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Are Multiple Supply Chains Important Survey Response 3
Written by: Jon HansenArticle Overview: A 2006 Report made the following statement: "Designing and operating multiple supply networks to meet the needs of specific market segments--supply chain innovation and the use of multiple supply chains will be important to future revenue and market share growth." Based on your own experience is this an accurate assessment? If yes, why? If no, why?
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Are Multiple Supply Chains Important Survey Response 3
Steven, Senior Supply Chain Manager, Miami, U.S.
What's the report and what's the definition of multiple supply chains? If you read that to mean multiple vendors, then its not a stretch because you should always have alternates available and should not give all your volume to one factory.
If it doesn't mean that - I would agree that multiple supply chains are impossibile considering most can't run a single supply chain efficiently.
My Clarification:
What is interesting is that this "assessment" appeared in a report that was written by the Institute of Supply Management (ISM), CAPS and AT Kearney last year. Much like you, I shared similar reservations that were outlined in part 3 of of my 7 part series Dangerous Supply Chain Myths (here is the URL Link to the article: please contact author). The report's title was Succeeding in a Dynamic World: Supply Management in the Decade Ahead.
In terms of the report, why do you think that the authors suggested this course of action?
Steven's Response:
My issue was that no definition of multiple supply chain networks was given. After reading the article, its still not given, but we can deduce from the discussion in the article what the authors are talking about. You can see in the answers that you have that everyone is looking at it from what I would call a "my supply chain" point of view. There are diverse industries and networks involved - and everyone thinks theirs is the best. However, they are all looking backward and not from begginning to the end.
I think the authors were talking about a firm's ability to meet a particular segment's demand so they could grow the business. I worked for a furniture manufacturer that sold product in specialty store, through etailers and to big box retailers. Each segment had a different supply chain. They all start at the factory - the big box goes direct to DC from the factory. The specialty stores may go direct store from the factory or may go to a domestic DC and then to the store. There are thre different supply networks for one manufacturer.
In order to grow revenue, the firm had to segregate products by channel - Lowe's didn't like us selling the same items to them that we sold to another customer. Then the firm had to deliver the products properly to the channel - some were faxed orders, some EDI, some L/C payment and some prepay credit cards. Each channel had the same basic requirements but we had to specialize by customer in the channel. So the equation gets even more and more complicated.
The firm could get smaller retailers to work within the required framework with minor exceptions. However, the larger the customer, the more complex the network and requirements.
The only way to manage this type of "multiple network" is to ensure that technology is driving the channel and supporting processes. One other point is that the entire chain - from planner to sales - needs to understand how each channel works in order to ensure that customer needs are met and expectations managed.
My Subsequent Response:
Thank you for providing your perspective on what is certainly an interesting topic.
Now there are two distinct tracks in terms of the subsequent questions I would ask you based upon your comments.
In terms of your reference to the furniture manufacturer's use of multiple supply chain networks, and in particular the comment regarding Lowes, a 2001 MIT which reviewed Coordinated Supply Networks made the following observation regarding multiple supply chains:
"Participants belonging to multiple supply chains complicate the formation of
disjoint supply networks. A shared supplier competing as part of two separate
supply networks creates potential conflict of interest among the participants."
Would your reference to "complexity" be linked to an incremental increase in the potential for channel conflicts? Being the manufacturer and therefore the point of origin, how do you view MIT's assertion that a shared supplier relationship increases this potential. For example, to what degree did Lowes interests and influence shape your other customer relationships.
The second track focuses on your statement that it is imperative to ensure that "technology is driving the channel and supporting processes."
Accepting this principle on its face value, what are your views relative to the role that Service Oriented Architectures or Web 2.0 can and will play in the successful management of multiple supply chains?
Are Multiple Supply Chains Important (Survey Response 4)
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