Don’t let your supply chain control your business

Don’t let your supply chain control your business

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In the past 25 years, major original-equipment manufacturers around the world have shifted to the Japanese tiered approach to supply chains. They’ve radically reduced the number of suppliers that they directly manage and off-loaded responsibility for supervising the rest, along with the task of building major subsystems, to a handful of first-tier suppliers. The attractions for OEMs were faster new-product introductions, larger volume discounts, reductions in the capital and risks associated with developing and producing the subsystems, and the ability to spend less management time on overseeing the multitude of lower-tier suppliers and more on building core competencies.

In the past 25 years, major original-equipment manufacturers around the world have shifted to the Japanese tiered approach to supply chains. They’ve radically reduced the number of suppliers


that they directly manage and off-loaded responsibility for supervising the rest, along with the task of building major subsystems, to a handful of first-tier suppliers. The attractions for


OEMs were faster new-product introductions, larger volume discounts, reductions in the capital and risks associated with developing and producing the subsystems, and the ability to spend


less management time on overseeing the multitude of lower-tier suppliers and more on building core competencies.