Agility

Deepak J Sharma

In our globally connected world, the supply chain is the lifeline which effects every person in the population. From companies that are trying to reduce costs and increase profit, to consumers who want to get goods at the best price. The COVID-19 epidemic has demonstrated the fragility of the current supply chain, especially in the US. The most developed nation in the world is now largely dependent on other countries for its own material needs and at a great cost. In 2019, the USA imported US$2.57 trillion worth of goods, including computers, vehicles, oil, pharmaceuticals, medical apparatus, furniture, bedding, lighting, signs, prefab buildings, plastics, gems, precious metals, chemicals, and even medicine and medical supplies. It might, in fact, be easier to identify what the USA does not import!

The 9/11 attacks in 2001 cost the nation many lives, but also resulted in substantial damage to the property and Information Technology infrastructures of the organizations that suffered from the disastrous attacks. Many of the companies located in the Twin Towers did not have Disaster Recovery Plans (DRP), and in the absence of backup to fall back on, data and software were in many cases lost forever. As a result, every major organization today ensures that they have a disaster recovery platform, often located in another state or country. That is an expensive and time-consuming scheme to setup and maintain, but it has become the cost of doing business and ensuring survival, for no modern company can today transact without an IT foundation and a dependency on data and information systems.

In order to make and sell a product, a company must have a well-defined supply chain. Ironically, the tools and technology that help fine-tune and perfect the modern supply chain, have also rendered it fragile. A brief historical look at the evolution of the supply chain can help us understand why:

Local manufacturing & local consumption. Before the Industrial Revolution and globalization raw material production and manufacturing were in the same country, if not the same town. Goods would be transported using horses, or even manually. We had self-contained pockets of production to consumption.

Mass manufacturing & Globalization. Mass manufacturing was known as early as the mid-1700. But it was Henry Ford who popularized the concept of mass production in the early part of the 20^th century. In the early 1970s, manufacturing started moving to Asia for obvious reasons – lower cost.

" In order to make and sell a product, a company must have a well-defined supply chain. Ironically, the tools and technology that help fine-tune and perfect the modern supply chain, have also rendered it fragile. "

Lower, lower and lower Cost.  “Lower cost” became the new mantra. In the 1950s the British Motor Company created the concept of Just in Time (JIT) to optimize the cost of production and storage. This concept did not catch the world by storm until the Japanese adopted it in the 1970s. In a few short years it became a manufacturing must-have to reduce the cost of warehousing, transportation, and production. Raw material could reach a manufacturer or distributor days or even hours before they needed it. And mind you, the cargo travelled thousands of miles for a JIT type environment. Talk about risk!

Made to Order. Dell in the 1990s took JIT to a significantly higher level – Made-to-Order. Order your computer online and specify the configuration you want, and the order would be transmitted to the manufacturing plan and your computer would be assembled and shipped to you within days. Yet one more way to cut costs - Don’t make it until they buy it.