Iron Man Musk can't solve the problem of the century, why is it so difficult to manage the supply chain?

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Why is supply chain management so hard?

How hard is the supply chain? Even Tesla CEO "Iron Man" Musk has posted on Twitter that "production, supply chain and logistics are too difficult!"

Can make "Ma Yilong" sigh uncertain, which shows that managing the supply chain is a porcelain job, and there must be diamond diamonds.

Today, let's talk about some of the key challenges facing supply chains and logistics. In other words, why is it so hard to manage it?

First, the lack of standards

In different industries, the supply chain has its own understanding, although everyone's goal is to reduce costs and increase efficiency, but the implementation has its own expression at the specific implementation level, so it is difficult for the supply chain to have a unified language, and it lacks a one-size-fits-all approach.

The SCOR model helped us unify our standards and cover as much of the supply chain as possible with six basic processes (Plan Planning, Source Sourcing, Make Manufacturing, Deliver Delivery, Return Return, Enable Enable), but now it seems that this methodology is more applicable to traditional manufacturing industries.

With the development of new formats and Internet technologies, there are more and more ways for suppliers to connect upstream and downstream, and the process at the operational level of SCOR is a bit out of step with the development of the times.

The new business model is also changing the supply chain, the same is to do exports, the previous name is foreign trade, sold to foreign customers can be, the other party may be a trader, a retailer, but not a consumer.

Cross-border e-commerce has changed the traditional model, can be sold directly to overseas end customers, the link has become shorter, and the challenges and opportunities have become more.

In the face of a large number of new models, the traditional model can not give a solution at once, there is no ready-made solution to learn from, and everyone can only feel the stones to cross the river.

There are many people who pay tuition in the process of groping, and eventually they will sigh that the supply chain is too difficult.

One of the biggest difficulties in the supply chain is that there is no standard, it is not like procurement, no matter what the industry, you can use the standard contract framework, it is not like sales, you can apply classic negotiation skills.

There are many participants in the supply chain, the scene is large and complex, and managers need to have a wealth of knowledge and skills, but also have strong capabilities to cope with the emerging challenges.

2. Information is opaque

"Do I still have inventory of the goods I want to buy online?" Answering this question is simple, open the app to see the number of treasures in stock.

But this is not the case on the to B side, and we may find that the information is very opaque. For example, I want to know how much inventory I still have in the customer's warehouse, and then I can make the next production plan, which sounds reasonable, right? But it's not that simple, and if customers don't share inventory data, we don't get the information.

There are two possibilities, the first is that they are unwilling to share, and the second is that they are unable to share.

First of all, look at the first case, the voice of participants in the supply chain is unequal. If the customer is a five-hundred-strong company in the world and much larger than us, even if we control the upper reaches of the supply chain, it depends on the customer's face.

Strong Party A is unwilling to share data for self-interest, we are helpless, and every party in the supply chain does not have the right to view data equally.

Then the second case, why can't you share the data? Or what is the difficulty of information transparency? All data is stored separately, and in every company's database, or in everyone's spreadsheet, there is no single supply chain database in the world.

If you want the other party to come up with the data, it may take him half a day to sort it out by hand, but the data is always updated, and the other party cannot always have time and energy to do this.

Although the current technology is very advanced, cloud technology can allow everyone to quickly access data, but this does not mean that all data is shared publicly.

Information is not spread throughout the supply chain, and it's hard to see the full picture of what's going on.

For example, U.S. ports have been congested for a long time, and although the containers on the docks have been cleared a lot, the next inland transportation is still delayed.

Containers can be stuck in a warehouse or train station yard, no one can tell exactly when the goods will be delivered to the customer's warehouse, and many times we can't see the real-time location of the inventory.

There are limits to how data can be shared. Parties in the supply chain often do not communicate in a uniform or standardized manner, which slows down the transportation of goods. The fragmented structure of the supply chain also makes the data flow fragmented.

The entire supply chain is end-to-end and contains many players. Supply chains span oceans and borders, each country has local regulations and policies, and different companies have their own operating models, all of which make it difficult to be transparent.

3. Uncertainty

There is uncertainty at every point in the supply chain. The first is the uncertainty of demand. As the variety of products increases, so do the choices.

30 years ago, the mainstream coffee in Shanghai was instant coffee, with only a few brands such as Nestle and Maxwell available. It wasn't until Starbucks entered China in 1999 that we didn't know there were so many coffees to choose from.

Shanghai now has the largest number of coffee shops in the world, with a total of nearly 7,000 and a high concentration in the downtown area. A large number of options disperse the consumer population, and as operators of the coffee industry, they face increasingly unpredictable demand.

Product life cycles are getting shorter and shorter, especially for consumer electronics. The popular cycle of mobile phones is only 12-18 months, and Apple's iPhone "thirteen fragrances" may not be fragrant in a few months.

Now that mobile phones have become a fashion product, more expensive FMCG, the product life cycle is getting shorter and shorter. So when forecasting demand, we will encounter more opportunities and challenges.

Another uncertainty comes from the supply side, that is, the source of raw materials. The production cycle has uncertainties, such as pork has a supply cycle, when the number of pigs out of the barn falls, the price will rise, to restore supply, you need to wait until the next supply peak comes. It can be said that there is uncertainty in almost every part of the supply chain.

It is often said that capital never sleeps, but how many people know that the supply chain is also non-stop? 20 years ago, after China's accession to the WTO, it gradually became the world's factory, and we are all part of the global supply chain.

The supply chain is 24X7 in operation, and it never stops. Supply chains span different time zones, and there is always someone to secure supply. The supply chain also needs to span different languages and cultures, so it faces numerous challenges.

These are three big challenges in the supply chain, which are why supply chain management is so difficult. So we have to keep learning and mastering the laws of the supply chain so that we can optimize our operational performance.

Author | Zhuo Hongyi

Source | Hony Supply Chain

This article is the personal opinion of the author and does not represent the position of the logistics salon