Key challenges and initial discussion questions
Supply chain management risk vulnerability and complexity are exacerbated by:
- intensifying domestic and international competition,
- demand volatility,
- shortening product life cycles service/delivery expectations,
- cost pressures with resulting shifts to lean manufacturing and outsourcing,
- globally extended value chains,
- rapid and increasingly complex technology emergence and cross-traditional sector boundary convergence, and
- frequency of disruptions due to unexpected events.
Relatedly, two interrelated themes have emerged as key to competitiveness: “visibility” and “resilience.” Visibility is needed to reduce cost, improve efficiency, customer response and compliance with global port reporting requirements and to monitor supplier performance. Visibility implies smooth communication, open information/data sharing and relationships between supply chain members who are increasingly seen as partners. It is enabled by improvements in IT, sensors and communication technologies as well as analytics involving “big data “and, critically, standards. Visibility can be along multiple dimensions e.g., order processing, shipping, traceability of materials for reporting and avoiding theft and diversion of shipping, as well as more broadly in purchasing and quality control functions.
Standards enable visibility by ensuring common understanding of requirements by suppliers, and consistency of data quality and formats to support aggregation and analysis. Available standards cover automatic product identification and tracking (bar codes, RFID), electronic business protocols and dynamic inventory communication. The impact is not always positive as adopting related systems can be costly and use of open versus proprietary standards can reduce competitive advantage based on unique processes and operational models. A lack of common, harmonized standards increases cost and complexity in responding to varying reporting demands as components move cross borders.
“Resilience” refers to the ability to rapidly and effectively respond to shifting consumer demand level and type but also to natural disasters, conflicts and political unrest, and extreme weather. It implies a common risk vocabulary, efficient data and information sharing throughout supply chains, and integration into flexible/contingency response broader management strategies. The importance of resilience is reflected in the designation of “dynamic resilience” related to supply chains and trade as the theme of the 2013 World Economic Forum in Davos.
Resilience supporting standards include ISO 28002 entitled, “Development of Resilience in the Supply Chain” which is explicitly designed to seamlessly integrate with risk management process standards. The intent of these standards is to provide structure, guidance, communication frameworks and measures to clarify response procedures and ensure supplier compliance and readiness.
Initial discussion questions:
- What are strategic implications for selecting standards and participation in standards development?
- How does this topic and standards influence product and service design?
- How could standards impact on supply chain management vary based on sector, product life cycle stage, supply chain complexity and supplier national cultures? Where standards monitoring and strategy could/should fit organizationally aligning with traditional supply chain management functions? What are illustrative cases?
- Even as standards and technologies allow visibility and resilience, questions are accentuated:
- Who gathers and controls information, over what period of time and how is it and analysis used (information can be sensitive and proprietary to individual suppliers; visibility can support supplier consolidation or longer supply chains)?
- What are implications for supply chain structure, design and broader management?
Review our Supply Chain Papers page for links to papers that are specific to supply chain.
Supply Chain Operations, Strategy and Infrastructure Development in a Global Economy NIST industry-academic workshop conducted May 19-20, 2015 at Georgetown University Link to announcement and presentations