technology can bring many advantages, it should follow supply chain strategic design, rather than lead it. Clear thinking is the first and the most important ingredient in supply chain continuity.