Experts in the supply chain management field will inevitably need to decide whether to focus on adding redundancy and scale or pare down and run with little inventory and room for error. There are benefits and drawbacks to both approaches but, according to EBN contributor Barbara Jorgensen, companies may have reached their limits when making processes lean.
Ups and downs
Jorgensen stated lean supply chains focus on creating and shipping goods in response to orders and demand. Rather than keeping large stockpiles of inventory, firms hold only what they need. There are significant costs associated with manufacturing shipping and storing objects, meaning that the concept behind a lean strategy involves saving money in the long term and using high-speed communications to make sure deliveries are made on time.
There are also weaknesses to lean planning, however. Jorgensen noted that discussion in the supply chain world has shifted in recent months, with experts seeing lessons in the effects of the 2011 earthquake and tsunami in Japan and the intense flooding that struck Thailand that same year. She stated that both disasters had effects on the global electronics supply chain.
The tech industry damage dealt by the Thailand disaster in particular took a long time to correct, Jorgensen stated. Manufacturers in the region had moved their factories into one area, to reduce redundant component shipping. When that region suffered debilitating flooding, 70 percent of global hard disk creation suffered, Jorgensen said.
According to Jorgensen, the conversation shift in the wake of the disasters changed the overall focus of the industry from a search for speed and efficiency to a more resilient and agile model. While there is not wide consensus regarding how firms can become agile and tough, Jorgensen stated that one of the vital components of a reactive supply chain is increased visibility. Companies with B2B integration could be far better equipped than their peers to clearly observe operations at partners around the world, a modern type of visibility.
PCQuest contributor Maha Muzumdar explained some of the possible dangers that could come from a lack of visibility. He stated that companies unable to connect to their own information cannot accurately project future demand. He suggested firms make sure managers have a good view of every aspect of a manufacturing process, from equipment usage to cycle times. He explained that the demands of modern business in the global economy could quickly expose problems in supply processes.