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The Emerging Drivers of Supply Chain Complexity

 

The concept of a supply chain implies a linear arrangement of steps or players with a fixed start and end point. Nowadays, only the very simplest product delivery systems, such as perhaps the growing of organic vegetables that are then sold directly by the producers to the final consumer at farmers’ markets could be described adequately by such a concept.

In this simple supply chain, direction and control is exercised by the producer who owns and generates practically all the inputs and means required to produce and deliver the product to market - land, manure, transport and market stall.

Even this is a gross simplification because we are excluding from consideration a whole range of regulatory and licensing aspects of carrying on this activity as well as the complex supply chains to which some of the means and resources used in this chain belong e.g. the van that transports the product to market and the furniture on which it is displayed.

In contrast, the typical supply chains of the early twenty first century are of an order of complexity that is far greater than in this simple example and many are characterised by high degrees of interconnectedness, iteration, interaction and multiple start and end points.

The concept of a total product system as put forward by Ed Rhodes of the Open University in UK is far more comprehensive in nature and attempts to take into consideration this greater level of complexity that is being driven by new emerging trends and factors.

Among these trends is the growing importance of the aftermarket as a source of revenue and repute through the provision of support and service activities and the need to develop reverse logistics capabilities.

Another of these emerging trends driving complexity is that of regulation, which is impacting both new product design considerations as well as the need to develop recovery and reprocessing solutions.

Yet another is represented by the tendency for key players in the supply chain to focus on core activities with many other functions now being carried out by supply partners. This is resulting in many value-added intellectual activities such as design and development now taking place across company boundaries resulting in ever increasing degrees of complexity.

By way of example the sports footwear product system is one that has led the way in offshore production and that has devolved many of its functions and activities to supply chain partners spread all around the globe.

However in this industry the big brand owners such as Nike, Adidas, Puma and Reebok have retained the key coordinating role and the control of the major profit generating activities of design and development, supply chain configuration, brand development and marketing.

Comments

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  1. derekpm / July 12th, 2009 / 9:05 pm

    Rather interesting. Has few times re-read for this purpose to remember. Thanks for interesting article. Waiting for trackback

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