Supply Chain Process Evolution

First Shift in the Supply Chain Process The Efficient Supply Chain 

In the beginning, supply chain excellence was defined as the lowest manufactured cost. The belief was that supply chain excellence could be achieved by sweating the assets. This set of beliefs formed the foundation for the efficient supply chain. Through the evolution of supply chain processes, costs were reduced, inventory levels lowered, and waste eliminated however, each company reached a point where they could no longer just cut costs without trading off service to customers. They had reached their effective frontier. 

Early pioneers fought hard battles with finance teams that did not understand the concepts. IT projects were implemented with overinflated commitments that were not grounded in reality. In the early days, the principles of supply chain trade-offs and the effective frontier were difficult to conceive. The singular focus on costs resulted in failures in customer service. These failures drove organizations to define supply chain excellence as a reliable supply chain to focus on closing multiple gaps  

In this period, there was a belief that savings from operations could self-fund growth. At first, it worked. However, as the company reached its effective frontier of trade-offs, these continuous 

In this process, companies had to rethink their processes and close some major gaps  

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In the first three decades of supply chain process evolution, demand was primarily used vertically within a function. It was seldom used to stretch horizontally to align the value network. In the definition of... 

Implications matter. The business impact of the evolution of supply chain practices is far-reaching. To snpport the evolution, an entire ecosystem of software, consulting, and hardware companies dedicated to improving supply chain processes evolved. 

The bricks pave the evolution of supply chain processes. In the 30-year evolution, as shown in Figure 1.2, three types of bricks mattered the right use of assets or buildings expansion into Brazil, Russia, India, and China (BRIG countries) and the knowledge to build supply chain... 

Figure 1.3 The Evolution of Supply Chain Process Excellence...

In reality, less than 2 percent of the trading exchanges provided value to the extended supply chain over the course of the next decade. They were not a major factor in the evolution of supply chain processes. 

This process innovation was a wake-up call for the Samsung management team. The leadership team at Samsung became innovators in inventory management and supply chain processes championing horizontal process evolution of S OP, revenue management, and supplier development to never have to write off inventory. 

Stories like these gave birth to the evolution of horizontal supply chain processes to drive operational excellence. Building them requires vision, tenacity, and the ability to bridge the gaps of corporate functional processes. This world was driven by the leaders that could fill in the process holes and build new processes in the world of gray. Brick by brick, these horizontal processes bridge the gap between the customer s customer and the supplier s supplier. 

Curran T, Keller G (1998) SAP R/3 Business Blueprint understanding the business process reference model, Prentice Hall, Upper Saddle River Datta S, Betts B, Dinning M, Erhun F, Gibbs T, Keskinocak P, Li H, Li M, Samuels M (2004) Adaptive Value Networks, In Chang YS, Makatsoris H, Richards H (eds) Evolution of Supply Chain Management. Kluwer Academic Publishers, Norwell, MA, pp 3-68... 

A systemic approach of the whole supply chain allows the designer to identify the critical stages where inefficient use of raw materials and energy takes place, as well as the sources of toxic materials and pollution. Developing sustainable processes implies the availability of consistent and general accepted sustainability measures. A comprehensive analysis should examine the evolution of sustainability over the whole life cycle, namely that raised by the dismantling the plant. 

The goal of this book is to share the insights of what has been learned over the course of these 30 years. In this book, we do not debate the ideal supply chain or the flavor of the month. Instead, we give insights on the evolution of the processes, share the stories of success and failure, and prognosticate on the future of tomorrow s supply chains. 

Companies stumbled in two areas process evolution and technology implementations. These failures drove improvements in supply chain excellence. The pace of change from failure was much faster than from success. 

Over the last 30 years, there has been more progressive thinking on the evolution of manufactnring processes than on any other area of supply chain management. Improvements propelled growth and enabled the building of the global supply chains. 

Failure gave birth to supply chain horizontal processes. Today s leaders in horizontal process evolution—Cisco Systems, Coca-Cola, IBM, Intel, Hewlett-Packard, Samsung, and Walmart—all learned the need for horizontal processes the hard way. Each stubbed its big toe and stumbled before learning that bricks matter. 

In the evolution of supply chain management, the first horizontal processes were transactional. They were billing systems created to automate the order-to-cash and procure-to-pay processes. These systems of record were implemented using standard out of the box functionality in enterprise resource planning. However, for these new horizontal processes, there is no standard out of the box system for implementation. 

From 1990 to 1998, in the early phase of supply chain evolution, the supply chain pioneers focus was on the development of vertical processes. It was a zealous focus on optimizing vertical silo processes of make, source, and deliver. As a result, there was little cross-functional overlap and as a consequence, there was no way to orchestrate tradeoffs in supply chain execution. In the last five years, the focus on planning processes has shifted from vertical to horizontal. In addition, from an inside-out (within the organization) to an outside-in (from the external markets in to the organization) focus. Both of these shifts are fundamental to the building of market-driven value networks. 

As companies move forward in the definition of new processes, they will quickly realize that their supply chain systems are obsolete. Existing technology providers will fight this awakening, ft will be uncomfortable. Solving the problem is a revolution that cannot be tackled as an evolution. To build the effective market-driven value network, the supply chain will require a redesign. 

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