Managing an extended supply network
I was talking to a customer last week about their challenges in managing their extended supply network. This has become extremely common as virtually everyone is outsourcing some portion of their manufacturing and even those that are the manufacturers (contract manufacturers like EMS providers) are leveraging a globally distributed supply base. This customer was talking about the biggest problem they had was the lack of coordination and efficient collaboration and communication between their buying function and their suppliers.
The problem that companies face when this happens is that their responsiveness is delayed and any hiccup in the process has a much bigger effect. This is because you can’t effectively “sense” when something goes wrong (or at least you sense it later than you should) and then your “response” is hampered by the fact that you have no collaboration capabilities to figure out the right course of action to take.
Another customer, Teradyne, just did a presentation where they talked about their desire to get a “glass pipeline” from them to their contract manufacturers to their key suppliers. Companies like Teradyne realize that as an OEM/brand owner, you’re now really running a virtual company or extended supply network. And, while you may not directly execute all aspects of the supply chain, you’re still accountable to the customer and your own company’s performance.
Given the volatility and pace of change in today’s markets and the rising expectations by customers and shareholders, companies need to become more proactive in managing their extended supply network. To do this, front line decision makers must be empowered with greater visibility (the “glass pipeline”) and tools to make rapid, well-informed decisions that align with corporate metrics. Companies like Teradyne and others have found that empowering people throughout the supply chain to respond to change is key to effectively managing an extended supply network in today’s fast-pace and ruthless market.
