Supply Chain Design S1/E7: 10 Misconceptions in the "Make or Buy" Approach

Flexible supply chains: Advantage or risk?

Especially in machinery and equipment manufacturing, cost pressure - unlike in the past - forces companies to maintain a less vertical production structure. Often, only the final assembly is carried out in-house. This requires a sophisticated orchestration of many different production nodes that are distributed across the supply chain network and managed in detail by suppliers.

Due to this forced "Make or Buy" decision, competition arises at the capacity points within the project or order network, where other customers are also relying on "our" suppliers. This competition, along with the "savviness" of the suppliers, shifts priorities and strains the buffers in the carefully planned project.

This raises the question of whether the tools for modeling and orchestration capabilities meet one's own requirements and adequately serve the overall value creation.

What characteristics should a tool have to design and operate the supply chain network profitably?

• Flexibility: The supply chain network must be able to flexibly model different organizational structures (both internal and external).

• Status Communication: The network must quickly and intuitively convey the current status to decision-makers.

• Role Adaptation: The network must cater to the different roles within the supply chain.

• Web Architecture: It must technically follow a modern web architecture and be globally accessible. ​

• ERP Connectivity: The network must be able to connect with different ERP architectures.

• Learning Curve Adjustment: It must be able to gradually adapt to the different learning curves within the supply chain. ​

• IT Demand: The network should not place a significant burden on the IT department.

• Work Preparation: It should not only work with catalog items but must incorporate the respective work preparation within the network and enable overarching production and project management.

The scouts at catuuga have modeled this in practice and can demonstrate these capabilities, as well as transfer them to new tasks.

The use of these tools ensures that the supply chain network operates flexibly, efficiently, and profitably, while optimizing overall value creation.

While flexibility in the supply chain is considered beneficial, some argue that constant adjustments can jeopardize efficiency and stability. Is flexibility truly an advantage, or is it an underestimated risk? 

Discuss this interesting question with us in the forum HERE.