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Abstract
Purpose - To provide five ways of simplifying the supply chain.
Design/methodology/approach - Uses the Complexity Reduction Framework to break down supply chain complexity into its component parts.
Findings - Reveals that ongoing globalisation brings increased complexity to virtually every aspect of the business world, and supply chains are the latest to be affected; thus adaptability has never been more crucial. Many company failures can be traced back to an inability to adapt rapidly to changing market expectations; overly complex supply chains are not adaptable. It is best to take some of the complexity out of the supply chain.
Originality/value - By simplifying the supply chain process overall performance will usually be enhanced, leading to more consistent quality, lower operation costs, and inherently greater responsiveness; and this will most certainly yield more satisfied customers.
Keywords Supply chain management, Quality improvement
Paper type Viewpoint
With the acceleration of global competition in the past decade, supply chain performance has become a critical source of sustainable advantage in many industries. Total supply chain costs can vary by as much as 5 per cent to 6 per cent of annual revenues between companies in the same industry sector, based on PRTM's benchmarking of more than 500 supply chains. Our research also shows that companies with more mature supply chain practices are reducing costs faster than their less mature peers and achieving higher profit margins. Industry leaders are using this advantage to increase market share and drive out their competition. Through supply chain innovation, companies like Dell, Wal-Mart, and Zara are transforming the industries in which they compete.
To a large degree, the success of these companies stems from their ability to reduce the complexity of their supply chain architecture. All aspects of the supply chain contribute to the problem: physical breadth and configuration, management, relationships with suppliers and customers, organisational structure, and information technology capabilities.
The overly complex state of supply chains stems from a number of causes. Competitive pressures that constantly drive businesses to expand their capabilities are partly responsible. In addition, most people in large organisations continue to wear functional hats and, as one might expect, strive for functional excellence: As each function docs what is in the best interests of its customers or internal...