Last week I highlighted a study that McKinsey Quarterly published called “Building the Supply Chain of the Future”. Interestingly this week Bloomberg (among others) published a study called “China Will Face Crisis Within 5 Years” http://www.businessweek.com/news/2011-01-26/china-will-face-crisis-within-5-years-investors-say.html which provides a glimpse into the future.
The McKinsey study talked about the need for having a global supply chain strategy that was agile and able to flex to the rapidly shifting global environment. The Bloomberg report highlights a significant concern that China will face exceptional dislocations in their banking system that will reverberate around the world. If this happens, and clearly the vast majority of the respondents to the study poll believe it will happen within 5-7 years, it begs the question, what will be the impact on supply and supply chains around the world? At this time the question is moot. However, if it happens, the impact on supply and supply chains will likely be impactful and possibly devastating to some companies. The way organizations respond will greatly impact their success. The way organizations respond will depend on the strategies they have formulated and are able to implement.
Another column appeared in Supply Chain Digest today titled “Time for More Dynamic Supply Chains” http://www.scdigest.com/assets/news/11-01-27.htm#FT. In the article, Dan Gilmore, the publisher and a very insightful guy asks the question: “ What is of more importance for supply chain success (and agility): the trucks and the software, or the people who design and run them?”
What links all three of these articles is their focus on the need for organizations to have agile supply chains to address the unknowns that the future holds for their supply chains.
I think that the questions posed by Dan is worthy of thought and a response. The response to this question is that they are all important, but not all equally important.
I believe that people are the foundation of any organization, and therefore the most critical component for creating and maintaining an agile supply chain. An agile supply chain is ultimately about being able to respond to changing supply conditions quickly, with the least amount of disruption, and at the lowest possible cost. People interpret information that the software (systems) provides and make the decisions that organize the trucks (physical supply chain components) to deliver the materials. Therefore people who run the supply chain are the most important.
I would then argue that the software is next in importance for creating and executing supply chain agility. As supply chains become more complex, the amount of information related to the planning, procuring, moving, making and distributing products to the final customer is growing geometrically, if not exponentially. Having systems and software solutions that capture the raw information and contextualize it is a major keystone component of any successful supply chain infrastructure. Access to the underlying supply chain information is vital to the people who are responsible for making the decisions about the design, deployment, and execution of the supply chain. Software solutions that contextualize the information and present it in a way that is meaningful for the user is critical to supporting the decision making process that people must do on a minute-by-minute basis.
The final component addressed by Dan’s question, the trucks, are important but are the outcome of the former. When people have meaningful information that they can then apply to their experiences they can make better decisions as relates to the physical (trucks) supply chain. When major supply disruptions arise in the physical supply chain having visibility to the problem is critically important. The visibility is provided by information. It is this information, most often supported by appropriate software solutions that enable the people to make the best decisions about how to deploy the resources across the supply chain.