When assessing complexity in the area of supply chain management, the central question is: What measures should companies take to manage supply chain complexity in order to enable profitable growth?

Almost one in twenty logistics and supply chain managers anticipate a less complex environment in the future. In comparison, the majority forecast a further increase in complexity within the logistics chain. However, the majority also see complex supply chains as an opportunity to realize competitive advantages over the competition. At the same time, many companies are failing to recognize changes at an early stage and take active measures.

Supply chain: differentiation between structural and dynamic complexity

An appropriate introduction to the topic of complexity management is to reflect on the company’s position with a focus on its own structural and dynamic complexity. Depending on whether you are in a simple or even highly complex system, appropriate methods must be selected to meet the individual challenges.

Using complexity as a competitive advantage

Complexity is largely associated with negative terms. However, successful companies have learned to use complexity to their advantage and further expand their competitive edge over the competition.

Successful companies not only differentiate between structural and dynamic complexity, but also between internal and external complexity. This results in a new cost-benefit analysis over time.

At present, the prevailing opinion is that complexity must be avoided or reduced and only allows a limited scope for action. However, this passive attitude means that internal complexity remains at its current level, creating a gap to external complexity. The company is no longer or only insufficiently equipped to deal with complexity!

The secret recipe: understanding and using complexity as an opportunity

In order to use complexity as an opportunity, a rethink is required. The advantage can be seen in the time advantage over the competition: companies that accept and use complexity achieve an earlier harmonization between internal and external complexity within the same period of time.

However, the individual level of both internal and external complexity can only ever be understood as a momentary state. Consequently, dealing with complexity is not a one-off matter, but must be pursued continuously!

Conclusion

Successful companies do not allow themselves to be unsettled by the prevailing complexity in the supply chain and consciously address the issue of complexity management. This proactive approach enables promising opportunities to be recognized at an early stage and used as a unique selling point ahead of the competition. The realization: complexity is not an obstacle, but a business enabler.

Further information on this topic can also be found under ‘ Complexity costs ‘ and‘Additional costs in the supply chain‘.

Image source: © Wassermann AG