Next Generation Supply Chain Management

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Created on April 2, 2014

This article was originally posted on the PNC Business Insights e-news section. Guest blog post by John Lloyd, MANTEC

Every company, large or small, is dependent upon the companies that make up its supply chain. The term “supply chain” encompasses all of the entities on which a business depends to meet its customer expectations. These range from first-, second- and third-tier material sources to service providers to logistics and transportation specialists. Today’s forward-thinking companies have come to understand that their own performance hinges on the success of their supply chain relationships.

Historically, companies viewed their suppliers simply as the instruments to get them the parts they needed on time at the right price. Too often the customer/supplier relationship was very autocratic: Demands were made and it was expected that those demands would be met. In making sourcing decisions, companies traditionally did not look beyond a supplier’s capability, price and delivery. But those who stop there are missing a valuable opportunity to view suppliers strategically as a resource to add customer value and create a competitive advantage in the marketplace. Suppliers can be a source of critical information to improve product design, quality, performance and cost.

Recognizing these factors, progressive companies now view supply chain relationships as collaborative rather than autocratic. World-class companies share information on their strategic direction and engage suppliers in providing value.

During the 1970s, ’80s and ’90s, we saw a huge wave of offshoring of components.  Sourcing decisions were made strictly on the basis of price. Today we are seeing a growing trend of “reshoring” parts back to the United States; with this there is significantly greater interdependence within supply chains. Reshoring has proven to bring greater control, flexibility, responsiveness and information sharing.

Looking toward the horizon, you can expect supply chains of the future to become ever more complex. Performance excellence will be achieved only with seamless support from those companies that fuel the engine of your operation.