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The first in a series of special reports on operations in business

Special Report

Creating the Optimal Supply Chain

http://www.bcg.com • http://knowledge.wharton.upenn.edu

Contents
Creating the Optimal Supply Chain
As global competition and advancing technology render borders irrelevant and link companies more closely, supply chains — the network of suppliers, plants, distributors, retailers and others that participate in the sale, delivery and production of goods and services — are growing increasingly complex. No longer simply the domain of the warehouse manager or logistics director, supply chain management is viewed by most companies as a mission-critical element. In this special report, experts from Wharton and Boston Consulting Group (BCG) discuss strategies for maximizing the value of supply chains, avoiding inefficiencies, managing the omnipresent risk of disruption, and evaluating the pros and cons of supply chain enterprise systems.

‘You Can’t Manage What You Can’t Measure’: Maximizing Supply Chain Value

1

Low-cost country sourcing, outsourcing, customization, globalization and more are adding tremendous complexity to supply chains across the globe. But even as companies are rapidly adopting supply chain management strategies in an effort to keep up, experts from Wharton and BCG report that many still lag when it comes to measuring how well they are doing, and balancing the trade-offs involved in keeping service levels high and costs low.

Avoiding the Cost of Inefficiency: Coordination and Collaboration in Supply Chain Management

5

The process of getting the right product to the right place at the right time at the right price — the traditional touchstones of supply chain success — remains a challenging and often elusive goal. According to experts from BCG and Wharton, two key supply chain elements that are often taken for granted — coordination and collaboration — can mean the difference between the merely functioning and the profitable when it comes to procuring goods and services from vendors around the world and delivering them to global consumers as fast and inexpensively as possible.

Flexibility in the Face of Disaster: Managing the Risk of Supply Chain Disruption

9

When it comes to global supply chains, the potential for disruption comes in many packages, from large-scale natural disasters and terrorist attacks to plant manufacturing fires, electrical blackouts, and operational contingencies such as shipping ports too small to handle the flow of goods coming into a country. Experts from BCG and Wharton say that managing supply chain disruptions revolves around two goals: first, to thoroughly understand the potential of identified risks; and second, to increase the capacity of the supply chain — within reasonable limits — to sustain and absorb disruption without serious impact.

Supply Chain Enterprise Systems: The Silver Bullet?

14

Supply Chain Enterprise Systems — information, communication and management technologies that support supply chain functions — have quickly become a central element of supply chain management strategy. But, implementing these systems is often a difficult undertaking with an uncertain outcome. For application of supply chain technology to be successful, experts from BCG and Wharton argue that certain elements need to be in place: namely, a clearly defined need based on supply chain strategy, as well as clear expectations about what such technologies can and cannot do for a company.

‘You Can’t Manage What You Can’t Measure’: Maximizing Supply Chain Value In the face of increasing complexity
in global supply chains, more companies are realizing that supply chain management (SCM) is a mission-critical element, and no longer simply the domain of the warehouse manager or logistics director. But even as companies adopt SCM strategies in an effort to keep up, experts from Wharton and Boston Consulting Group (BCG) report that many...
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