Supply chain management terminology is changing with the times
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It’s been well documented that the manufacturing world is becoming more complex and changing rapidly. Increasingly volatile demand brought on by more global competition and increasingly demanding customer buying behavior combined with globally distributed supply chains and ever shorter product lifecycles are placing incredible demands on brand owners and manufacturers alike.
I’m noticing a change in terminology associated with these trends as well.
As many probably know, several years ago AMR Research started to change the dialog through their focus on Demand-driven Supply Networks (DDSN). This alone represented a change in terminology on multiple levels. It started to place the emphasis on demand whereas historically supply chain management, as the term implies, was very supply centric. The other thing it did was acknowledge that supply chains had become supply networks that have evolved from more linear chains to a much more complex set of interconnected relationships amongst a network of partners (case in point: according to AMR, Cisco, the $28.5B virtual network equipment manufacturer, must coordinate a 331-partner supply network consisting of 43,000 non-employees).
Consistent with this is an evolution in thinking about what it takes to be successful in today’s more challenging environment. 20th century supply chains emphasized a plan and execute mentality because things were more linear in fashion and crisp execution to the plan was the way to compete and win. The added complexities have forced a re-evaluation of what it takes to win in the 21st century and places increasing emphasis on sense and respond capabilities that empower people and leverage human judgment to deal with the large number of unexpected events that occur in between planning cycles and can have a profound impact on a company’s ability to execute.
Lately, AMR has started to elevate the discussion further by challenging the term supply chain itself. Their point is that this term is too limiting and companies really need to start thinking about the entire value chain to be successful. It will be interesting to see how this plays out and what type of traction this shift gets in the marketplace. I’m guessing that people will gravitate to this as it broadens the dialog to a more strategic, comprehensive discussion about what truly impacts a company’s success.
