Is now the time to redefine what the supply chain is?

Posted on 10 Feb 2022 by The Manufacturer

Raam Shankar, Founder and CEO, Equitus Engineering and Design, discusses the pressing need to rethink what the supply chain actually means.

Typing ‘manufacturing supply chain definition’ into Google harnesses copious results and explanations.

Here’s what Oxford Languages, the provider of Google’s English dictionary, conveys.

‘The sequence of processes involved in the production and distribution of a commodity’.

A definition I prefer states: ‘the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through to their distribution and sale’.

‘Entire’ is the key word. Especially if everyone involved in the process is both bringing and adding value to it. What hasn’t sat comfortably with me for a good few years is the term ‘supply chain’, particularly when connected to the unwelcomed evolution of ‘just-in-time supply chain’ business models.

At Equitus we define innovation as ‘essential to survival, growth, prosperity and sustainability’. With manufacturing subject to ongoing innovation – amidst great challenge – from digitisation including artificial intelligence, optimising sustainability and the efficiency of logistics technology, perhaps the term ‘supply chain’ is no longer limited to what has too long been the convention.

Every value point connected to manufacturing ought to be included within the ‘supply chain’. And when I say everything, I mean everything. The people, agencies and organisations that are predicting the future of manufacturing must become part of the supply chain – data provision, connectivity and software providers to name a few.

Those who provide us with pertinent analytics and insights create paths we can follow. They are valuable to the industry as they allow us to make decisions that improve not just the performance of the organisation but the health of those who work within it.

When we talk about decisions being taken in the manufacturing world of today, many if not all are strongly influenced by streams of data which has been generated, transmitted and received.

With data there is no disagreement. And with good data comes the opportunity to make good decisions which are crucial as we walk into an era of value creation and value dispensation.

We live in a world that is more complex than ever and this makes me wonder about the word supply within the manufacturing chain. The problem is that the inherent presence of supply has a prerequisite that there has to be demand.

Bring true ‘value’ into the equation – into the manufacturing supply chain specifically – and you have a powerful entity that both creates and fulfils demand.

As an industry the time has come to redefine what the supply chain is. Any organisation that provides value to a manufacturing company, and to which customers upstream will be part of the new chain.

By replacing the word supply with the word value, you get two things. One, the people who are providing services get an immediate psychological boost. Two, people or a company at or towards the bottom of the supply chain, will go above and beyond the call of duty to offer value from their end.

Over the years I’ve too often witnessed a zero sum game while working for manufacturing companies. To explain further I’ve seen a mentality that plays out – ‘advantage to us’ and ‘disadvantage to them’. When this happens people end up working in close knit silos.

And that breeds miscommunication, lack of transparency, even dishonesty – a vicious cycle and polar opposite to value. Every time this happens a chance to provide further value has been lost.

Coupled with the unique moment we find ourselves in today – no longer an era of supply and demand alone, but of escalating customer expectations – we soon become aware that agility and the ability to embrace change is required.

Similar to net zero ambitions though, everyone has to play a part if it is to be realised. Take culture changes for example – within a company, a family, even an institution such as manufacturing as I like to call it.

When things change it is the culture change that happens last. And that is because, as people, we are used to being in our zones of comfort. We don’t always embrace changing our mindset. It is easier not to uproot ourselves from the zone of comfort and enter a new environment where it will likely take time to be comfortable again.

The problem is, unless we move out of our comfort zone, we will not be able to discover new things, let alone achieve new things. We will just be sitting in the comfort zone doing what we’ve always done. And if that happens where does change then come from?

The world outside is changing, the way people are buying things is changing. However, in order to keep up with that, the way we make things must change, and that change starts with the way we think about who we are and what we do and how we do it.

We have a unique opportunity to focus on decisions that will affect the supply chain and therefore the industry for the better in the long-term.

And it can start with a booster injection of simple change to a phrase. A term that we can even completely do away with. Maybe we can call the supply chain ‘the value stream’.

Five years ago GlaxoSmithKline (GSK) brought forward their value chain approach. It was the core approach to their business.

Sitting in its value chain was: purchased goods and services and sourcing of the raw materials GSK buys from other companies; operations and what GSK did in its labs, factories and offices; logistics and delivering medicines, vaccines and consumer health products across the globe; use of GSK products – both patients and consumers; And disposal of products by GSK, patients and consumers.

To me, this is a carefully considered long-term approach that minimises mismanagement within the supply chain. Everyone was involved, everyone was covered. And the focus? Value, from beginning to end.

In a growing global market and competitive ecosystem, mismanagement within the chain is the beginning of the end. Over the past 18 months – potentially due to the growth in home improvements – the term supply chain has become much more commonplace among those who had little idea about supply chains.

For manufacturers, supply chain disruptions have been tremendous challenges. Today we are looking toward what will hopefully be a mass industry investment required to bolster the speed and efficiency of product delivery.

With that in mind, now is an apt time to analyse what we are doing well as organisations and what we are not doing well. Our business models often require analysis but a deeper dive is crucial when it comes to identifying what it is that creates or hinders performance and efficiency.

By being granular in this process all points within the chain will be deemed valuable or valueless. Appropriate then that ‘a value stream’ or ‘the value stream’ could – and should – emerge.

Standards will be raised, a benchmark if you like. And it will be a move that enables everyone involved in the entire process of designing, making and selling commercial goods to play a valuable part. It’s simple but it is something that has the potential to bring profound change.

What do you think? Do you feel there is a desire to redefine what supply chain means for us as a manufacturing sector? And if so, what will we bring into the supply chain? How should we look at it? Should it include all service providers, not just material providers? Should it include everybody who provides a direct input into the making of a product? And should it then include the people who indirectly support the running of the business?

Either way, if we redefine this within our own organisations, and better still across the entire institution of manufacturing, I believe only better things will come. And better is always welcome. Better leads to more consistent value.

Raam Shankar, Founder and CEO, Equitus Engineering and Design Raam Shankar, Founder, Equitus Engineering and Design