Grabbing the supply chain by the crust ...

You know it will happen, every time: you grab that slice of pizza by the crust; you give it a nudge with the knife in the hope of a clean cut; then, as soon as you pull away, the long cheesy strings start an endless struggle for which you have to send in an army of fingers to break them free.

Unfortunately, supply chain management can sometimes resemble this culinary battle. Buying a new business or divesting a division, often means dealing with complex strings that have been intertwined and compressed through countless optimisation projects. Logistics, warehousing, and transport are usually the prime candidates for supply chain rationalisation and the cost savings make it worthwhile. But when the business decides to 'sell off', it takes a lot of money to re-allocate the strings that were holding the chain together.

On a number of occasions with purchases over the past few years I know that special project teams have had to be set up to carry out the difficult integration of logistics and distribution.

A change of hands can also have major implications for sourcing and distribution. The difficulty with the 'strings attached' can lead to periods of unstable supply or erratic lead-times, all of which have costly consequences.

I agree with initiatives that will take time and costs out of the supply chain. But I also think that businesses must be fully aware of the resulting interdependence. I have seen situations where businesses would carry on suffering the poor performance of a supplier simply because their logistics were so integrated that it would have been too much hassle to take the business elsewhere.

That is why the design of your supply chain must remain as dynamic as the flow of material itself. With businesses constantly buying and selling divisions, your integration initiatives should aim to achieve more flexibility, as well as cost savings.

Hugh Williams​ is founder of supply chain planning specialist Hughenden >http://www.hughenden.net​.