THE PLUG-AND-PLAY SUPPLY CHAIN: BEYOND EFFICIENCY TO GROWTH

Years of growth, merger and acquisition activity, changing customer markets and globalization have taken their toll on supply chains. “Instead of operating a concise set of ‘configurable’ supply chain segments, many organizations wrestle with a web of complex and overlapping or underdeveloped supply chains,” says Accenture in a recent report on supply chain transformation. “The reverse can also be true, where some organizations have standardized various supply chain segments to the point where they are no longer meeting customer requirements in the most efficient way possible.”

New research by DHL Supply Chain bears this statement out. In a global survey on supply chain standardization and segmentation, among the 350 respondents, 32 percent reported their companies operate more than 10 discrete supply chains.

Companies are realizing that operating with this complex web of one-off supply chains is unsustainable. It is high cost and full of waste. It is cumbersome and lacks the agility to respond to realtime market dynamics, and it exposes quality gaps and performance failures – all of which can leave companies vulnerable to the competition.

These realities have spawned renewed interest in streamlining supply chains through segmentation and standardization. But not the segmentation and standardization practices of five or 10 years ago. Thanks to advances in data analytics and visibility, organizations can create finely-tuned, agile supply chains built on intelligent, data-driven decisions around customers, markets and, importantly, profitability.

We call this emerging model the plug-and-play supply chain. Exploring the nature of this evolving strategy is the focus of this paper.

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