Complexity has been called the 21st-century supply chain (SC) challenge. Most SC managers view it as a necessary evil, ever-present, costly and tough to manage, and few prioritize it. Still, anecdotes suggest some leverage it to drive operational excellence. This study aims to explore how they do it, delving into the development of a complexity management capability, under what circumstances it emerges and its effect on competitiveness.
To better understand why, and how, companies develop (or not) a distinctive SC complexity management capability, this study employed an inductive study of 10 leading European companies, each operating a complex SC.
Although SC complexity raises costs, increases disruptions and makes decision-making difficult, few companies have made complexity management a priority. Among those, most focus on reducing or absorbing complexity to improve operational excellence. A few invest to develop a distinctive SC complexity management capability. They manage complexity for market success. The interaction among competitive pressures, managerial attitudes and investments delineate a dynamic capability development process.
Despite extensive research on complexity drivers, the tools used to manage SC complexity and the impact of SC complexity on performance, the interplay among factors that promote, or hinder, the development of an SC complexity capability continues to be poorly understood. By mapping the complexity capability development process, this study explicates a more nuanced approach to managing SC complexity that can yield a competitive edge.
SC complexity prevails because the dynamic, iterative complexity capability development process is overlooked. Managers can use the complexity capability roadmap to assess the cost/benefits of pursuing a distinctive complexity management capability more accurately.
This study demystifies the development of a complexity management capability, showing how some companies develop the capability to distinguish between value-added and value-dissipating complexity and thus become empowered to leverage SC complexity for competitive advantage.
