These six trends make supply chain management even more complex. In a new management book ‘Simply Effective’, author Ron Ashkenas describes four things that cause organisational complexity: structural fragmentation (constant changes within the organisational structure), increased product proliferation (the extension of product lines and services), the evolution of processes and technology and management behaviour. Many companies underestimate the extent to which an ever-growing number of stock keeping units (SKUs) leads to increased organisational complexity as well as increased costs. Rationalisation and reductions of the brand and product portfolio is therefore a logical step towards reducing complexity.

 Another way to combat organisational complexity is by simplifying the processes and Ashkenas describes five methods in his book: identifying best practices, identifying processes and redesign, Six Sigma and Lean, so-called rapid-results projects and lastly, the work-out approach with a large group of employees. Each of the five methods has its own speed, technical impact and staff involvement. However, this doesn’t make it easy to decide which method to employ.

 I read an interesting chapter about managing product, organisational and process complexity in the annual release of ‘Winning in Turbulence’ from the ‘Memo to the CEO’ series. According to the author, Darrel Rigby from Bain & Company, you need to combat product complexity first, followed by organisational complexity and then process complexity. If you try to simplify the processes without having improved product and organisational complexity, you will only end up creating more complex processes in other areas.

 Reducing complexity in a supply chain that just keeps on growing is a must. It makes them more transparent and improves a company’s ability to react. It’s simple.

Martijn Lofvers, Publishing Director & Chief Editor, Supply Chain Movement
martijn.lofvers@supplychainmedia.nl

Related posts:

1. Simply Effective
2. Managing supply chain complexity
3. The shape of infinity

In recent years, quite some emphasis has been put on the importance of strategies such as just-in-time, lean manufacturing, off-shoring and frequent deliveries to retail Bringing profess ionals and academics together outlets. However, with significant economic changes, rising labour costs in developing countries, huge volatility in oil and
other commodity prices, and new regulations such as carbon emissions caps, some of these strategies may put the supply chain in peril. At the same time, logistics and supply chain management have been the focus of executive meetings, business columns and research institutes as never before. The importance of integrated, globally optimised supply chains is well understood, and it seems that in many companies, executives have discovered the impact on business performance that can be achieved by effectively managing their supply chains.

SCM in the boardroom
The objective of this next SCM research by MIT is to answer the question of how important SCM is as a topic on the agenda of today’s business leaders, particularly CEOs and COOs. If it is on the agenda, what should it specifically include: risk management, cost cutting, cash reduction or new channels? If SCM is not directly on the CEO’s/COO’s agenda, what is on their agenda? Is there a link between SCM and these topics? More importantly, is there a framework that links the firm’s value proposition to its supply chain strategy? Such a framework can establish a strong connection between business strategy and SCM and help position it in the eyes of the firm’s decision-makers.

Become a member of the SCM Research Community
If you would like to participate in the study or need further information, please send an email to mhoogeveen@trueconomy.com.

Related posts:

1. The 2011 Global Supply Chain Agenda
2. The New Supply Chain Agenda
3. Gartner Supply Chain Executive Conference