Letter from the Director

Economic uncertainty is a source of major challenges for supply chain management. But businesses can meet these challenges by adopting a more agile supply chain scheme and by applying certain key principles, they can quite survive and thrive.

The current economic context is causing a real change in the competitive environment. Organizations that have felt protected from competition in the past are now finding that they not only have to constantly create value for their customers, but at a lower price.

Meeting the challenge of service and cost reduction requires a radically different approach than responding to the immediate market. Experience has shown that significant brakes exist within the company and between its upstream and downstream partners, which prevent reaching the required level of reactivity throughout the chain. The role of a supply chain is now recognized as an essential axis of success and enabling more agile logistics which must constantly cope with change.

Organizations over the next few years will need to integrate a number of parameters, including:

• turbulent markets that change quickly and unpredictably,

• niche markets instead of the general public market,

• short product life cycles,

• growing demand for tailor-made products,

• customer demand for complete solutions, combining products and services,

and all of the above to achieve of course at a lower cost!

These challenges call for a new operating model. The key component here is agility: rapid, strategic, and operational adaptation to change. Agility involves responsiveness from one end of the chain to the other. It focuses on removing obstacles, whether organizational, technical or even cultural.

Be careful, agility should not be confused with the notion of “fairer”. The “fairest” is to do more with less. The term is often used in conjunction with Lean Manufacturing and implies a “just in time” approach. Many companies have adopted lean manufacturing but are far from being agile in their supply chain.

How does the supply chain achieve agility?

1 – Breaking down organizational barriers

Too many companies are hampered in their attempts to improve their supply chains by outdated organizational structures.

In the same way, “baronies” are still all powerful. The decisions made are based on a narrow definition of optimization. In other words, the emphasis is on improving performance in a function without taking into account its impact on the wider chain.

So factories or warehouses are built to maximize economies of scale rather than to increase flexibility.

2 – Transform the logistics chain into a value chain

The idea that companies should focus on their business is quickly gaining ground. This has resulted in a development of outsourcing. This trend has been particularly evident in multi-country organizations which have found that specialists are required to manage an increasingly large and complex supply chain.

Today the need concerns all sizes of companies whatever their market, New Caledonia is not immune to this trend, the need is proven.

To help them in this process, logistics providers are now working to extend the companies’ value chain.

In structuring logistics organizations globally, it is crucial to determine where value creation should take place in this chain. By working more closely with service providers, organizations can improve.

A source of benefits.

Managing global logistics requires a much more demanding level of agility and responsiveness than the old local manufacturing model for local demand. This is especially true in times of uncertainty.

Increasingly, companies will need to create business models that recognize that the competitive advantage is created by supply chain management as a single entity rather than fragmented.

Success will belong to companies that will adapt and be more agile than their competitors.

Yvan Exposito

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