1. Shifting the focus
from cost minimization to value creation:
On the one hand,
this shift in the operating environment leads to more complicated trade-offs
between design objectives such as cost versus market share.
On the other hand,
it creates a more expansive design and decision-making process that ventures
beyond the physical configuration of supply chains and considers factors like
outsourcing, leasing decisions, and go-to-market decisions. The relative
importance of different service-related cost trade-offs has changed.
2. Giving way to
tactical and continuous reviews:
Being in a VUCA (uncertainty,
volatility, complexity, and ambiguity) world descriptors define markets and the
supply chains that support them. In response, companies have to be ultra-agile
and able to revisit supply chain designs regularly.
In addition to
keeping the company abreast of market changes, a continuous review process
helps organizations anticipate disruptions and prepare for them. Preparedness
has become a competitive necessity.
3. Building up
local/regional redundancy into supply networks and multi-sourcing:
In a highly
dynamic, uncertain world, companies are turning to localization as a risk
mitigation strategy. Recent upheavals in international trade like Brexit
controversy, a trade war between China and the United States, and the
impact the COVID-19 pandemic brought this strategy into the limelight.
As the attractions
of global supply chains enabled by low trade barriers and low-cost conveyances have
eroded, local/regional supply chain designs have gained support.
4. Evolution
toward the use of artificial intelligence/machine learning and data analytics
to inform and optimize design choices:
This shift in
emphasis is driven by recent advances in data science and a massive increase in
the volume of data availability to supply chain designers. Data analytics and
machine learning tools elucidate the structure and performance of supply chains
as never before. Modern-day network science methods highlight the complexities
of relationships between trading partners.
Also, models of
supply chains are now more intricate than in the past and reflective of today’s
market dynamics. Moreover, it is now possible to display analytical results in
easy-to-understand, intuitive visual formats that executives can quickly grasp
and interpret.
5.
Interdisciplinary supply chain design processes are gaining ground:
The advanced
visualization techniques described in the previous section facilitates the
shift towards multi-disciplinary design projects. Experience from the recent COVID-19
pandemic also suggests that cross-functional crisis management teams are better
able to tailor effective responses than teams that only represent operations.
Migrating to a cross-functional approach requires companies to redesign relevant organizational and decision-making processes. Research underway at MIT Centre for Transportation & Logistics is developing S&OP processes that can be incorporated in the supply chain design process.
Companies should also be aware that the supply
chain design changes run their course and is still evolving. Moreover, the
experience gained from managing crises such as the COVID-19 pandemic will
likely accelerate the pace of evolutionary change.
Happy Learning😀. Please share your valuable comments.
Interesting Read. Would like to know more about companies that have adopted these supply chain designs.
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