The Outside-In Supply Chain

June 10, 2015

As supply chains extend globally, they become more complex. The flow of supplies, finished goods, and information are widely distributed, presenting significant challenges across a manufacturer’s entire supply chain network of customers, suppliers, and logistics providers. For success, companies need to gain visibility into this complex supply chain network to collectively sense and properly respond to changes in supply and demand.

Mergers & acquisitions activity, increased competition, wider fluctuations in the availability and costs of raw materials, reduced demand and supply predictability, and dispersed assets further add to the broad array of challenges manufacturers face when planning their operations. As a consequence, volatility is increasing, while predictability is decreasing.

Rapid responses and clear visibility into the supply chain are required to avoid costly mistakes. For example excess raw material stocks held at a time of falling raw material prices incur huge losses, putting a manufacturer at a disadvantage relative to better-prepared competitors. Alternatively, too low a raw material stock, at a time of increasing demand can leave supply shortages, causing an inability to manufacture sufficient product and losing customer demand to competitors who had better insight into changes in the supply and demand balance. 

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