Why a Dynamic Supply Chain is the Key to Profitability

Posted by Talent on February 27th, 2020

To view their supply chains as adaptable ecosystems of people, processes, assets, capital, technology, and data, businesses are moving from the “integrated” to the “dynamic” supply chain model. The present era is one of permanent volatility. This constant change is an integral part of today's business environment. It has created a situation that is placing unprecedented pressure on how businesses source, manufacturer, and distribute products.

Dynamic Supply Chain

The dynamic supply chain allows companies to take advantage of market conditions, giving them a powerful competitive edge. It empowers businesses to balance opportunities to drive new economic value and growth. Businesses in the dynamic model try for flexibility where it matters and focus efforts on operational agility that drives profits. The ultimate aim of businesses is not just short-term efficiencies but profitability.

Dynamic supply chains can meet the specific needs of every customer channel in unpredictable markets. As per reliable research, at present only 10% of companies are managing to have a resilient supply chain. This group is 75% more profitable on average than their competitors.

Steps to Dynamism

Now that we know that dynamic supply chains are essential for profitability let us understand how this can be achieved. The first thing that must be understood is that the process of transforming into a fully dynamic supply chain model needs to be tailored to the strategic needs of each business or a business unit.

Portfolio of Supply Chains

Defining the supply change within the organization is the first step a business should take. After alignment with the overall business strategy, segmentation in the supply chain based on product customer and geography needs to be done. Evaluation of each chain by functional area is the next step. This is done to define which characteristics are considered unique and which are standard.

To be successful supply chains must incorporate the following key capabilities, as the traditional linear value chain may not be able to respond efficiently and quickly enough to all the demands being placed on it.

• Agility

The dynamic supply chains of tomorrow need to be agile. They need to be dynamic and responsive to change in technologies and market conditions. For a competitive advantage and increasing profitability, plug and play business techniques, processes and systems as well as collaborative relationships between different partners within the ecosystem will help.

• Flexible Integration

Dynamic supply chain supports flexibility in forming new connections and forms of collaboration both within and outside the organization.

• Intelligence

intelligence is the key requirement if companies are to meet the expectations of different consumers quickly and without prohibited cost. Combining unstructured and structured data sources with actionable insights will allow companies to optimize and reconfigure the operations not only to deliver what its consumers want but setting themselves up for long term goals.

• Fluidity

When information and goods flow freely and efficiently to where they are needed most, the supply chain can be termed as being fluid. This, in the long term, adds to the profitability of the company.

• Visibility

A dynamic supply chain would essentially enable visibility. This implies a clear line of sight across operations. This enables a retailer to optimize logistics, cut costs and provide a higher level of service to customers.

To get a more global overview of why a dynamic supply chain is a key to profitability, supply chain management programs are recommended. Several institutions offer supply chain management online certifications. Some of the best institutions providing supply chain management programs online for working professionals are XLRI, IIM (Calcutta), IIM (Indore).