Evolution of supply chains – part 1
Evolution of supply chains – part 2
Determinants of supply chain evolution
The shaping of supply chains varies across different industries, particularly regarding structure and processes, which stems from the design of development stages. For example, industries based on complex processes—due to capital-intensive machinery and equipment—are focused primarily on the level of production capacity utilization, whereas the consumer goods industry assigns the highest importance to the level of customer service, despite strong pressure to reduce costs. Although company-specific framework conditions also play a role in shaping chains, the automotive industry can still be considered a Best Practice, particularly in the areas of procurement and production. Understanding the problems in this industry and the experience gained can be transferred and utilized in the machinery and equipment manufacturing industry. In the area of distribution—not only due to the application of solutions specific to ECR—the consumer goods industry is a good benchmark, providing valuable solutions for telecommunications and the pharmaceutical industry.
Especially for chains requiring fast and punctual deliveries and flexible adaptation to customer wishes, effective management is so important and essential. The content of Figure 5 shows that the greatest potential for beneficial changes in the sphere of implemented processes lies at the operational level. This includes order fulfillment, production planning and control, as well as demand and supply planning and procurement. In strategic planning, for example, when planning production structure, there are no significant potentials for improvement.
Another possible potential for innovation and improvement of competitive ability can be triggered through the interaction of three factors: Agility, Adaptability, and Alignment.
Agility means the ability of a given organization to act in a flexible, active, and adaptive manner using elements of external activity in times of significant changes characterized by an increased level of uncertainty. Agility emerged as a reaction to passive, bureaucratic organizations in order to meet changing market conditions. A virtual enterprise is cited as an extreme case of an agile organization. In the case of supply chain management, agility enables the initiation of appropriate reactions in the event of short-term fluctuations regarding changes in the volume of demand and supply on the market, as well as proper preparation for the impact of external factors. Creating cooperative arrangements with reliable partners in supply chains, improving information flow, and managing crisis situations belong to the catalog of actions allowing for the achievement of agility.
Adaptability appears in the case of structural changes in the market through the modification of the network of connections. Enterprises are forced to adapt to changing strategies, products, and technologies. Therefore, observing the global market and the current state of product life cycles is of significant importance in order to recognize the nature of the trend in advance and apply appropriate measures and solutions. Furthermore, the use of network infrastructure and intermediate links (trade intermediaries) comes to the fore. Enterprises are expected to prepare a flexible product design to maintain competitiveness. Due to the globalization of the economy, as well as increasing competitive pressure, the time of product creation becomes a decisive factor of competition and a measure of a company’s success. This has led to the development of a comprehensive way of creating a new product. This concept consists of the earliest possible connection and integration of all departments that will participate in the process of its creation, using modern software. A key issue is ensuring flexible structures within product modeling, production planning of individual components, and planning of assembly sequences. The basis for these actions is standardized construction elements, which are made available using “feature” technology, which enables support for the design process and its structuring. “Feature” elements are so-called skeletal and functional elements that standardize skeletal modeling, thanks to which higher transparency is obtained within the product model, as it is developed according to uniform methods of operation. “Feature” technology enables scientific presentation in digital models of product development and production planning, through which geometric areas can be developed automatically. The system enables the evaluation of various technological and production alternatives. Various “feature” elements can be used for prototype implementation. The primary goal of product modeling is the ability to support the use of various data from the entire product life cycle. Using knowledge in the form of “features” enables a high level of maturity of serial products in a short time and the achievement of their optimal quality. With the help of “feature” technology, information about the product can be automatically derived for later phases of its development. Thanks to these solutions, time and cost savings are achieved in the early phases of product development and design.
Alignment and its scope are related to creating a system of incentives for partners in order to shape cooperation more effectively. Free exchange of information, as well as the distribution of responsibility, risk, costs, and benefits (profits), are elements that should be accepted by partners as a condition for effective cooperation within the framework of supply chain management. The environment of enterprises is undergoing significant changes, but furthermore, the requirements placed on enterprises have increased significantly. It is therefore necessary to have lean supply chains that can adapt to customer expectations in a flexible yet dynamic way. If these elements can be implemented along the entire length of the chain, it will enable the achievement of a competitive advantage and lead to a “win-win” situation for all its participants. Such improvement in supply chain management leads to a significant change in their character; a transition to value chain management.
The article comes from the magazine “Logistyka” 3/2009.