Rising Supply Chains Complexity & How to Manage It

The purpose of supply chain management is to provide the highest degree of accuracy to meet the customer demands. However, in past couple of years the supply chain industry has faced a volatile period in terms of pandemic crisis, rising customer expectations for faster lead times, expanded products and services, and tailored experiences. In addition, new global markets, lower manufacturing costs, and sourcing activities have led to a global dispersion of supply chains. These factors increased the overall supply chain complexities for the business and thus forced business to opt for rapid supply chain digitization, improved inventory management with suppliers, and deeper visibility and control into all supply chain steps.

Supply chain complexity is a constant factor and supply chain leaders are also anticipating complexities related to operating models (e.g., equipment, product design, business models, and partners) will increase over the next couple of years. As manufacturing and fulfilment complexities continue to grow, the supply chain industry will be under pressure and the traditional approach to limit supply chain complexity by focusing on reducing and managing the long tail of product SKUs will not be a successful or profitable option. Therefore, businesses need advanced technology and tailored solutions to tackle these challenges and incorporate digital supply chain management into their strategies to stay competitive.

The problem with supply chain is that it is moving into modern territory with the emergence of new global consumer markets and not only is a significant driver of cost within a supply chain but that it also contributes to variability and uncertainty. Manufacturers started experiencing a surge in supply chain complexity, despite the fact that it provided excitement and boosted income. Consumers are becoming more demanding, and this is leading the supply chains to change and evolve at a faster rate. Here we try to cover some of the root causes enforcing increased complexities in businesses’ supply chain model.

• Rising and constantly changing customer expectations.
• Network complexity: With more nodes and links in a network, supply chain becomes more complex. As companies are reliant on external suppliers for goods and services and these suppliers depend on other suppliers. There is a strong likelihood that the companies don’t have complete visibility of the network and thus there is a potential for unexpected disruptions to the supply chain in these extended networks
• Process Complexity: Every supply chain model of an organisation has numerous processes and these processes are internal to the firm as well as those processes managed by upstream and downstream partners. Thus, leading to complexity in the supply chain.
• Product complexity: Product complexity can arise because the number of components or subassemblies is high, or because there is little commonality across the Bills of Material for different products. The less the commonality at the Bill of Material level the less is the flexibility to vary product mix or volume.
• Customer Complexity: Too many non-standard service options or customised solutions increases the costs of serving different customers significantly.
• Supplier Complexity: The size of the supplier base can add to supply chain complexity by increasing the number of relationships that need to be managed along with increasing total transaction costs.
• Inventory across multiple parties: Obsolete inventory can make or break profitability. In the current scenario suppliers & partners along with the manufacturers manage inventory. Therefore, getting real-time visibility and control over the entire network of partners is the only way to prevent the “bull-whip effect” of increased, unused inventory across the network.

The above-discussed factors lead to a lack of integration into the supply chain, lack of coordination, synchronization of data, and information sharing. Lacking these can strongly affect business operations leading to poor performance, higher costs, trouble managing supply relationships, and higher risks.

Supply chain Complexity will continue to be a significant pain point for any organizations, especially when businesses are looking to grow and expand their territory. The solution for this is not to make the supply chain “less complex,” but to figure out how to embrace the complexity. One way is to unify the complex systems and party’s landscape along with building end-to-end visibility, collaboration, and optimization across inventory, order, logistics, and transportation management. Although managing the supply chain can be difficult, here are a few strategies that we have identified to handle such complexity.

• Supply chain visibility: Visibility is a critical component of efficient supply chain systems and can improved through digital supply chain management. It helps in improving real-time visibility in all steps of the supply chain using technologies like big data, Internet of Things (IoT), and Artificial Intelligence (AI) solutions.
• Demand Planning: Integration of demand planning strategies into supply chain operations, allowing better inventory tracking and insights. It helps in providing data insights about consumer trends, customer behaviour, sales history, and productivity to meet customer demands with the highest possible accuracy.
• Standardised methods of operation: Standardisation of supply chain operations helps businesses in creating integrated procedures that help in improving employee and company productivity and eliminate unwanted steps from the supply chain.
• Inventory Management in Real Time: It creates visibility with real-time data to optimize the delivery process and avoid disruptions and offers seamless flexibility and scalability in the long-run.
• Automation: Automating a company’s existing supply chain procedures helps in reducing supply chain complexity. It can be present in all operational areas, from automated accounting to an automated warehouse. It saves time and costs, helps you track your orders, and make enquiries across multiple supply channels.
• Data analysis helps in improving supply chain complexity. It helps in improving efficiency across the supply chain while reducing time and resource wastages.

These are the few advisable points for managing and measuring supply chain complexities. These suggestions will help businesses to prosper and advance in the market and allow them to stay ahead from their competition. In addition, introducing a proper SCM player to the operation will help businesses to have access to the end-to-end supply chain. TVS supply chain solution is amongst the top supply chain company offering supply chain digitization through their best-in-class technology, and supply chain expertise. Their digital supply chain management solutions offers integrated end-to-end visibility and execution platform that is unparalleled in the market today.

TVS SCS offers specialized solutions to reduce complexity in customer’s supply chains by using technology, data analytics and execution experience to offer key solutions such as accurate demand forecasting, inventory planning and production, procurement management, network optimization, visibility, and supply chain agility to handle evolving needs.

TVS SCS has experience and expertise across various sectors. End-to-end service portfolio customised as per customers’ needs offers flexibility and scalability that customers are looking for. The way to address supply chain complexity is to build strong partnerships with domain experts. With more than 250 customers in India, TVS SCS is capable SCM expert and reliable logistics partner.