Is 'Supply Chain' Obsolete?

“Don’t shackle yourself to the notion of a chain.”

Every decade or so, a new name is chosen to describe the business of getting raw materials and finished goods from suppliers to consumers: transportation, physical distribution, logistics.

In the 1990s we latched onto the term "supply chain," which has only become more popular in recent years — as seen when the Council of Logistics Management Council became the Supply Chain Management Professionals in 2005.

And so, the old National Council on Physical Distribution Management begat CLM which begat CSCMP, thereby restoring the organization’s acronym to a suitably impressive five letters.

But a supply chain consultant is challenging the OSCBS, or Orthodox Supply Chain Belief System, by questioning whether the term “supply chain” is appropriate for today’s supply networks.

“Is the term supply chain obsolete?” asks Max Jeffrey, an integration consultant at Kinaxis, an Ottawa-based software company that develops — yes — supply chain management software. Jeffrey explains his reasoning in a post on Kinaxis’ blog: "The 21st Century Supply Chain."

Many global supply networks have reached a high level of complexity, with multiple tiers of suppliers and multiple bill of material or BOM levels at each tier, Jeffrey writes. In traditional supply chains, information tends to flow from one link to another in linear, sequential fashion, up and down the chain. But that’s oh so 20th Century.

As those supply chains acquire new “links” stretching across multiple levels, it becomes easier for unexpected events — strikes, natural disasters, surging or plunging demand, pandemics and unforeseen dental appointments — to interfere with supply network communications. “Weeks and even months can go by before the changes reach the end of the supply chain,” Jeffrey writes.

In other words, SCM drops the BOM.

“Consider the risk factors associated with increased outsourcing that can result in more supply disruptions/issues,” Jeffrey warns. “The end result can be excess inventory or lost sales due to not having products available for delivery to the customer.”

The solution may be to rethink how we communicate within and across supply networks, to move away from up-and-down-the-chain model to a more fluid, flexible multidirectional one. That demands very transparent networks, with a high degree of centralized control — which is what many organizations are working toward, is it not?

I hereby christen this new model SARDIS, or Supply and Relative Distribution in Space.

I doubt the countless businesses and organizations engaged in supply chain management are going to revise their Web sites or tear up and replace their business cards — that would add at least a year to the recession and decimate the rain forest. But Jeffrey’s challenge to how we view SCM is well-timed.

“While obviously the concept of the supply chain is certainly not obsolete, information flow and collaboration throughout the supply chain needs to flow seamlessly and not as a linear, sequential series of steps,” he suggests.

“Don’t shackle yourself to the notion of a chain.”

Thanks to Kirsten Watson, director of marketing at Kinaxis, for pointing me to Jeffrey’s blog post. (You can find and follow her as Kinaxis on Twitter).

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