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Jayashankar M. Swaminathan: Supply Chain Management
"All of a sudden, supply chains stopped working, and several companies, including automotive and high-tech companies, had to just temporarily shut down," said Jayashankar M. Swaminathan, professor and area chair of operations, technology and innovation management and an expert in global supply-chain management. Supply-chain management is the efficient management of the end-to-end process starting with design of the product or service and tracking and managing it through sale or delivery. The supply chain is comprised of all the entities involved in making this happen, from the designer to the raw-material supplier to the producer of the finished product to the person who delivers the final product to the customer.
"Supply-chain management has a tremendous impact on a company's return on investment," Swaminathan said. "When you are good at supply-chain management, you reduce inventories and increase your productivity: That means your costs go down. Assuming that you're charging the same price, that means your profits go up. At the same time, the assets that you have tied up in supply chain go down; so your return on investment increases, and your investment in assets decreases." Business 2.0 magazine recognized retail giant Sears, Roebuck and Co. as one of the companies that managed its supply chain effectively during the chaotic days following Sept. 11. Swaminathan has his own list of supply-chain stars, corporations that have mastered how to successfully manage a supply chain. Walmart, Dell, IBM and, in the online world, Amazon and Best Buy (also a traditional retailer) are companies from which other corporations can learn best practices, he said. "Supply-chain management is not easy; but once you get it right, it's very hard for competitors to catch up with you," he said. One of the tough lessons global companies realized after Sept. 11 is that although they may have had the backups for data, they didn't have the backups for processes, Swaminathan said. "Many companies were able to restore the data, but they didn't know the answer to the question, 'If our suppliers are not letting anything in for a few days, what will we do?'" he said. "I think people will pay more attention to the risks associated with the uncertainty in the process, and they will develop better strategies to manage those risks." In the past, companies have focused more on efficiency of the supply chain. In the future, they'll have to pay more attention to responsiveness, that is how supply chains respond to changes in the environment, Swaminathan said. "It could be a catastrophic event, a shutdown in factories or a sudden surge in demand," he said. "Industries such as high-tech and high-fashion have always had to deal with volatile demands and respond very quickly, while traditional industries such as consumer goods have paid closer attention to efficiency. "Now all companies will have to pay closer attention to both these attributes." Web Links to Articles:
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he terrorist attacks created a series of events that were temporarily devastating for the supply chains of many companies. Closures at airports, bridges and tunnels caused delays in the supply chain for weeks. For many companies, this need to pay closer attention to the complicated network involved in distributing goods from manufacturer to consumer was an eye-opening experience.
