Why Supply Chain Models Have To Change

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Why Supply Chain Models Have To Change

The Story Of Supply Chain Models

In his book The 5-STAR Business Network (http://bit.ly/5-STARBN), Vivek Sood exposes the results of his researches on the organizational structure of companies. Companies used to follow the model of a traditional organization structure as in the following figure:

However, the global business world has changed and this structure is no longer adapted to current businesses.

Companies focus on customer’s needs, but their supply network cannot provide the expected results because of this organizational structure. In effect, the problem about this structure is its rigidity.

Relations between these people and departments within the company are not flexible enough, which limits the results. Rigidity is responsible for the limited effectiveness of the organization.

The Shocking Revelation of Supply Chain Models.

In fact, the supply network should be more flexible, which will help the organization to be more customer centric. The traditional structure shown above is so rigid that it stifles customer responsiveness and innovation.

The main change that has made this organizational structure inefficient in today’s business world is outsourcing. In effect, today’s globalized world involves outsourcing and bigger supply networks than before.

This is what makes this rigid structure unadapted to current business realities. Strict hierarchy and silo mentality of the different departments prevent companies from achieving their objectives.

The Biggest Contribution Of Supply Chain Models To Humanity.

In fact, CEOs and executives think their globalized supply network will enable them to achieve very good results and respond to customer’s needs very quickly and effectively.

However, this cannot happen because of rigidity that is still present in their business, but they do not realize it. That is the reason why those who understand that are leaders in their markets.

This is how Apple became leader, outstripping Sony, Samsung, Nokia, and Dell.

To be better than your competitors, you must first have a look at your organization structure.

Is it rigid or flexible enough to be able to benefit from great supply opportunities thanks to your globalized supply network?

Can you act faster and more effectively than your competitors in the global market? Does your organization structure enable that?

If the answer to these questions is “no”, then you have to reconsider your structure first, before implementing any project. In fact, your business structure is the basis for all your decisions and strategies.

Simple Guidance For You In Supply Chain Models.

That is the reason why this is the first step in your evolution towards success.

Nowadays, supply chains are built across multiple countries and continents, and you cannot take the risk to keep a traditional structure. It is not adapted to new the supply chain models.

Although you are still selling a product to a customer, the process is very different from former businesses in the old business world.

New supply chain models involve new organizational structures. In the new organizational structure, the customer-centric model is based on customer’s needs obviously, which involve the sales team as a key player.

In fact, the sales team would be the basis for new organizational structures because they are the first people your organization needs to be able to create a satisfying product for your customers.

Then, Research & Development and Marketing are also two key functions of the modern structure. Finally, the supply chain, including procurement, production and logistics, represents the support base of the organization.

Consequently, the most important point to underline in this article is the importance of flexibility in new organization structures.

In fact, your supply network cannot provide the maximum results if you keep a traditional structure. They do not get along together.

New supply chain models imply new structures, and these modern structures involve flexibility in hierarchies and collaboration between the departments within the organisation.

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1. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, webinars, videos and training. You may have heard us say the same thing before.

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ABOUT THE PRINCIPAL AUTHOR

Today, Vivek and his partners are among 20-30 people on the planet earth who have this deep understanding of supply chain systems, practices and tools. CEOs, COOs, executives and Boards call them in most challenging situations once they know the full potential of supply chain based transformations. Following are key milestones in Vivek's journey:

  • Started in 1983 as a merchant navy cadet at 18 years age, worked his way to qualify as a Captain – qualified to take command of any merchant ship, worldwide.
  • Earned a top tier MBA from UNSW at the top of his class.
  • Joined highly regarded strategy consulting firm Booz Allen & Hamilton, consulting to the CEOs, Boards and senior management of global corporations within Australia.
  • To learn and specialise in supply chain – against all odds, sought out the co-inventor of supply chain in Germany and convinced him to be a partner in his firm, GLOBAL SUPPLY CHAIN GROUP, launched in January 2000.
  • More than 500 successful blue chip projects with high impact business transformations in large corporations using the full power of SUPPLY CHAIN MANAGEMENT.
  • 4 Seminal and path breaking business books IN SUPPLY CHAIN MANAGEMENT – these are available in bookstores and universities and libraries worldwide.

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THE 5-STAR BUSINESS NETWORK

If you are deeply passionate about the world of business and supply chain networks as I am, and enjoy digging answers to critical questions that will help build and steer your business with wisdom, then join me. This book is a journey of exploration through the world of business networks that run along the veins of today’s commercial world.

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OUTPERFORM OUTSOURCE OUTPROFIT

The trend of outsourcing continues to grow unabated with the whole gamut of services, from simple to mission-critical tasks. There is not a single company on earth that does not outsource anything. It is not just about cost arbitrage, it is also a finer expression of division of labour at the organisational level. Like all leverage, outsourcing is a double-edged sword too. On one hand, it allows you to do more, faster. On the other hand, if it goes bad, it can easily kill your business. If you do not believe that is possible – you can google the Fox Meyer saga from the 90s and see for yourself.

4.3
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UNCHAIN YOUR CORPORATION

Businesses Are Chained By Unseen Chains. If You Are Looking For Ways To “Unchain Your Corporation” A Successful Business Transformation Is Required.

Successful Business Transformations Are Difficult, Yet Rewarding.

Business Transformation Is Fast Becoming A Question Of Survival In The Modern Globalised Era.

Modern Supply Chains Integrate Businesses And Economies Faster By Systematic Information Sharing From Internal And External Sources.

Companies Can Multiply Profits By Progressively Ramping Up Cohesion And Collaboration Of All Moving Parts In B2B Network To Achieve Tighter Integration.

4.3
4.3/5

GREEN SUPPLY CHAIN – AN ACTION MANIFESTO

It is generally accepted that environmental consciousness is now changing to environmental proactiveness as organizations are discovering that it makes good commercial sense.

Boards are asking the management to review their policies related to environmental norms, not only to bolster their corporate social responsibility aims, but also because consumers are asking for greener supply chains

It is also widely agreed that consumers will increasingly prefer to buy more and even pay more for products or services provided in an environmentally sound manner.

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