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Increasing Flexibility: Precipitating Supply Chains from the Network

This dispersion of manufacturing processes is just part of the story of network orchestration. The other part is the network itself and how it builds flexibility. The modularization and dispersion of the manufacturing process has created further opportunities. Instead of a fixed network of suppliers, as shown in the Boeing example, the possibility now exists to interchange different suppliers to increase flexibility and responsiveness.

In network orchestration, the network is the universe of suppliers from which a given supply chain is precipitated, as illustrated in Figure 1-2. If an order for 100,000 dress shirts comes into Li & Fung today for a delivery date four months from now, the best set of suppliers for filling this order with the right quality in the right time frame will be drawn from the broader network. But if the same order comes in a month from now for the same delivery date, it likely will be delivered by a different supply chain that can respond faster. The world changes a lot in a month. Customer expectations change. Supplier capacity changes. The best supply chain for each given order will be created individually based on the order itself. Li & Fung's network of 8,300 suppliers stands ready like the famous Qin terra cotta soldiers that guard the emperor's grave in Xian. A specific supply chain is called forth in response to the demand of the customer. Henry Ford told his customers, "They can have any color they want as long as it is black," the modern network orchestrator can make a much simpler claim: "You can have almost anything you want. Just say the word, and the supply chain will be created. We will build you a virtual factory from a network of suppliers to meet your need."

Figure 1-2

Figure 1-2 Networks and supply chains

The network orchestrator needs to think about building and managing this broader network, and also about designing the best supply chain from it to meet a specific customer need. In this sense, the network represents capacity, or potential energy. The supply chain harnesses that potential for a specific task. Network orchestration is concerned with both developing and managing the network, and designing and managing specific supply chains through this network. This is a new capacity that is essential for the dispersed enterprises of a flat world.

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