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Are Multiple Supply Chains Important (Survey Response 5)

Written by: Jon Hansen

Article 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?

Are Multiple Supply Chains Important (Survey Response 5)

Megan, Senior Director Supply Chain Operations, Los Angeles, U.S.

I agree.

Multiple and supple Supply Chains that can be adopted quickly mitigate the risk associated with global business. absolutely.

Unanalyzed loyalty, or myopic reliance on a specific supply chain process or partnerships is less efficient for all products that a global business must produce to meet their growth demands; specifically, because, typically the chain is designed around either trying to meet all products needs (in the case of Apparel this is the biggest mistake we make- one chain for all brands), or geared towards one products exceptions (automotive innovation is the example here). This Creates unneeded pathways that add time, cost, or non required testing or analytics to individual product demands.

In addition any global company is exposed to the speed in which governments are adopting and dropping restrictions or regulations and the growing socio-political instability of both the raw materials and manufacturing markets.

Multiple Supply chains that can be adopted quickly as contingency routs or sustained individuated paths allows a company to respond to their consumers ever increasing demand for quality and cost. Ask GM… Dog food makers or Mattel.

My Response:

Interesting observation Megan.

In the example of Mattel specifically, (and I assuming you are talking about the recent spate of product recalls), how do you believe the Multiple Supply Chain concept could have averted the situation?

Megan's Clarification:

I believe what happens with “ancient” or “loyal” (older than 5 years) Supply paths is that the company becomes more and more reliant on the partnerships that make up the path Each person in the system becomes somewhat lazy (if you will) the vendors, product auditors etc. realize their relationship is exclusive or critical to the company and either take risks or loose focus. Having multiple supply chains forces “free market’ competition, provides the Company with contingency so they take a hard stance on quality, or push for better costs, allows for spontaneous freshening of the Supply Base, and worst case allows a company to make an immediate change when a problem is identified. If double digit percentage of your product is traveling through one set of partnerships there’s too much risk involved in changing A single supplier or a single path- they have deals with your other partners based on sustained volume, or legacy relationships, your cost structure is built on those relationships, your speed to market metrics are modeled against those paths. I believe what happens is it’s easier to make concessions because the risk of holding fast to product integrity standards is greater than the risk of bad quality. Until, of course, it’s too late. I think that’s the flaw of the chain not some large corrupt entity making planned obsolescence, or calculated risk, decisions.

A more simple example of this is with moving finished product. Having one exclusive contracted relationship limits you to certain lanes, ports and sail times. Having multiple relationships, or at the very least creating a relationship with a broker who manages those rapid switches allows for flexibility, adding time back into the Manufacturing calendar or back into the sales cycle, which in some cases may be more pennies per product but the time saved factor makes it more cost effective

Managing multiple chains, on-boarding new paths, grafting new sources to existing branches, or amputating chains that are not working should be a constant focus even if you make ball-bearings it’s the only way a company can stay competitive.

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Article Tags: analytics, automotive innovation, clarification, contingency, dog food, food makers, free market competition, global business, global company, growth demands, mattel, pathways, political instability, product demands, raw materials, routs, spate, supply chain operations, supply chains, supply paths



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