The Weakest Link in the Supply Chain:
What is the weakest link in the Supply Chain?
Bottlenecks in the supply chain where, Goldrattt (E.M. 1990) suggests that the weakest link in the supply chain is the bottleneck, wherever it may occur; and that through put in the whole system is determined by these bottlenecks ( See slide10 Managing Strategic Lead times series). The case study would tend to indicate that a test of weakness in supply chain management might be when all parts are treated equally (Paragraph 7 Case Study) In other words not everything should be treated equally. The implication being that lack of management and failure to realise that different products and different customers might require different treatment is a common weakness in the supply chains of many companies.
The Bain report (paragraph 4) would appear to indicate, however that, failure to “Reach past your four walls.” Is the most series problem the report goes onto indicate that fewer than 10% of companies reach out across their network of suppliers.
On balance therefore it would appear that the evidence from the case that the evidence from the Bain report that for most companies the failure to reach past their own four walls is likely to be their weakest link in the supply chain. By failing to do this they have not even recognised the important of striving to ensure that the customer order cycle and the logistics lead time are equal to each other (Lead Time Gap slide 9 from Managing Strategic Lead Times series). In other words “they do not know what they don’t know” a classic failure common to human systems, this is an important part of reducing lead time gap (see slide 10 of Managing Strategic Lead Time series of slides). The potential competitive advantage of being able to remove the requirement for holding inventory or for forecast is potential enormous in many industries, particularly those that are under significant price pressure. The evidence of the relative success of Dell computers much of which is based on its superior ability to manage its lead time gap further supports this point.
What has Strategy to do with supply Chain Management?
Everything!
In other words using the basic principles of control and planning it is logical that if a firm is going to be effective in achieving its long term strategic goals then the process of control should consistent throughout the organisation. Certainly the example of Dell is that a large part of their success is due to the fact that their supply management process is inextricably linked to the firm’s strategy of providing value to their customers by selling them good quality computers at a low price and being able to deliver them when they say the will. In the first of the five disciplines highlighted by the Bain report in paragraph 4 of the case, it state: “Get the strategy right first”, it goes on to emphasise the importance of supply chain managers knowing which improvements in the supply chain process are likely to “…drive real advantage…” or “…which service enhancements will customers value…”. Competitive strategy or planning is all about how to get you customers to want your products in preference to those of your competitors. Logically therefore strategy or planning is about the control process for the whole organisation. Failure to measure and control on e part of the organisation operations will result in poor performance overall.