Speaker: Prof. Dr. David Simchi-Levi, MIT, Director of the MIT Forum
According to David Simchi-Levi, long lead times, unpredictable demand, and high logistics costs make it difficult to control a modern supply chain. In a study carried out by MIT and SAP, only ten percent of companies surveyed operated mature planning systems and business processes. However, their profits were 75 percent higher than other manufacturers. “They benefit from the high performance levels of their supply chain and consequently enjoy low inventory levels or shorter-term capital tie-up,” explaines Simchi-Levi in his presentation.
He goes on to say that, in order to be successful, companies need to look at the entire supply chain. Maintaining a narrow focus means that individual sections concentrate only on their own interests, without considering how partners are affected. Simchi-Levi comments that effective risk management can also optimize a supply chain and that strategically organized and positioned warehousing can reduce costs and delivery times. He goes on to point out that one-sided investment is clearly not sufficient. On the contrary, companies investing only in IT will fare worse than those focusing purely on their business strategies. “In the end though, success can only be achieved when both approaches are combined,” concludes the MIT professor.
