It’s hard to find a supply chain success story. Either there isn’t any or enterprises would prefer to keep it private, not wanting to share any secret they consider proprietary.
Some so-called experts (ones like me who write blogs and claim they are) say companies like Apple, P&G, Walmart, and Toyota are supply chain successes. But these are companies, individual stand-alone enterprises. They don’t represent their respective supply chains; they’re just components or links. True, they may dominate their vendors & markets, but it does not necessarily mean their supply chains are wholly successful.
What in the first place is a successful supply chain?
Some would say that they are the ones who consistently deliver to customers at the right time, right quantity, right quality, at lowest cost. Others may say it’s one that simply fulfils demand to the satisfaction of customers. Or it’s the steady stream flow of goods and services through a series of operations, in which inventories are kept to a minimum, if at all.
A large corporation that sells food condiments boasted a 98% order-to-delivery performance, i.e., it fulfilled its customers’ orders on-time and complete just about always. Two of its biggest customers, however, say that’s false. They say that the condiments corporation order-to-delivery performance is at best 60%, in which the customers slapped penalties for the 40% of deliveries that are late or incomplete. The corporation tells its stockholders & employees it is a success, but its customers claim it’s a laggard.
Supply chains aren’t limited to one enterprise. It’s made up of linked participants: the enterprises or organisations which trade goods or services with one another. We see supply chains via activities such as the sourcing of raw materials, the manufacture of merchandise, the storage, handling, & conveyance of goods, the execution of services, and the exchange of information between customers, vendors, & service-providers.
The successful performances of one enterprise’s operations, however, do not necessarily translate to the success of supply chains in their entireties. Enterprises are dependent on their vendors, customers, & service providers, as much as they are independent in how they manage themselves. Enterprises define their own standards, plan their own strategies, and decide whether their own performances are up to par or not, but they don’t dictate to their vendors & customers.
Are there supply chains that consist solely of one enterprise? Some of us may cite the armed forces of nations. Armies of countries, federations, & empires set up their own infrastructure and oversee their supply lines as they defend or conquer their territories. The Greeks sailed ships, the Romans built roads, and the notorious Wehrmacht of World War 2 Germany constructed autobahns & railways to transport troops & war matériel quickly to front lines. The success of a sovereign country’s military may be traced to the success of its supply chain.
But single entity supply chains are more of a myth than real. Logisticians of leaders of vast empires like Alexander the Great and Genghis Khan had to negotiate with farmers, fisherfolk, livestock breeders, & villagers to obtain food & supplies. As much as they could threaten and subjugate those who wouldn’t agree, the benefits of cooperation and contracts outweighed the costs (e.g., there was no long-term worth to pillaging a village which wouldn’t be able to supply anything in the aftermath). From the past until present, there is hardly any supply chain with one dominant or single entity. Any successful supply chain would have to have at least some sort of synergistic relationship between linked participants. Militaries depend on vendors & contractors. Large conglomerates need to convince consumers to buy their products.
It’s hard to find successful supply chains, and we can that in everyday challenges. We as customers complain about not getting our products on time or sometimes, not at all. We see empty shelves in supermarkets. Some of what we buy don’t meet our expectations. Ships lose merchandise at sea. Inventories are too much or too little. Soldiers in the battlefield didn’t receive the right weapons or uniforms. Employers lay off workers because of lack of components on the production lines. Citizens clamour for food in one country while farmers throw away rotting vegetables in another.
What makes supply chains successful is not in how well enterprises manage their own operations to prevent or handle failures but in how linked enterprises work together. Linked participants must agree among themselves what constitute success for their supply chains, otherwise there will inevitably be failure from the very start. A vendor may agree with an enterprise on performance measures but a supplier to the vendor may have a different idea. The same goes down the line to customers and their trading partners.
Supply chain success begins with consensus from linked participants on what successful means. Consensus requires negotiation and collaboration. Adversarial relationships must be avoided. Synergy must be the goal and the standard. We succeed when we work together, not by trying to dominate.
We may recognise supply chains as visible models to better manage the flow of goods and services from sources to end-users. But until we as actively linked participants realise the need to collaborate and agree on what would make our supply chains successful, we will continue to live with non-optimal unproductive relationships that shall lead to frequent failures.
Supply chain success will remain elusive as long as we don’t cooperate.
Ellery's Essays 