Industry Market Trends
Modern Manufacturing Supply Chain Success Requires Constant Vigil
January 21, 2014
The vertically integrated supply chain model borne from the manufacturing industries of the 20th century has long been recognized as a creature of very different economic and cultural conditions. In fact, the concept of supply chain management didn't take hold in the U.S. until the mid-1990s, and logistics wasn't defined as a profession by the Department of Labor until 2000. Today, open market conditions, a climate of international free trade, and the ever-evolving integrated global economy offer manufacturers broader access to materials as well as other dynamics of production. Where it used to be more advantageous for a manufacturer to make all facets of production proprietary, today's climate makes that business model costly, impractical, and inefficient. Some of the disadvantages inherent in a vertically integrated supply chain are:
- Dilution of core competencies
- Reduced efficiency
- Reduced flexibility due to increased bureaucracy and higher infrastructure investments
- Decreased capacity to support product variety.