Supply chain complexity sources

The SCOR systematic places return processes both upstream and downstream of the supply chain. The source return processes refer to the return of raw material or components to suppliers, whereas the deliver return processes address the receipt of returned finished goods from customers. Furthermore there is the return of empty containers. For all situations, three different return processes are defined (for defective products, MRO (maintenance, repair, and overhaul) products, and excess products). They are not mutually exclusive and can (or even should) be exercised simultaneously, depending on the chosen supply chain strategy and other factors such as product complexity and service level offered to the customer. 

There is a need for a constant review of process structure and a consequent re-engineering if this pervasive source of supply chain complexity is to be kept to a minimum. 

The country-specific variations clearly add complexity across products and marketing channels as well as the supporting supply chain functions - sourcing, manufacturing, distributing, and retailing. 

Single-sourcing restrictions can be employed between different echelons of a supply chain. Their objective often is to reduce the complexity of the supply network. For example, in a production-distribution model a restriction might be included to ensure that each customer is only served by one distribution center (e.g., Tsiakis et al. 2001, p. 3590 Geoffrion and Graves 1974, p. 823). 

Retail supply chains are different than other industry models. Many of the components of the supply chain are the same product sourcing, inbound transportation, processing, location and storage of inventory, outbound transportation, company operations, and information. However, retailers are at the end of the chain, just before the products touch the consumer. As a result, the retailer is at the end of the cumulative efficiencies and deficiencies of aU the chain partners. It may be that retail supply chains are just a bit more complex. Imagine the thousands of vendors, each with their own ideas and operations, aU moving with a thousand different retailers set of unique requirements and multiply this by the 90,000-t different stock keeping units (SKUs) in the typical large discount store. 

Several definitions have been put forward over the last 40 years but what is known as modern logistics is generally viewed as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today s business environment. It fits into the supply chain as defined by Mentzer et al. as a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances andjor information from a source to a customer (see Figure 4.1). ... 

So supply chain design, applying Fisher s model, has two branches. For the functional product, it means advances that reduce the cost of sourcing, manufacturing, and distribution. For the innovative product, it means reducing total costs, including market mediation costs. This is a more complex equation because most companies do not — in fact, cannot — track these costs. 

All discussions on supply chain development are dominated by references to the environment (Rutkowski 2011, pp. 96-110 Witkowski 2003, pp. 179-181). This is obvious, as external conditions provide the background, the source of opportunities and threats, as well as the inspiration for business activity, including business activities undertaken in the supply chain. However, the complexity of extended enterprises, as supply chains are often called, requires heightened alertness to and careful observation of the conditions of their operation. The connections between the external phenomena and the directions of supply chain development are discussed later in this chapter. 

To implement the SCM concept, one needs logistics knowledge and skills however, equating these with SCM knowledge in the face of the complexity of this concept may be regarded as somewhat abusive, and is a significant source of delays in the development of supply chains in Poland. 

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