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Design for supply (DFS) and supply-chain problems — Part 1: The need for change

Ensuring that a product finds its customers through its form and function delights them, and differentiating that product from competing products is a critical part of the design process. However, there are many other design requirements to include and balance that have nothing to do with form and function, and they also play a critical role.

Design for "x" where x stands for "everything," or simply “excellence” (DFX), is a valuable framework that encompasses all of these elements. It acknowledges that for a product to be available to end users, parts of it need to be sourced, manufactured/assembled, stored, shipped and distributed. As such, design is about connecting demand (form and function being an element of the concept of “Design for/to Demand”) and supply (“Design for Supply”).

Design for supply has been practiced, to some extent, for years by organizations. However, a repositioning is more critical now than ever. It is because we are now paying the hefty price of years of “Design for low(est) price.” Companies participated in the race for (hyper-)efficiencies that transformed supply chains into a global web of interconnected elements and planted the seed for (hyper-)fragility within it. Beyond shooting themselves in the foot, their overfocus on efficiencies also acted as blinders, making them oblivious to consequences for the broader ecosystem they operate in. And, today, our world (not just the planet, society at large) is facing significant challenges to cope with the consequences of that race. The effect of the Covid pandemic and the climate crisis are two examples of that. It isn’t a coincidence that this series on “design for supply” comes after our ESG series …

Therefore, it is urgent and imperative to look at design differently, and it is why part 1 of our series will dive into more details on what design for supply (DFS) is, why it matters in general, and more specifically why it’s important for procurement professionals. In part 2, we discuss how to move forward by acknowledging the challenges and identifying existing opportunities.

Then, in part 3, we will give concrete examples by looking at a specific industry and supply category: the automotive industry and the electronics supply chain, which is facing a global shortage of semiconductor chips. This case study exemplifies the general considerations we will touch on in part 1 and 2, and there is a lot to learn from it for other industries and/or categories, and also because it is a current topic.

The case study also illustrates what we're seeing from the most forward-thinking vendors in the direct materials sourcing subsegment, which is why part 4 of this series will focus on the technology aspects by looking at a couple of providers that offer specific solutions related to some elements of DFS and that can be of massive value for customers (not just in the automotive sector).

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