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The Evolution of Supply Chain

Each one of us fit into one of the functions that combine to make the value chain of our businesses. Let us start by pondering over a few questions:

  • How do organizations become more competitive by increasing collaboration with suppliers and customer?
  • Where can End to End collaborative relationships in the supply chain help to eliminate business losses hidden in between functional silos?
  • How do businesses better link the supply chain strategy of the organization to its overall strategy to increase competitiveness?

Similar questions were probably first asked in early 1980s when more and more organizations were getting vertically integrated or concentrating on specialized businesses. This means, they were not owners of their supplies or raw material but increasingly dependent on external suppliers to provide them with quality materials at affordable costs.

If we look at the industry trends, then 80's was the decade of Quality, when the primary focus of the manufacturing industry was to ensure the quality of goods produced. The industry followed the norm of Total Quality Assurance (TQA). In the 90's the buzz word became Efficiency, when the focus shifted to making the most from existing resources. The industry adopted Total Productive Maintenance (TPM) to drive asset productivity and continuous improvement. The turn of century gave way to Real-Time Solutions wherein the end-to-end supply chain is synchronized and working to Plan, Source, Make and Deliver daily to fulfil what the customer requires, and Flow products and services seamlessly through the network to where they are needed.

The Traditional Supply Chain Model

"Supply Chain Management" as a term was first inked by Keith Oliver in 1982. Though, readers and scholars would mutually agree that as a concept, supply chain in management, has been of great importance since the beginning of 20th century, especially during the creation of the assembly line.
The traditional supply chain excellence model is shown in the chart above. In this model, the first level of capability and focus is the Factory set up involving the Manufacturing (Make) part, or often termed “World Class Manufacturing”. The second level of capability evolves to an Integrated Supply Chain including Plan, Source, Make and Deliver activities. Level-3 is the vision encompassing the Extended Value Chain, which considers the Technology and Product development aspects of the business portfolio, as well as the integrated supply chain constituents. Suppliers, Customers & Consumers also become an essential and integral focus for optimizing the whole value chain.
However, EFESO believe this traditional model is no longer adequate for today’s world. In this new era of agility and responsiveness, suppliers and customers have to be collaboratively involved from the very beginning to optimize and create new value from the end to end chain.

From Supply Chain to Concurrent Digitalized Value Chain

In this new Contemporary Age of Real Time where companies need to increase Agility and Responsiveness, it is not enough for Supply Chains to deliver Cost and Efficiency. They will have to go a notch above to deliver simultaneously Cost, Cash and Revenue benefits. Traditional “Siloed” Supply Chains must be transformed into synchronized Value Chains, engaging partners End to End from Suppliers to Customers, identifying innovative solutions to boost sales, while continuing to improve the cost & cash structure.
To support this “game changing” shift from a traditional Supply Chain into an End to End (E2E) Synchronized Value Chain, EFESO developed together with key industry leading companies a Concurrent Digitalized Value Chain (CDVC) progression model. It guides clients to assess their maturity level, performance and capability gaps, develop an integrated End to End Progression Plan containing a strategic, specific and systemic program of improvements that can be executed in tandem with the client.
End-To-End Value Chain Can Give Much Wider Visibility To Manufacturing As Well As Orders And Inventory.

Concurrent Digitalized Value Chain (CDVC) ...
from a layman's perspective

Before we introduce the CDVC model, let us try to understand the WHY behind the how and what. To make it as simple as it can get for an initial understanding, and without taking away anything from what a great concept that it is, we dissect the three terms that form - C-D-VC.

VALUE CHAIN (VC) - It constitutes all elements of the supply chain that are continuously working to create value with the customer. It can increasingly be seen as a network or eco-system with interdependent nodes, with a connected web of communications, information and processes. Any weak link can put the ultimate performance of the value chain at risk.

CONCURRENT (C) - The mathematical definition of concurrent states – “a set of three or more lines meeting at or tending towards one point”. So, a Concurrent Value Chain implies the advancement of capabilities and performance happening concurrently in sync across all functional domains and nodes in the value chain as opposed to the sequential, one before the other, traditional progression. At the operational and transactional level there will be many interactions and data flows being passed concurrently between the nodes and entities making up the chain.

Now, hold back and think for a moment - who / what can handle such a volume and complexity of concurrent interactions and information flows? Each node is receiving inputs from multiple sources, they are filtering and processing them, before communicating and passing outputs to other nodes and receivers. Making it extremely challenging and probably out of bounds for the human interventions to effectively manage and optimize the end to end flow. Hence, we introduce the critical enabler for real-time CDVC, that is:

DIGITALIZED - Creation of digital focal points that collect, filter and disseminate information to all nodes and stakeholders in real-time. Digitalized solutions can be set-up with the capacity and cadence required to handle the volume, flow and granularity of information used to manage and optimize the end to end value chain in a concurrent way.