Supply chains come in all shapes, sizes, and complexities. And supply chain management needs to adapt and plan ahead to keep everything flowing smoothly. That is why we will discuss how you can get the most out of your unique supply chain in this blog series. To guide us through this series we start each of our topics with a meaningful film quote that explains the core of our story.
The quote that inspired us for this topic:
“We're sending you back to the future!”
For this blog, we got inspired by the adventures of Marty McFly in Back to the Future. Just like the high school student, we’ll step into our time-traveling DeLorean and take a look at what we can learn from the simple supply chains from the past, so we can simplify the complex versions of the present. And just like Doc Brown, we will try to find a way back to the future with the lessons from the past in mind.
How supply chains evolved into a complex puzzle of independent parts
In general, supply chains have gone through enormous changes over the last few decades. Every part of how we source, manufacture, and transport goods has been transformed. Gradually, companies started pulling their supply chains apart and transformed them into small, separate processes which operate largely independently from each other. By doing this, they have often lost the overview of the bigger picture, while their supply chain management has the difficult task of piecing this puzzle back together to figure out how to maintain or increase supply chain efficiency.
Supply chain complexity is caused by a variety of factors, which are often the result of rising customer expectations for faster lead times, expanded products and services, and tailor-made experiences. These factors force brand owners to support more unique orders for customers across their supply chain, requiring greater collaboration with partners, improved inventory management with suppliers, and deeper visibility and control into all supply chain steps.
A clear example of this increasing complexity can be found in a simple product: chocolate. The Dutch brand Tony’s Chocolonely has a wide variety of flavours in its portfolio, from milk hazelnut and milk caramel sea salt to pure pecan coconut and dark pretzel toffee. All these different ingredients need to be tracked until they are combined into the end product, and if that product changes, it has an impact on the whole supply chain behind it. And if that’s not enough, Tony’s Chocolonely champions the fact that their chocolate is produced 100% slave free, which also needs to be rigorously controlled from cocoa bean to chocolate bar. That’s quite the most complex supply chain in my book for something as ‘simple’ as chocolate.
How we can get back to the simple supply chains of the past
In my opinion, the end product should determine what your supply chain looks like, and not the other way around. When you have the end result in mind, you can start clustering the different components that are combined throughout the supply chain. And when that end product needs to be adapted to unexpected circumstances, you’ll be able to adjust quickly and efficiently behind the scenes.
Let me explain this with an example from my own experience. Washing machines are one of the most complex and frequently sold customer products on the market. When one component, like isolation plates, for instance, is missing or delayed, it impacts the entire supply chain. Now, if you’ve taken this possibility into account pro-actively, and you have a clear overview of every cluster of components that make up this particular washing machine, you can adapt your production to make a low-cost model of washing machine in your offering that perhaps doesn’t need this kind of isolation plates.
Just as this example demonstrates, the main key to unlocking the complexity of your supply chain is reverse engineering. If you have a clear understanding of your end -product, you can start playing with the parts that make up the whole. Even when you’re experiencing transport issues for one part, you can still pivot your supply chain to produce another, similar, end-product to maintain the efficiency of your supply chain and avoid downtime in your production facilities.
Reverse-engineering end-products is the key
To make this switch, however, your planning department will need to have a clear overview of everything that makes up the Bill of Materials for each end-product, and how it compares to other products in your offering. Otherwise, it will be a difficult task to keep track of the dependencies between the manufacturing and supply of the different parts of, let’s say, a high-end washing machine and its low-cost counterpart. Once these dependencies are all mapped out, you can easily switch between end products without too many supply issues.
If you want to make this simplification, or reverse-engineering, of your supply chain possible you need to get every department and stakeholder influencing your supply chain on board. Creating awareness of this approach is one thing, but you also need to let everyone understand the benefits that go along with it. At Solventure, we streamline this exercise by connecting companies with our customers who have already solved this challenge. So, our customers share first-hand insights about how simplifying their supply chain by reverse-engineering, has revolutionized their business. So, no worries, you won’t have to drive a DeLorean at 88 miles an hour to get good answers 😉.