Trend 4: Risk management involves end-to-end supply chain
To date, risk has become an increasingly critical management challenge across the global supply chains. According to the research survey participants, new demands from their customers have played a key role in this development. Dealing with cost pressures of their own, many customers have increased their efforts in asset management and have started shifting supply chain risks, such as inventory holding risks, upstream to their suppliers. This approach, however, merely shifts risks from one part of the supply chain to another but not reduces it for the whole supply chain. In fact, between 65% and 75% respondents believe that supply chain risks can only be most effectively mitigated by the end-to-end supply chain approaches. These end-to-end supply chain practices include advanced inventory management, joint production and material resource planning, improved delivery to customers and so forth.
Leading companies are taking an end-to-end approach in managing risk at each node of the supply chain. To keep the supply chain as lean as possible, they are taking a more active role in demand planning, which ensures they order only the amount of material needed to fill firm orders. Firms are also limiting the complexity of products that receive late-stage customisation. Leading companies mitigate inventory-1related risks by shifting the responsibility for holding inventory to their suppliers and, furthermore, by making sure finished product is shipped immediately to customers after production.
Trend 5: More emphasis on supply chain integration and empowerment
Little can be achieved without appropriate management approaches that truly integrated across all functions throughout the supply chain and empowered them to take bold action. However, approximately 30% mention the lack of integration between supply chain functions likeproduct development and manufacturing. Integrated supply chain management across all key functions still seen to be a myth, with many pro,curement and manufacturing executives making silo optimisation decisions. Nearly one-fourth of survey respondents poiint to their organisations' inability to make concerted actions and coordinated planning to respond to the external challenges. This could be a surprise to many that would believe after so much has been talked by so many for so long on the supply chain integration, little has been achieved in practice.
Whilst almost all the survey participating companies have supply chain department, many of them failed to empower their supply chain managers to take leading roles in business 1transformation. Leading companies understand that breakthrough improvements are not possible unless the decisions made are optimal for all supply chain functions. For this reason, they have already taken steps to integrate and empower theiir supply chain as a single resource under one joint responsibility. These firms are making sure the organisation has a s1trong end-to-end optimization, and are integrating supply chain partners up and downstream.
3. Supply Chain IDesign and Planning
One of the important issues in supply chain management is to design and plan out the overall architecture of the supply chain network and the value adding flows that go throu1gh it. This means that managers should step back and looks at the supply chain as a whole and formulates strategies and processes that maximise the total supply chain value-adding and minimises the total supply chain costs. The key conten1ts of such architecture design and planning include configuration, extent of vertical integration, strategic outsourcing, location decisions, capacity planning, and dealing with bullwhip effect. There are also other aspects of the design and planning such as relationship posture which will be covered in a separated chapter.