Hailey College of Banking & Finance Lahore

June 30 - July 06, 2008

Recognition of the need of masses and finding a balance between responsiveness and efficiency is the key in achieving a strategic supply chain management system. In deciding where this balance should be located the planners concerned face many obstacles. Therefore, while initiating any planning the planners need to have a solid understanding of the impact of these bottlenecks because they are critical to ability to reap maximum benefit out of any policy implemented for the purpose. These bottlenecks include:

Increased Types of Differentiated Products: Product proliferation is rampant today. The customers demand more customized products, and consequently the suppliers of the products have come up with mass customization and segment-of-one view of the market. This increase in product variety complicates the supply chain by making forecasting more difficult. Increased variety tends to increase uncertainty, and increased uncertainty hampers both efficiency and responsiveness within the supply chain.

Decreased Quality of Products: One might wonder, but the food products also have Product Life Cycles but they are shorter compared with most of the Non-Food Products. Their life cycles can be computed in days and months rather than years. These are also not niche products either. This decreased life cycle also makes the job of strategic planners of supply chain very difficult, as the supply chain must be capable of adapting to new products standards, in addition to increased demand uncertainty. Shorter life cycles increase uncertainty while reducing the window of opportunity within which the supply chain can achieve best fit. Increased uncertainty combines with a smaller window of opportunity has put additional pressure on supply chains to coordinate and create a good match between supply and demand.

Demanding Customers: The masses now a day are also demanding improvements in delivery times, cost, and product quality. If they do not receive such improvements, they move on to new suppliers. All such qualities customers require at the same price they paid years ago! This tremendous growth in customer demand means that the supply chain must provide more just to maintain its business.

Fragmentation of Supply Chain Ownership: Vertical integration has become a trend over the last several decades. As the suppliers have shed non-core functions, they have been able to take advantage of supplier and customer competencies that they did not have before. With the chain broken into different parts with different owners, the coordination has also become very difficult. This has caused each stage of the supply chain to work for its own objectives rather than the whole resulting in the reduction of overall supply chain benefits.

Globalization: Supply chains today are more likely than ever to be global. It creates many benefits like sourcing from global base of suppliers. However, it adds stress to the chain because facilities between the chains are spread wider, making coordination more difficult. It has also increased competition, as once-protected local suppliers have to face competitors from all over the world. This situation makes supply chain more strain forcing them to choose trade offs more precisely.

Apart from above, in the 9th annual fields on wheels conference 2004 the following Bottlenecks have been pointed out for Grain Supply Chain:

Chronic Infrastructure Bottlenecks: Transportation infrastructure is long lived. As a result, capacity decisions have to be made with a look to the future of demand, as well as the ability to finance construction. Capacity can be altered by innovations in equipment and management, but are also affected by the level of maintenance or upgrading that occurs over time. While infrastructure is durable, it does have a finite life and must be reconstructed over time.

Seasonal Infrastructure Bottlenecks: Some traffic patterns are subject to wide variations that create temporary bottlenecks because the demand for service exceeds supply. With field crops, the seasonal bottlenecks can be exaggerated by Weather conditions that lead to an above average crop, or a more concentrated harvest period. Fluctuations in demand place economic stress on the system because equipment may not be fully utilized after the peak season. The availability of railcars to move grain is an example of a seasonal bottleneck that was mitigated by the public provision of equipment. This policy is now subject to change, and a farm group has stepped forward with a proposal to manage this publicly owned fleet.

Regulatory Bottlenecks: Since 2004, the ocean freight rates for bulk grain shipments on the Pacific exceeded the cost of shipping grain in containers. The growth of container movements is particularly important for identity preserved grains and special crops. These shipments have created demand for containers to be loaded on the Prairies, but the availability and costs of repositioning containers is a longstanding complaint. Customs regulations on the use of foreign equipment in many countries create bottlenecks that affect the competitiveness of farmers in many countries.