CISCOM through the Decades
In 2004, the first version of CISCOM was developed as The Supply Chain Primer, in response to the need for a dynamic and engaging training program in supply chain management. We are proud to see that CISCOM has met the expectation, which is evidenced by the fact that it is the only training program in supply chain management accredited by the American National Standards Institute (ANSI), a global mark of distinction.
Today, CISCOM training is accessible globally through the instructor-led online course, and also delivered locally through BRASI Affiliates. It is estimated that the demand for supply chain and operations management training will increase with time. CISCOM is poised to meet this requirement, and we will continue to serve the emerging needs of the businesses and professionals in the years to come.
Click here to view the downloadable CISCOM Brochure
CISCOM COURSE CALENDAR
CISCOM training is offered online from our US location for global participants, and in-class at our Affiliate locations. The online course consists of ten instructor-led sessions of three hours duration, conducted from 9:00 AM to 12:00 Noon New York Time, on Saturdays. In-class courses comprise five full days. Both formats include the same standard CISCOM Exam, which is conducted online from our US location and is proctored. Further details are available in our course brochure.
View the Course Calendar here
The next online course will begin on January 12, 2019 and end on March 16, 2019.
Click here to register
UPS announces Seattle-based cargo eBike pilot program
Collaborating with the city to reduce carbon emissions, UPS will be piloting use of electric bikes with modular containers, offering greater efficiency and flexibility.
Use of bikes will help reduce emissions, as well as traffic congestion due to double parking for delivery to side streets in city locations, where trucks cannot reach directly.
Supply Chain Complexity
Danish Mairaj, CISCOM
What is Complexity?
A complicated system, such as mechanical wrist watch, is formed of numerous components – in some cases as many as one thousand - that are linked to each other. But at the same time, the system is quite deterministic in nature. It cannot behave in an uncertain manner. It is certainly very complicated, but is also very easy to manage.
On the other hand, systems such as an economy or a subset of the economy such as an industrial supply chain can behave in a myriad ways (called modes) and can spontaneously change modes of behavior, for example from nominal to failure. These systems have another component in addition to the large number of interconnections – variability or uncertainty. With these systems, not only the number of behavioral modes increase, but the effort necessary to change modes can sometimes be counter-intuitively tiny in proportion. These systems have high complexity. Complexity, thus implies the capacity of a system to deliver surprises.
Highly complicated products do not necessarily have to be highly complex. It is also true that high complexity does not necessarily imply very many interconnected components. In fact, a system with very few components can be extremely difficult to understand and control. This brings us to one general purpose definition of complexity.
Complexity is a function of two fundamental components :
Structure. This is reflected via the topology of the information flow between the components in a system. Typically, this is represented via a Process Map or a graph in which the components are the nodes (vertices) of the graph, connected via links.
Uncertainty. The amount of variability measured in terms of uncertainty or entropy in the interactions between the components of the system.
Simple Supply Chain
A generic supply chain structure is as simple as Supplier, Manufacturer, Wholesaler and Retailer
A complex supply chain
More Complex Distributors & Warehouses Raw Material and Semi-Finished Products Suppliers Manufacturing Centers Consumers Material
Complexity is by choice, Complication is not
In its strictest sense, complexity does not mean complicated, but rather it describes a condition of inter-connectedness and inter-dependencies across a network where a change in one element can have an effect on other elements –often in unforeseen ways. Here we have particular “players” like procurement, production, distribution or sales, which do not work as stand-alone processes. The players are complemented by external factors like the market, customers and suppliers. Only by aligning these elements in the right way, will the product take a profitable course from producer to customer. A classic example is procurement aiming for low stock levels, while the sales department wants to guarantee a high service level for their customers.
Causes of Complexity
Contracts, Terms & Conditions, Arms-length relationships and strategic partnership, Global Aspects, Communication, political, cultural and economic aspects, regulations and barriers, tariff barriers and non-tariff barriers, Special economic zones
The following factors are reasons for SC complexity:
Numerousness is an undisputed indicator of supply chain complexity. Clearly the more variables that need to be monitored and controlled in a supply chain the more complex the operation is. Variables here could be the number of suppliers, parts, available inventory levels, number of workstations in an assembly line, orders received, orders completed, utilization rates of machines etc. One could also add the revenue generated as a variable.
Variety refers to the distribution pattern of each of the variables of interest. For example, job orders do not always come uniformly spaced as they could be seasonal swings. On the other hand one can imagine a process where the utilization rate of a machine is consistently at or near capacity all the time (!). A process which has a mix of these different patterns in the parameters of interest is clearly more complex.
The key to generating complexity in any field are the interactions between the different parameters. For example, the available inventory will affect the job lead time which will affect the utilization rates which will impact the revenue generated. But sometimes, there could be surprises among the interactions as well: you may find that the lead times not related to revenue, for example or you may find strange interactions such as a relationship between the utilization rates of one station with another which is not even in the workflow path. Obviously more interactions between parameters lead to a more complex supply chain.
The other facet about interactions – in addition to their existence – is the nature of these interactions. Typically one would expect say lead times to decrease with available parts inventory levels. But what is the exact nature of this relationship? Is it a downward sloping line? Is it a curved line? Maybe there are distinct zones of behavior across a range of inventory levels? This could be referred to as the “Opacity” of the parameter relationships. Opaque until made clear by analysis. A more complex process not only has more interconnections, but the nature of these interconnections could be distinctly non-linear or chaotic or worse, unknown.
Small perturbations at one end of the chain take some time to propagate through. While at the same time a small variation could magnify itself to a large swing at the other end. This is the so-called “bull whip” effect. A fundamental reason for this is lack of information on true nature of the product demand.
Besides partly contradicting goals within the internal supply chain, there are external factors which further complicate planning, such as fluctuating demand, changing customer expectations and higher cost pressure through increasingly globalized competition.
As globalization spreads even further, moving into new markets does not only unlock new customer groups, but also includes the factor of regional variability into the already complex system. Needless to say, new markets also mean new competitors, who are also fighting for market share.
Another factor driving complexity is the trend of online shopping, which is closely connected to increased customer expectations. Comparing online prices leads to a price war, and new delivery models lead to logistic challenges like same day delivery or multi-channel strategies.
On top of everything else, a strongly individualized customer demand calls for broad product ranges with many variants and a constant output of new products.
The development of the product life cycle with all consequences for the supply chain (and its complexity) can be described by the changes in the automotive industry. While the product life cycle in the 70s covered an average of 7 years, it shrunk to only 3 years in the 90s. Today, the models are substituted every 2 years.
Complexity in the global supply chain: the Boeing 787
The effects of complexity
The problem with complexity is not only that it is a significant driver of cost within a supply chain but that it also contributes to variability and uncertainty. Because so many of the interactions between agents and entities within a network can have a cumulative and combinatorial effect, it is not always possible to predict the impact of these interactions.
Complexity has two major effects. The first is an increase in the functionality of the system. Clearly if modern day big box retailers could not leverage global manufacturing and distribution capabilities, they would have none of their current advantages of wide reach, low prices to consumers and healthy returns to shareholders (at least during good economic times). No one would argue that the Wal-Mart of today is significantly more complex than the one started by Sam Walton several decades ago. The flip side of increase in complexity is that, left unchecked, growth in complexity can result at best in serious downswings in efficiency or at worst in catastrophic failures that may have consequences for the system and its environment. Examples abound today, and the quickest one could reach for is the effect of Chinese plant workers strike on the delivery of the latest Apple products and the accompanying public relations issues for the company.
Complexity is unavoidable
As products and supply bases become more complex, the task of managing these complexities and achieving the desired results becomes more challenging. Inability to manage these complexities results in lower performance throughout the supply chain. Thus, we can say that product complexity and supply base complexity are both "necessary evils".
Need for Reducing Complexity
Increasing globalization and demand for diverse product offerings puts supply chain complexity at an all-time high for many manufacturers and retailers. Some degree of complexity is inevitable, but too much causes a logistics double-whammy: increased costs and decreased efficiency. Companies are taking a hard look at product mix and processes to find ways to keep it simple
Seven types of supply chain complexity
• Network complexity e.g. too many nodes and links
• Process complexity e.g. too many steps
• Range complexity e.g. too wide a range
• Product complexity e.g. too many unique components
• Customer complexity e.g. too many service options
• Supplier complexity e.g. too many suppliers
• Organizational complexity e.g. too many levels and ‘silos’
Coping with supply chain complexity
• Deep customer insight to identify the things that customers value - the ‘order winning criteria’
• Supply chain processes must align with the value proposition
• Eliminate the complexity that customers will not pay for
• Exploit the complexity that customers value but seek to minimize the costs involved
• Use appropriate KPIs to ensure that complexity is a business priority
Structural vs Dynamic Flexibility
Dynamic flexibility is a reflection of the agility of the supply chain, particularly its ability to respond rapidly to variations in volume and mix.
Structural flexibility is the ability of the supply chain to adapt to fundamental change, e.g. if the ‘center of gravity’ of the supply chain changes, can the system change?
Moving from dynamic to structural flexibility
Gaining structural flexibility
• Investigate ‘local-for-local’ alternative to global sourcing and centralized manufacturing
• Focus on the ‘economies of scope’ rather than the ‘economies of scale’
• Create ‘bandwidth’ through asset sharing, e.g. capacity and inventory
• Adopt a ‘real options’ approach to supply chain decision making
Changing business models
• From vertical to virtual
• From stand-alone to network competition
• From lean to agile to ‘leagile’
• From dynamic to structural flexibility
BRASI ESSAY COMPETITION
Here is a chance to share your expertise with the professional community.
Submit your article for a chance to receive the USD250
Select articles are published in the BRASI Newsletter, which is received by the supply chain and operations management community world wide.
Entry Fee = None
Entry Deadline = 21st December 2018
Winner will be announced in the January 2019 Newsletter.
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Interested to be published? Contribute an article or feature for BRASI newsletter, having worldwide circulation in the supply chain and operations management circles.
Please contact Danish Mairaj, Managing Editor at firstname.lastname@example.org