Supply Chain strategies are like a living thin. They must change and adapt in order to meet the ever evolving needs of the customer and the business. They need to be flexible enough to drive ideal operational and tactical decisions. It also must be precise and clear. This is because it allows for immediacy in decision-making.
For example, future opportunities require a supply chain strategy to evolve with time. Twenty years ago, the internet was not so heavily used as it is today. Things were done in paper instead of online and digitally. Things like fax machines were used instead of email and people paid with checks instead of PayPal or some other online money system.
Now that things have become digitized, people are more likely to involve their business with online activity including websites and chat interfaces to allow customers and merchants to communicate with them effectively (Song, 2013). By adapting one’s supply chain to meet the current needs of the market and learn to anticipate the future needs, things will be handled effectively, quickly, and with less cost than simply waiting for things to change much later. Supply chains are not just one-two part systems. They involve much more.
A supply chain operation should only change to meet current supply chain demands by partners, customers, and suppliers when the need arises as it can be costly to alter everything just for anticipation of need. The old saying “if it is not broken, don’t fix it” applies. The business could have using the paper example again, a bunch of files stored as papers in folders versus digitally. What if the business is small and has a series of regulars coming in each day?
It is a small dentist office and while all the other bigger offices have transferred to digital, the small office does not because they do not want to upset regulars with wait times or altered appointments because of the time it would take to transfer everything. The quality of service in the office is high. The wait times are short and everyone knows what to do at any given time.
In this scenario, because the business is small, it doesn’t need much change. If things work smoothly without any change, why not just keep it the same? It is a small business with no expectations of expanding. All it needs to do is keep its customers happy.
On the flip side, supply chain operations should be innovative especially if the desire of the business is to expand. Starbucks and Apple made plans to expand to other foreign markets. Communication is an integral part of any business. If a business cannot communicate especially at the crucial juncture of supply chain operation, business will not get the materials needed to make the products adequately to sell to customers. Therefore, innovation must take precedence as foreign markets require a lot of changes in order to facilitate a smooth and easy expansion and transition.
Innovation would come in the way of evidence-based practice gathered from research. Certain cultures perform things and communicate in certain ways. If a business does not anticipate the need to adapt in order to meet the needs of foreign business partners and customers, the move can prove costly and time consuming if things are done without any planning ahead. Therefore, it is in the best interest of the company to plan ahead. For example, Apple’s main supply comes from Asia. “More than 80% of Apple’s suppliers are located in East Asia” (Elmer-DeWitt, 2013). Apple Inc. has to put into effect early on how to communicate with these suppliers.
A big challenge that could dampen supply chain innovation is consumerism. Thanks to the huge increase in online shopping the last decade, more and more consumers need more and more products and are looking to companies to supply it to them quickly and for less. This means more and more companies have to expand to other parts of the world not only to reach customers, but also reach cheaper suppliers. It is no surprise that many large companies have their products made in Asia. This is because the laws there make the production of items cheaper thanks to lower wages and less unionization of workers. In order to get the demand met of ever-growing consumers, companies are willing to go far to save money and increase production. Another challenge that falls into this is sourcing. It is often hard to find decent supply sources that can meet the needs of the business effectively and consistently as many sources are decreasing or the land is rifled with warfare.
In order to understand how a business’ organization structure as well as overall business integration play into supply chain innovation, it is best to look at a recent example. IBM developed an integrated supply chain to generate strategic value via enterprise. By uniting supply chain operations, they were able to achieve an easier to handle business unit that freed up the sales force and kept them from wasting effort and time on ordering, billing, and scheduling. They also gathered important data that notified the company of what areas worked and which needed change. “The management and organizational changes IBM made were reinforced with new measurement systems designed to capture critical quantitative data across and between functions as well as qualitative insights into supplier and partner relationships” (Supplychainbrain.com, 2016). They simplified things by uniting the supply chain operations. They gathered data to identify and assess any problems in the supply chain process. They communicated the findings to the rest of the company. Thus making for a transformative and innovative response to a new market demand and changes in the marketplace.
Elmer-DeWitt, P. (2013). Map of the day: Apple Inc.’s Asian supply chain.Fortune. Retrieved 9 February 2016, from http://fortune.com/2013/02/16/map-of-the-day-apple-inc-s-asian-supply-chain/
Song, D. (2013). Optimal control and optimization of stochastic supply chain systems. London: Springer.
Supplychainbrain.com,. (2016). IBM’s Integrated Supply Chain Creates Strategic Value Throughout the Enterprise. Retrieved 9 February 2016, from http://www.supplychainbrain.com/content/research-analysis/supply-chain-innovation-awards/single-article-page/article/ibms-integrated-supply-chain-creates-strategic-value-throughout-the-enterprise-1/
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