Occam’s razor is not enough

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The complexity of supply chains has increased over recent years alongside market globalisation and the resulting extended supply chains.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

A third of companies are operating more than ten supply chains – resulting in high costs, waste and reduced agility, according to a DHL Supply Chain study, which says the trend is a result of years of prolonged growth, merger and acquisition activity and globalisation which have transformed business operations but left supply chains in a complex underdeveloped web.

Close off the heels of DHL’s study is one from software supplier Iptor which found considerable agreement among logistics professionals on the need to reduce supply chain complexities, fine tune key performance indicators (KPIs) and offer a consistent customer experience across all channels.

The Iptor survey covered 500 logistics professionals from the UK, US, Australia, Benelux and Nordics participated in the research study, commissioned by Iptor Supply Chain Systems.

Three out of five of those surveyed said they now have a B2B2C fulfilment pattern, making customer experience and visibility more important than ever.

And 41 per cent of respondents said they believe there are too many KPIs to manage effectively. However, of the KPIs that are being managed effectively, 85 per cent said that they have some correlation or a strong correlation to the overall business performance.

The greatest challenges organisations have with their supply chain are its complexity (41 per cent), the balance between being cost-efficient and sustainable (38 per cent), and the traceability of products (36 per cent). Not only that, almost half (45 per cent) of the organisations said they struggle to handle reverse logistics returns.

DHL’s white paper “The Plug-and-Play supply chain: Beyond efficiency to growth” argues that the solution lies in the plug and play approach that standardises 70-80 per cent of supply chain operations at the core of a business. The balance then consists of tailored solutions to meet a segments’ specific market needs.

Report author Lisa Harrington said: “It’s no wonder that nearly 70 per cent of our survey respondents said they were now actively looking into standardisation solutions to reduce cost, inject agility and streamline operations.”

More than one author has suggested that it’s time to apply Occam’s razor, the idea that a simpler solution is better, to supply chain thinking.

The problem, of course, is that the trading environment keeps getting a little more complex.

No one can deny the importance of simplification – where is possible. But I suspect that in the immediate future, the ability to manage complexity will be at a premium.

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