Miranda Nichole Gonzalez

October 3rd, 2022

Supply Chain Management
Summary

Summary: Can your supply chain deliver what your consumer wants?

In the world we live in today, it’s vital that companies evaluate their supply chain and

consider tweaking it or redesigning their operating models to ensure resiliency and agility.

Companies today face a whole realm of challenges, from quickly changing consumer

preferences in fast fashion to ever-increasing competition and the pressure of keeping a tight

hold on budget while maximizing market share. In fact, the pandemic has increased the

exponentially reinforced said challenges by forcing companies to adapt their operations as

customer re-evaluate their needs in times of such high uncertainty. In fact, companies have

responded in two separate ways, either by quickly re adapting their operating models in a

process of deliberate decisions or by surviving through isolated unplanned decision making.

Regardless, all if not most companies had to readapt their model to fit the organization’s needs.

All in all, for companies to survive and do well, they likely will need to re-evaluate their

supply chain models to ensure that they’re agile, responsive and resilient to quick changes in

the market. While there isn’t a single ‘correct’ model for all companies, some may need to

completely transform their operating models while other may simply implement some tweaks.

Nevertheless, at the bare minimum, most enterprises will have to acknowledge their strengths,

their objectives and opportunities across the entire supply chain in order to reach their ultimate

long-term strategic goals.

Miranda Nichole Gonzalez
October 3rd, 2022
Supply Chain Management
Summary

In terms of consumer preferences, even before the pandemic began, consumers

demands are high, they’re expecting products that are convenient, customized, cheap and

socially responsible. In the same token, besides having to face such drastic and strict demands,

new competitors are equipped with innovative business models, decreased prices and very

tailored brands which increases the challenges to operation teams of existing brands. While

advances in tech allow for facilitation of said challenges, discoordination and bad planning may

worsen existing problems like lacks in capability and poorly-coordinated internal processes. In

conclusion, supply chains today are under pressure to become more resilient and agile all while

staying faster and more flexible, granular and segmented, enabled by new technology and

talent, integrated seamlessly and being cost-efficient.

As mentioned earlier, organizations will be adjusting and making changes to their

existing operating models by incorporating better practices to respond more quickly to

uncontrollable and unexpected events (like the pandemic!). In essence, an intentionally

designed operating model is created for quick change, on clear priorities established from the

company’s aspirations and unique difficulties across the supply chain. By incorporating

flexibility to these supply chains it will require that companies balance scalability,

responsiveness, efficiency and standardization.

To get into the core of the article, there are three operating-models presented. It’s

important to note once again however that there isn’t one single ideal model for all
Miranda Nichole Gonzalez
October 3rd, 2022
Supply Chain Management
Summary

organizations. The right model will have to be selected by taking into account different industry

elements that inevitably lead to different answers and diverse levels of centralization. However,

all three models emerge from consumer businesses.

Firstly, the centralized operating model is on the basis of internal and integrated control

“of planning, procurement and manufacturing and logistics” of traditional business units and

acquired ones. In other words, one single executive has responsibility across the entire supply

chain, from beginning to end. Therefore, as brands are acquired they are integrated into the

greater company’s existing model and structure. This works ideally when business units in the

entreprise produce similar products or serve similar costumers. It allows high control and great

scale efficiencies. On the other hand, however, it may limit responsiveness to quick changes for

new trends.

Secondly, a decentralized operating model creates different supply-chain networks for

each business unit or geography. Within each business unit, leaders have the responsibility to

run their own supply chain as it may be necessary with full autonomy in decisions. Typically this

works well when companies sell different products or to very different customer bases or if

they have little need to coordinate activities across business units. The primary advantage is

that it allows for a quicker and more agile response to changes in consumer preferneces at

business-unit levels. However, the trade-off here is that the flexibility costs the expense of

standardization and efficiency.

Miranda Nichole Gonzalez
October 3rd, 2022
Supply Chain Management
Summary

Thirdly and finally, a hybrid operating model is one in which specific aspects are

centrally controlled while others are in the hands of the individual business units. Typically it’s

for companies that have highly dissimilar manufacturing technologies or have customer bases

separated by region. Since each company may decide which aspects are centralized and which

are delegated, key dimensions may be balanced for their needs. In other words, agility may be

increased while economies of scale are protected.

All in all, in order to select the correct operating model it’s vital that strategic outcomes

are met. In other words, the decision should not be simply based on high level objective but

also micro design considerations. Highly effective business models take into account long-term

business aspirations such as increased market share and growth. This considers innovative

technology such as advanced analytics and AI. Secondly, trade-offs must be evaluated against

design principles. In other words, executives should begin desining based on their most critical

principles and plan their models accordingly. Finally, maximizing responsiveness is necessary

because it encourages business units to change to market needs. To conclude, once again, not

all companies will need a complete transformation of their supply chain but should definitely

take into account implementing changes for good by fully evaluating their current process and

needs. Nevertheless, leaders must be pioneers of change to grow their organizations to the

limit and outperform competition.