When researching supply chain design for this blog post topic, I found an insightful and informative academic paper from the Institute for Supply Management. This paper “Supply Chain Design: A Necessary Core Competency to Build Sustainable Competitive Advantage,” written by Thomas A. Crimi, MBA, MAPA, C.P.M. and Ralph G. Kauffman, Ph.D., C.P.M., goes into detail on the definition of supply chain management, the importance of supply chain design, and the various steps necessary in designing a supply chain.
As we know from class, there are many different definitions for a supply chain, but Crimi and Kauffman define it as “an integrative approach to managing supply and distribution networks.” Further, they define a supply chain in terms of the competitive advantages it seeks to achieve for the company or organization it is associated with. Within the various competitive advantages are what can be considered the supply chain’s core competencies. As defined by Crimi and Kauffman, “core competencies can be defined as those activities that a firm does best and most cost-effectively, and which are central or ‘core’ to success in its business.” These core competencies are achieved through effective supply chain management and, more importantly, the specific design of the supply chain.
This is why Crimi and Kauffman assert that “firms don’t compete, supply chains do . . . how supply chains are designed will affect their ability to compete.” For example, a firm that is attempting to compete in a market where low cost determines who gets the business will have difficulty if it includes high cost suppliers in its supply chain. The characteristics of the end-market in which a firm is competing must be considered when designing supply chains.
So how are supply chains designed? What are the steps taken to design a successful supply chain? The first step is straight forward: “select a chain.” Decide where in the market you want to operate, what you want to sell, or what aspect of the already existing business model you want to improve/re-design. The next step is to “form a design team,” including stakeholders from inside and outside of the organization. Next, “map the chain as a team,” or, in other words, get everyone on the same page and reach a common understanding on what each member’s role is in the supply chain. After organizing and defining, the team must “determine supply chain performance criteria,” which can be cost, quality, time, reliability, flexibility, or other “specific product performance characteristics.” This is the critically important stage in the supply chain design process where the competitive priority is identified. Next, the supply chain management team must “analyze each step of the selected supply chain.” After analysis, the team must “evaluate the impact of changes from existing practice needed to perform each step in the supply chain as a whole.” Finally, the last step of the supply chain design process is to “reiterate the preceding process until the combination of practices that best meets the supply chain performance criteria is determined.” This last step echoes what we have already talked about in class as the importance of continual improvement and constant reevaluation.
What do you all think of Crimi and Kauffman’s paper? What part of the supply chain design process do you think is the most important? Is there anything you would add their design process?