Efficiency in the supply chain is something every organization can benefit from, but there are often risks that stand in the way unless the proper safeguards are put in place. A recent report from the Massachusetts Institute of Technology and PricewaterhouseCoopers found that companies with more mature supply chain and risk management policies in place will suffer from less disruptions than those who have immature processes. Supply chain logistics management and automated data collection could help these organizations become much more mature in their supply chain.
The report looked at how automaker Nissan recovered from the 2011 earthquake, tsunami and nuclear disaster in Japan. Six of the company's 50 facilities suffered, but they saw a 9.3 percent rise in production compared with a 9.3 percent drop across the industry. The company had a flexible supply chain model, visibility, management across the organization, deployment of a previously drafted management plan and good risk management in place.
"Flexibility is critical to a company's ability to adapt to change," MIT professor David Simchi-Levi said. "A greater degree of flexibility in their businesses will allow companies to better respond to demand changes, labor strikes, technology changes, currency volatility, [and] volatile energy and oil prices."
CGMA magazine said companies can enable stronger supply chain management with some simple steps, including:
- Putting better risk management into place
- Embedding flexibility and redundancy across the organization
- Using automated data collection and analytics to support management functions
- Aligning the partners that run the supply chain
- Making sure complexities are well managed and rationalized
Trends Will Drive Supply Chain to New Best Practices
Supply chain and manufacturing professional Tom Linton spoke at the Crossroads 2013 conference at MIT and said labor prices in China and across the world will be a key trend that drives the use of technology, tools and new best practices in an effort to cut or maintain costs, according to Supply Chain HQ.
"If you can optimize the supply chain for North America, Europe and Asia, you're going to have a competitive advantage over companies that don't because of the last mile in fulfillment," Linton said at the conference, adding that cost and waste is reduced when the supplies are closer to customers. "You're taking time and waste out of the supply chain, so your supply chain becomes much more efficient."
Each organization will need to evaluate business and see what kind of supply chain management tools work best for it.