A few weeks ago “IDC Manufacturing Insights” released its Top 10 Predictions for the 2013 Supply Chain.
We will focus on the top three predictions for the supply chain in 2013.
- Prediction 1 – Resiliency Becomes a Priority for End Users Looking to Master ‘Massive Multidimensionality’
- Prediction 2 – On the Supply Side of the Supply Chain, Recognizing the Inherent Cost of Long Lead-Times,Manufacturers Continue to Look at Global Networks Through the Lens of both Regional and Country-Level Sourcing
- Prediction 3 – On the Demand Side of the Supply Chain, Recognizing the Need for Better Service Levels and Mass Customization, Manufacturers Look Again to Postponement Techniques and Data Analytics to Drive More Effective Customer Insights and ‘Smarter’ Fulfillment
It is interesting to read this as these are exactly the topics OPS Rules has been working on with our customers. We have developed some unique approaches to these challenges that can provide a significant advantage to companies that are trying to address them.
Everybody talks about resiliency but it is not at all clear how to measure it, where to start and how to invest in it productively. Dr. David Simchi-Levi has developed the risk exposure index which helps model the supply chain and quantify the financial impact of supply chain risk, determine the highest priority risk points in the supply chain and segment suppliers so that the most effective mitigation strategies are applied depending on supplier characteristics. These strategies range from dual sourcing to better positioning inventory and finally increasing flexibility in sourcing or manufacturing.
OPS Rules is pioneering an approach called supply assurance that enables companies to both monitor and manage their suppliers through performance tracking, control tower technology and various other techniques. Together with the improved resiliency provided by modeling and mitigation we have developed a new methodology called Advanced Supplier Management.
Supply chain analytics have been around for a while in applications such as network design and inventory optimization. However, these technologies are still not widely deployed on an ongoing basis and the results and opportunities are not well understood. In order to improve customer service levels while maintaining or even reducing costs, we have recommended for many years to deploy a combination of supply chain network design and end-to-end inventory optimization which enables the quantification of landed costs as well as a detailed understanding of inventory drivers. This enables various modeling strategies including determining new push/pull boundaries, postponement and revised shipment frequencies. We also recommend that companies invest in reducing product and business complexity and revenue management techniques to improve performance. In addition, analysis of customer, channel and product segmentation will allow companies to better match the needs of customers with the supply chain used. This is illustrated in a powerful way in the Dell supply chain transformation (When One Size Does Not Fit All, Sloan Management Review), a project led by Dr. Simchi-Levi.
Written by Edith Simchi-Levi, VP of Operations at OPS Rules Management Consultants