Is Constant Change A Supply Chain Risk or a Supply Chain Reward?

A recent article by Noha Tohamy of AMR Research claimed that constant change was the buggest supply chain risk of all. (I assume she meant biggest, as otherwise it would just be a flea-sized annoyance and gnat worth discussing.)

Referencing a study that found that volatile fuel, energy, and commodity prices were the top three risks reported by companies last October, Noha noted how global companies faced a dilemma between the cheaper production costs and labor wages in China and other low cost countries and the high costs of transportation that result during periods of high fuel and energy prices and concluded that constant change must be the biggest supply chain risk at all.

I have to disagree. While volatile markets are a supply chain risk, which is sometimes only dwarfed by supplier solvency (which is probably the biggest risk these same companies are facing today as entire factories are closing up shop overnight without a warning in China) they are only one example of constant change.

Other examples of constant change are the constant improvements in supply chain technology, supply chain risk management processes, and supply chain finance. Today’s on-demand SaaS platforms, when adopted by your supply chain partners, can give you real time visibility into your supply chain and let you know where your order is at any time, anywhere. Improvements in scorecarding and supplier management practices can delivery higher quality products at lower costs. And modern supply chain finance methodologies, that include properly managed early payment discounts and buyer financing, can lower costs for all parties. I think these rewards far outweigh the risks of constant change in the supply chain.

What do you think?

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