Tuesday, September 22, 2009

It's Not a Supply "Chain"

For the last 10 years or so, consultants and big corporations have been talking about controlling and managing and leveraging the competencies in the supply chain. What they fail to realize is: there's no such thing. Even if there was, it would not work the way they say it does.

There is no chain. It's a chain link fence, unmanageable and uncontrollable. It would take a super-computer of super-computers to calculate all the interactions and optimizations. Start with the company that sells to the end user. Let's say they have 100 suppliers. Those suppliers have 100 suppliers, and those suppliers have 100 suppliers. You have 100,000 suppliers in one supply "chain" whose operations need to be optimized, whose inventory needs to be managed and everyone of them needs to be linked by an information system in order to make it happen. It ain't going to happen.

You can work the problem from the other direction also. Each of the bottom tier suppliers has 100 customers, all trying to manage, control and optimize the supply chain. Those customers each have 100 customers, trying the do the same thing. Who gets to determine the priorities for any of the tiers? No one. Each supplier is autonomous and always will be, ignoring the "push" from any one supply chain.

Forget the consultants, forget the supply chain directors and VP's. The only opportunity that will actually be leveraged are the ones inside your own doors. That's plenty of work. Break down the barriers, build trust within the corporate functions. There's enough waste inside the organization because of distrust and inadequate communication (the quality, the content, the frequency and the amount). If you can't fix the trust and communication issues inside your own walls, you certainly are going to compound the problems in the supply chain link fence through 100,000 suppliers. Man, that's a lot of waste.

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