Managing Supply Chains in the era of turbulence

(Faizan Ellahi, Karachi)

Will the current models of supply chain be efficient in the coming era of turbulence

We are living in the era of turbulence and chances are more we will experience the more turbulence in near future because the world has now become so globalized,uncertain and complex.the uncertainties may arise form different sorts of areas where some areas are able to control and some aren’t. such as terrorism, natural disaster.the most important question which comes into mind. “Will the Traditional Supply chain models be suitable to meet the challenge of uncertainty?” of course not because these models were created under the assumption of stability. so what should we do in order to mitigate this risk. here are some approaches which can help to deal with turbulence

Approaches for dealing with turbulence
The concept of traditional Supply Chain were based on the dynamic flexibility which is not suitable for the uncertainty or to deal with turbulence. Hence there is a need to convert this concept into structural flexibility. The first step which should be taken is to really understand the sources of variability and built simple model that can help to mitigate the risk because there is a uncertainty there is a risk so let us go through these aspects in more detail.

Embrace volatility do not fight it
as we know uncertainty and turbulence create risk but here is the most important thing which most of them usually ignore is that risk provide opportunity. it is very difficult for us to change the uncertainty but what we can do is that we can manage the exposure of risk. In order to manage the exposure of risk first we will have to accept the turbulence . so do not fight but try to understand its impact. which would be possible when we will focus on the solution rather the problem.

Understand the nature and the impact of turbulence
Not all the firms are equally affected by the impact of turbulence therefore, top management should understand how changes in demand and transportation cost might affect the profitability of their Supply Chain structure. whether the demand should be met by outsource “surge” or produce in house what is the right way to go.

Challenge the economies of scale mindset
big is not always beautiful.. small scale facilities can also have a range of benefits. and Toyota is the good example of this. As kanji isshi formerly Toyota's head of the NUMMI plant in California, and now president of Central Motors confirmed that Central motors is being used as a experimental lab in which most of the researches is being made on how to work efficiently at small scale and they achieved astonishing result that central Motors produces one of the main model of Toyota which is know as Corolla. Toyota believe that if the production can be made on a small scale in Japan so it can be at any market as well. In other words we can say that Toyota Logic is simple “Local for Local” to produce the units that serve regional market with local product

These are the tips which can be helpful to mitigate the uncertainty. every risk comes with opportunity so we should try to find the opportunity which can turn the weakness into favorable situation. hence it is impossible to build the supply chain structure on the basis of single commodity price this new era demand us to think in different way with new mental framework in order to manage the supply chain in a turbulence.

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