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Are Multiple Supply Chains Important (Survey Response 8)

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 8)

Steve, Director at Supply Chain Design Company, Nottingham, U.K.

Jon, I tend to agree with the responses of the other respondents, in that single or simple supply chains are better. But it's all a matter of scale.

The extract you quoted sounds to me like the sort of statement that you would find in a goverment report into risk in the supply chain. From a government viewpoint, maintaining the continuity of supply into the consumer markets and into key strategic industries would be essential. Therefore from their viewpoint, multiple supply chains would be a good thing. However, the statement that "future revenue and market share growth is important" does not sound like anything I've heard from the UK government for a long time. So it is either a consultant's report for the government, or it is a quote from one of the large truly global companies, BP for example, that have turnovers larger than many countries and have to think on a similar scale.

My Response:

Thank you for your input Steve.

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 the other commenters, I shared similar reservations that were outlined in part 3 of of my 7 part series Dangerous Supply Chain Myths. The report's title by the way was Succeeding in a Dynamic World: Supply Management in the Decade Ahead.

My reasoning however was tied to the fact that while the concept of Multiple Supply Chains has some merit, with 85% of all initiatives failing to achieve the expected results to date, most organizations have not been able to progress past the walk (re success within existing environments) before you can run stage. In essence, what is conceptually viable is not necessarily practical in real-world circumstances. At least not to the point where you can offer an absolute such as the one presented in the report.

What are your thoughts?

Steve's Clarification:

Jon, I have read all the other response and I have had a look at your article. My earlier response was aiming somewhere else. Further reflection leads me to a different answer and one closer to home. I was a logistics and purchasing specialist at the last company I worked for as a full-time employee. It had multiple supply chains as a matter of course and had done for many years. We did not use identical routes to market for the full truck-full pallet customers as for say the opinion forming specialist sector that only ordered 10-20 cases at a time. The 3PLs we used were different, as were the price cards, terms offered, delivery dates etc. On the inbound we had raws sourced from the other side of the world that were only harvested twice/year, alongside components from the place across the road. Some we bought delivered, some we bought ex works, some we bought via other routes. We used the global 3PLs and we used local family businesses. Depending upon the needs of the supply chain, we either leveraged our global buying volume, or we used smaller volumes to buy well locally. The suppliers we selected, the relationships we strived to maintain were all different depending upon the mix of the risk (perceived and actual) that we were taking, the reward we were taking or had the opportunity to take, how much the supplier needed us and how much we needed them. Running throughout this was our determination to maintain the continuity of supply for the quality and service required, at the lowest demonstrable cost. So upon reflection, yes we did have multiple supply chains and being able to manage them effectively is what gave us the edge. One of the top 3 UK Retailers rated our UK supply chain as world class, but I have no idea of the criteria used as I didn't find out until after I left the company.

Does that hit the spot, or have I completely missed your point?

My 2nd Response:

That definitely hit the spot in that the diversity of responses demonstrates that the subject of multiple supply chain networks means different things to different organizations.

Besides the fact that many organizations are still struggling with more basic supply practice issues, there are no absolutes that can be broadly applied to a general market. This is what troubled me relative to the ISM, CAPS and AT Kearney report.

The scenario you described was not a formulaic approach that would have easily been applied to another sector such as the pharmaceutical industry for example.

There is a high deree of expertise that is indegenous to an organization's supply practice that requires a strong commitment to stakeholder collaboration versus defined proclamations of what will or will not define purported industry "best practice."

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Article Tags: bp, caps, clarification, commenters, consumer markets, continuity, dynamic world, global companies, goverment, institute of supply management, ism, market share growth, myths, real world, respondents, strategic industries, supply chain design, supply chains, uk government, viewpoint



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