Supply Chain complexity is something all professionals involved with supply chain can agree. There is a consensus that supply chain are complex, are getting more and more trough time and that complexity adds costs to operations.
So, professionals must look for ways to mitigate what is hard, difficult, or bad on concerning supply chains on their operations. But when we talk about supply chain complexity, its not just the problems that can occur, but elements that are involved.
Let’s understand better what complexity means and how to deal with it on a supply chain.
What is supply chain complexity?
Complexity is usually referring to something specific, such as characteristics of products or customers. On these terms, what is complex is the way to relate to them, which can lead to price distortion or deeper problems.
There is a lot of non-standard characteristics that will lead to complex issues on a supply chain. First, let’s look at products.
For products, you can think as unusual or non-standard characteristics points such as small batch sizes or long set-up times. Or even if the product has unique items so you can’t have any postponing or modularity.
Also, the product may require a special type of testing, resulting in delays of operation or necessity of including other partners on the process. The product may need extensive material handling and special vendors.
All of these factors will increase supply chain complexity as it makes harder for managers to deal with problems and uncertainties. But products aren’t the only factor that can present harder aspects. Customers also can increase supply chain complexity.
On a customer’s side, they may want customized products that are unique to them and demand very short lead time for those products. Also, they may require a strict period of delivery and make unpredictable orders.
Two other aspects that may increase the complexity of operations on customers side are extensive technical support and post-sales support. Those will lead to an over cost due to the time needed on each client.
So, supply chain complexity has a lot to do with the increase in costs that comes with specifications from products and customers. Managers must pay attention to details and find ways to deal with those points.
Complicated vs Complex
Complicated problems may be difficult and not necessary complex. Such tasks may have many detailed steps but usually follows known patterns and steps such as a recipe to be solved.
Complex problems are different because they are more emergent and harder to clearly define ahead of time. That happens because they are consist of many interdependent and interconnect components that interact in unpredictable ways.
You can look at complexity in two different ways:
- Detail complexity: large systems with many moving parts; Or distinct number of process or parts within the system, such as setting inventory levels for a lot of skews.
- Dynamic complexity: occurs as cause and effect aren’t obvious. And applying same methods doesn’t always result in the same outcome.
Basically, a system can be interpreted as complex if it has a large number of parts interacting with each other in non-simplistic and determined ways.
Supply Chain Complexity In sum
As we established, supply chains are complex organizations that require attention to each detail to find an optimized way to manage. A lot of aspects may increase supply chain complexity, such as the increase in the number of products or customers.
Also, the rising customers expectations in a modern scenario can lead to faster lead times and expanded products and services. Which will also impact how managers need to compose strategies.