The sources of supply chain complexity

Compiexity in a suppiy chain can arise from a number of sources and some of the most common causes are detaiied beiow. 

The more nodes and links that exist in a network then cieariy the more complex it becomes. As a result of outsourcing non-core activities many companies are today much more reliant on external suppliers of goods and services. Those external suppliers also are dependent upon a web of second tier suppliers, and so on. There is a strong likelihood that the focal firm at the centre of the network will not even be aware of many of the second or third tier suppliers that feed their upstream supply chain. The potential for unexpected disruptions to the supply chain is clearly heightened by these extended networks as evidenced by the following example. 

Following the shut-down of Dell s American assembly line within days of the September 1999 earthquake in Taiwan the company set out to understand why this had happened. 

To do this Dell studied where their tier-one suppliers did their shopping and this in turn soon yielded the first important answer - the Taiwan Semiconductor Manufacturing Corporation (TSMC). Dell s executives realised that they were in fact buying hundreds of millions of dollars of chips each year from TSMC indirectly. 

Source Abridged from Lynn, B.C., We End of the Line, Doubleday, 2005 

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