Logistics and Supply Chain Management, 4th Edition

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We have several times in previous chapters suggested that rather than refer to

supply chains we should talk instead about networks. The idea of a chain suggests

a series of linear one-to-one relationships whereas the reality is that the focal firm

lies at the centre of a complex web of interconnected and interrelated yet inde-

pendent entities.

Partly as a result of outsourcing activities that previously were performed in-

house combined with the trend to offshore manufacturing, many companies have

found that they have added to the complexity of their operations because the

degree of interdependency across the network has increased. Thus an event or

action taking place in one part of the network will often have unforeseen impacts

somewhere else in the network. The unpredictability of these events is heightened

by the growing volatility that characterises today’s business environment.

The well-known ‘butterfly’ effect seems to typify much of today’s supply chain

turbulence. The idea is that a butterfly, flapping its wings somewhere over the

Amazon basin, can cause a hurricane thousands of miles away! Whilst this exam-

ple of what is sometimes described as ‘chaotic’ effects may be a little far-fetched,

it provides a useful reminder of how the ‘law of unintended consequences’ applies

to today’s highly interconnected supply chains.

In April 2010 a previously dormant volcano in Iceland erupted, sending a plume

of ash into the upper atmosphere. A cloud of ash and debris from the eruption

began to drift across the skies of Northern Europe. Because of a concern for air-

craft safety most airports in the region were closed for the best part of a week.

Whilst there was a considerable impact on individuals’ travel plans – many thou-

sands of people were stranded away from home – there was also a less visible,

Complexity and the

supply chain

8

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The sources of supply chain complexity

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The cost of complexity

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Product design and supply chain complexity

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Mastering complexity