Supply Chain – a Whole New World
A Whole New World
The New Supply Chain World: How companies and executives need to approach the key issues and challenges, and how leaders are building new capabilities
Join Wally Buran for a companion webinar to this article on June 13th at 2 PM EDT
Over the last 20 years, the supply chain of most companies has changed dramatically. In the 1980’s, most companies produced over 50% of the cost of goods they sold, had mainly domestic suppliers, and owned most of the intellectual capital embedded in their products.
Today, the average US manufacturer produces less than 15% of the products they sell, buys heavily from global suppliers or have significant global components and raw materials, and owns less than 20% of the intellectual capital upon which their products are based.
It is a whole new supply chain world; and most companies are competing in this new world with old world strategies, paradigms and tools.
During this period, companies have invested over a trillion dollars and untold thousands of management and executive hours on improving, upgrading and replacing the processes, systems and tools they use to manage and support their supply chains. Yet virtually all these increasing investments have been focused on the internal, owned assets and activities of their business – the constantly decreasing value and risk portion of the supply chain.
In parallel, the external portion of the supply chain has grown dramatically, as have the value added content of suppliers and partners, the operating and strategic risks and the major value/risk drivers. Unfortunately, as more and more of the supply chain has been outsourced, the visibility into the ever-larger supply base has been lost.
Information on capacity, asset capabilities, inventories, investments risks and value levers is much less than before. Few of the investments in systems and information technology address the external supplier base performance, capabilities and risks other than information on delivery performance. Most supply base visibility has been reduced to primary (large) suppliers with largely high level and manually acquired data. This serves to severely limit proactive planning and management at each level of the supply chain and makes it difficult to both understand the “risks that matter” and manage them.
In short, it is a new supply chain world. Unfortunately, it is a world requiring very different capabilities, strategies, systems and operating models.
Join us for a webinar on this topic that will address this new supply chain world, how companies and executives need to approach the key issues and challenges, and how leaders are building new capabilities for this new world.