Move beyond traditonal supply chains

Why Supply Chain Models In Outsourcing Have To Change

Why Supply Chain Models In Outsourcing Have To Change

The Latest Trend In Supply Chain Models.

In his book The 5-STAR Business Network (http://bit.ly/5-STARBN), Vivek Sood exposes the results of his researches on the organizational structure of companies. Companies used to follow the model of a traditional organization structure as in the following figure:

However, the global business world has changed and this structure is no longer adapted to current businesses.

Companies focus on customer’s needs, but their supply network cannot provide the expected results because of this organizational structure.

Master The Skills Of Supply Chain Models And Be Successful.

In effect, the problem about this structure is its rigidity. Relations between these people and departments within the company are not flexible enough, which limits the results.

Rigidity is responsible for the limited effectiveness of the organization. In fact, the supply network should be more flexible, which will help the organization to be more customer centric.

The traditional structure shown above is so rigid that it stifles customer responsiveness and innovation.

The main change that has made this organizational structure inefficient in today’s business world is outsourcing.

Everything You Need To Know About Supply Chain Models.

In effect, today’s globalized world involves outsourcing and bigger supply networks than before. This is what makes this rigid structure unadapted to current business realities.

Strict hierarchy and silo mentality of the different departments prevent companies from achieving their objectives.

In fact, CEOs and executives think their globalized supply network will enable them to achieve very good results and respond to customer’s needs very quickly and effectively.

However, this cannot happen because of rigidity that is still present in their business, but they do not realize it. That is the reason why those who understand that are leaders in their markets.

Supply Chain Models

This is how Apple became leader, outstripping Sony, Samsung, Nokia, and Dell.

To be better than your competitors, you must first have a look at your organization structure.

Is it rigid or flexible enough to be able to benefit from great supply opportunities thanks to your globalized supply network?

Can you act faster and more effectively than your competitors in the global market? Does your organization structure enable that?

If the answer to these questions is “no”, then you have to reconsider your structure first, before implementing any project.

In fact, your business structure is the basis for all your decisions and strategies. That is the reason why this is the first step in your evolution towards success.

Nowadays, supply chains are built across multiple countries and continents, and you cannot take the risk to keep a traditional structure.

Nowadays, supply chains are built across multiple countries and continents, and you cannot take the risk to keep a traditional structure.

New supply chain models involve new organizational structures. In the new organizational structure, the customer-centric model is based on customer’s needs obviously, which involve the sales team as a key player.

In fact, the sales team would be the basis for new organizational structures because they are the first people your organization needs to be able to create a satisfying product for your customers.

Then, Research & Development and Marketing are also two key functions of the modern structure.

Finally, the supply chain, including procurement, production and logistics, represents the support base of the organization.

Supply Chain Models Business

Consequently, the most important point to underline in this article is the importance of flexibility in new organization structures.

In fact, your supply network cannot provide the maximum results if you keep a traditional structure. They do not get along together.

New supply chain models imply new structures, and these modern structures involve flexibility in hierarchies and collaboration between the departments within the organisation.

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About the Principal Author of Outsourcing 3.0 - Vivek Sood

Vivek Sood - Author Outsourcing 3.0

Today, Vivek and his partners are among 20-30 people on Earth who have this deep understanding of supply chain systems, practices and tools. CEOs, COOs, executives and Boards call them in the most challenging situations once they know the full potential of supply chain based transformations. Following are key milestones in Vivek’s journey:Started in 1983 as a merchant navy cadet at 18 years age, and worked his way to qualify as a Captain – qualified to take command of any merchant ship, worldwide.

  • Earned a top tier MBA from UNSW at the top of his class.
  • Joined highly regarded strategy consulting firm Booz Allen & Hamilton, consulting to the CEOs, Boards and senior management of global corporations within Australia.
  • To learn and specialise in the supply chain – against all odds, sought out the co-inventor of the supply chain in Germany and convinced him to be a partner in his firm, GLOBAL SUPPLY CHAIN GROUP, launched in January 2000.
  • More than 500 successful blue-chip projects with high impact business transformations in large corporations using the full power of SUPPLY CHAIN MANAGEMENT.
  • 4 Seminal and path-breaking business books IN SUPPLY CHAIN MANAGEMENT – these are available in bookstores and universities, and libraries worldwide.

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