How to define a supply chain

IDC group vice president, Bob Parker, has noted that there has been a lot written and discussed in the business media about the impact of Japan’s tragedy on markets. He adds, that the term “supply chain” is being used quite a bit, occasionally by someone who understands what it means.

By ·

IDC group vice president, Bob Parker, has noted that there has been a lot written and discussed in the business media about the impact of Japan’s tragedy on markets. He adds, that the term “supply chain” is being used quite a bit, occasionally by someone who understands what it means.
 
“Our interest, as always, is in how well or poorly supply chain technology supported company needs in dealing with the unexpected event,” said Parker.

Here a few of his recommendations:

·  Modernize supply chain response management.  More mature industries like automotive are taking much too long to evaluate the impact of supply shortages.  To hear company officials they should have a good handle on the situation “in several weeks” is a huge red flag.  The expectation isn’t to fully anticipate the event, but to respond much more rapidly as we saw in the high tech/electronics segment.
·      Go deeper with supply risk assessment.  While the electronics industry responded quickly, the mitigating tactics were only one or two levels upstream in the supply chain.  To illustrate the point, a key adhesive in electronics manufacturing has been severely impacted by the circumstances in Japan and may ultimately cause more disruption than flash memory.  It appears the response models didn’t account for a supply item this far up the supply chain.

·  Reassessment of global supply networks. As demand becomes more and more global, supply networks must follow.  It is not enough to simply chase low-cost labor rates, manufacturers must consider both total cost and proximity to demand. Beyond these considerations, globalization (i.e. diversification) of supply will also limit the effect of local or regional disruptions.

·  Better supply/demand contingency models.  In base materials, industry planners seem unable to answer the question as to whether lost capacity (supply) will increase prices or lost demand will lower them.  Also, the analysis necessitated by events in Japan must be combined with the implications of the unrest in the Middle East to allow for more comprehensive contingency planning and more effective supply response.

“We give a lot of credit, deservedly so, to the investments industry has made in supply chain planning and execution in terms of being able to deal with major market shifts,” he said. “This was certainly true during the recent recession when these systems created a greater ability to respond.  The events in Japan, certainly the severity, are nearly impossible to be fully prepared for and, while supply chain systems are delivering, there needs to be additional improvements in order to better mitigate risks and speed response.”

For related stories click here.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...