Slide 21 of 22
Products are increasingly procured and manufactured to customer orders, rather than to replenish inventories. When combined with the globalization of markets, radically distributed supply chains result. For example, personal computers havecomponents and assemblies manufactured in the USA, Europe, Japan, Taiwan, Singapore, Hong Kong and other locations around the globe. Manufacturers assemble each computer to satisfy individual customer orders, and schedule production capacity and component supplies directly from this demand.
It is virtually impossible to keep track of supply orders distributed around the world, each with own lead time, mode of transport, lot quantity, etc., particularly when demand level and mix change continuously in response to customer preferences. The situation becomes even more complex when one considers the distribution of products to the literally billions of customers around the globe. Products of different suppliers are consolidated into shipments for long haul routes, and then burst and re-consolidated for shorter routes, until they eventually reach the target company or person. With the ability to order over the Internet, individual customers are likely to increase, putting greater pressure on distribution systems.
While this work may be delegated to shipping organizations with sophisticated tracking systems, a more comprehensive approach is required to manage these value networks.