Strategic Supply Chains
David Pyke, Associate Dean for the MBA Program,
Benjamin Ames Kimball Professor of the Science of Administration
Ten years ago, managers were just beginning to understand the challenges of global supply chains," says operations management expert David Pyke. "But with the advent of the Internet and supply chain management techniques, more companies are streamlining the flow of goods and information around the globe. At the same time, supply chains have become increasingly global as firms have aggressively pursued outsourcing. Now we're seeing remarkably successful companies challenge this thinking as they take a completely different approach."
The bottom line, Pyke believes, is that globalization of the supply chain isn't right for every industry or every company. If properly executed, it can create enormous synergies. But it does present limitations'like a loss of control and increased lead times'and problems, as companies must have relationships and systems that support coordination and win-win situations.
For participants working with Pyke, it's not about deciding whether the strategy is right or wrong; it's about making informed choices. "Start by looking at whether it plays to your core competencies," he says.
The point is simply illustrated by looking at two clothing manufacturers. One owns most of its supply and distribution channels and follows fashion trends. The other is more fashion-forward and marketing-savvy. The first company benefits from keeping manufacturing in-house and local, because doing so allows it to more quickly respond to the trends it's trying to imitate. Outsourcing globally makes sense for the second company, because it can find the highest quality and lowest cost producers in the world, and because as trendsetters its manufacturing doesn't have to be as responsive. Both companies can be successful if they stay true to a strategy that fits.
David Pyke is Associate Dean for the MBA Program and the
Benjamin Ames Kimball Professor of the Science of Administration at the Tuck School.
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strategic supply chains
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