The best way to manage the increased complexity of today's supply chain flow is to apply five basic strategies that can help strike a balance between increasing costs and generating revenue, a study released Tuesday says.
Challenges in the supply chain include rising consumer demand for customized products and growing diversity in the omnichannel flow of goods from sources such as direct from manufacturer, through distributors, and direct to home, according to "Managing the Complexity Paradigm," a report from APICS, a professional association for supply chain management, and Michigan State University (MSU).
In search of answers, the researchers gathered data from interviews with 50 global supply chain firms, which agreed on five general strategies for tackling supply chain challenges:
- Finding ways to avoid and preemptively mitigate complexity
- Relying upon collaborative partnerships
- Integrating modern information technology
- Engaging leadership
- Establishing more flexible operations
By applying those methods, companies can handle the increased complexity caused by a constantly growing number of products, customers, channels, and geographies, the study said. Researchers found that the four primary sources of supply chain complexity are:
- Customer accommodation: Customers expect ever-increasing speed and visibility of process, and variety and customization of products.
- Operations globalization: As supply chains expand into more varied global customer markets, substantial variations in existing supply chain processes must occur.
- Supplier complexity: Globalization means developing and maintaining strategies to overcome the complex and often serious issues associated with local sourcing.
- General business and supply chain trends: The industry push to omnichannel supply chains is exacerbated by day-to-day business concerns, such as technology turnover or company mergers.
The full version of "Managing the Complexity Paradigm" is available from APICS as part of "Supply Chain Management: Beyond the Horizon," a multi-year research project conducted by MSU's Eli Broad School of Business and supported by the APICS Supply Chain Council and the John H. McConnell Chair in Business Administration at MSU.
