The four principles of 'breakthrough' supply chain thinking

Breakthrough Supply Chains is a book that seeks to help businesses leaders rethink supply chains to increase both profits and global benefits

An important new book about supply chain. Breakthrough Supply Chains is now available. It is a guide to rethinking and reinventing supply chains using breakthrough thinking, so that business leaders can benefit their organisations, the economy and the world

It is written by four distinguished experts in the field:

The following is the third edited extract ... 

Breakthrough thinking: The Four Principles

We define ‘breakthrough thinking’ as encompassing:

  • Innovative thinking and constructs
  • Structures and concepts that many consider but few deploy
  • Basic concepts of supply chain management that are ignored by too many executives 

Also, here are some key facts about supply chain, that must inform the narrative:

  • Supply chains have never been ‘global’. Rather, they are ‘international’ and ‘cross-border’. 
  • All supply chains are different from one another. One size does not fit all, in terms of capability, priorities, products, costs, speed and, of course, risk. Even companies in the same industry have different supply chains. 
  • Governments also have different supply chains and priorities, and they also often play a critical role in commercial supply chains.
  • Traditional design methods that assume a stable, reasonably predictable environment of continued growth have become outdated. 

Yet there are several concepts and practices that apply to most supply chains. Given this, we have outlined four critical principles and guidelines to breakthrough thinking.

1. Design end-to-end supply chains from the customer back and from suppliers forward

End-to-end supplies chains should:

  • Be based on a push-pull system that provides scale, customisation and response.
  • Operate within guardrails. Security is essential. 
  • Enhance the customer experience.
  • Focus on supplier financing and working capital needs.
  • Evaluate suppliers in terms of foreign ownership and relations. 
  • Use a variety of tools, including optimisation, simulation, and scenario planning. 
  • Identify where existing structure and suppliers can drive strategy.
  • Offer differentiated services for different markets, segments, and fulfilment models.
  • Leverage public-private partnerships to engage industry and academia, and ensure business continuity.

2. Develop an end-to-end data, knowledge and technology strategy 

This should:

  • Focus on data accuracy, timeliness, governance, and ownership.
  • Provide true end-to-end visibility and transparency.
  • Enable automatic adjustments
  • Support an analytics and measurement system that are both cross-functional and cross-organisational.
  • Eliminate the boundary between digital content and physical objects, to give competitive advantage.

3. Collaborate across functions and supply chain partners

Businesses should adopt a stakeholder perspective toward sustainability initiatives, while addressing the risks from a measured business perspective, with realistic and complete return on investment analyses.

Adapt redundancy and hedging strategies and develop a diversified portfolio of reshoring, nearshoring, and friend-shoring.

Reduce the exposure of materials that are concentrated in strategic competitors and / or adversarial nations.

4. Manage talent and knowledge 

  • Treat talent as an asset by crafting value propositions for hiring, retention, upskilling and reskilling.
  • Place employees in positions and projects that are interesting and challenging to them.
  • Educate employees on how the company operates and makes money

Note that these guidelines will change over the coming years years, to account for new realities and changes in technology, government actions, geopolitical tensions and strategic imperatives and will be driven by both competitive and societal pressures, national interests and priorities.

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