Understanding Supply Chain Architecture and its Impact—A Case

7 Understanding Supply Chain Architecture and its Impact—A Case  

Industrial Chemicals faced a dilemma. The vice president of sales had a consultants report that showed a significant sales opportunity as the North American Free Trade Agreement (NAFTA) became a reality. While the forecasts were known in the past to be a poor predictor of actual sales, sales had always managed to deliver long-term growth. Industrial needed to prepare for this expansion, and the lead time for plant and warehouse expansion was two years. 

But before approving the expansion, Industrial s management wanted a supply chain audit of the entire system. This meant an analysis of all physical and informational flows throughout the system. Industrial wanted a complete analysis of every step in the supply chain, inside and 

This example illustrates the benefit of thinking outside the box as defined by Industrial Chemicals and examining the root causes for order variation, i.e., the supply chain structure. But it also means moving to a bigger box, i.e., including more entities in the supply chain. The new perspective considers the link between demand variation and truck capacity driven by existing coordination agreements (backhaul discounts). The case shows the benefit 

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