Supply Chains and shoes
Supply chains are all the activities a company does to deliver the finished product to the customer.
No one invented the supply chain. It just happened. Take the product to the market as fast and cheap as possible. But from its humble beginnings supply chains has grown into one of the largest enterprises we humans undertake. It is the flow of products, raw materials and information that keeps the wheels spinning. We have become quite good at making the supply chain more efficient, precise, and agile to change. Just consider all the activities it requires to bring those new nike shoes to your favorite shop. The shop wants them in time, hassle free – from China!
Good old Henry Ford realized that keeping stock and a lot of varieties didn’t make you successful. He is most famous for the assembly line but he also created a standard for the supply chain with no large warehouses and keeping everything in stock, tying up money and resources. Instead raw material flowed directly into the factory by train, truck and boat. He made sure that the factory had just enough material for the current day of production even using the packaging material (wooden crates) as flooring in the cars to minimize cost.
It’s just that simple. If you see a pile of something, it’s a cost. Money lying around, not working for you is bad. In a business you don’t want that.
The supply chain evolved one small step at a time. Companies came up with small cost saving techniques. The truck with all its flexibility made transports radically cheaper and more flexible. The next big leap then came from Japan with lean production. Lean production or “just-in-time”, as it’s also called, is the supply chain fine tuned to perfection. Simply put – Inventory is waste. Nothing is decided, ordered, moved or made unless a customer has started a ripple in the chain. It leaves the organization open to effectivisation since managers can’t hide flaws in production.
In essence things are good. Production has never produced so little unintended waste. Still we are getting aware that something is not right here.
The problems are the transports. Oil is becoming an expensive question without a cheap answer as of yet. How are we going to design the supply chains of tomorrow that solves this question?
