Question 4

A. Explain First Principle of Supply Chain First Principle -01: Segment Customers based on
service needs. Why and How Giant / Global Multinational Company Practicing this first
Principle of Andersen Consulting Firm.
Answer: The businesses and supply chain professionals understand customer’s needs.
Customers are divided into different groups called ‘segments’ in order to understand them
better. On the basis of sales volume or profitability, the primitive way to segment customer is
ABC analysis. It can also be done by product, trade channel and industry. Anticipating the
customer’s needs is also very important. Once the needs of the customers are anticipated, the
supply chain should be aligned to cater to the needs.
For example, in 2011 Amazon initiated a program called Amazon Prime (free 2-day shipping
and discounted 1-day shipping). Today, people are still discussing if this program makes sense.
But one thing for sure, customer turns to Amazon more and more. The morale of this story is
that you should “anticipate” customer’s needs as well.

B. Explain / Breakdown the Definition of Supply Chain Management - According to Your

own Understanding, setting a suitable Example (Flexibility given to you to have the
opportunity let me understanding your insights)
Answer: Supply Chain Management includes, planning, design, control and implementation of
all business processes related to procurement, manufacturing, distribution and sales order
fulfilment functions of a business. Thus, Supply Chain Management includes managing supply
and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and
inventory tracking, order entry and order management, distribution across all channels, and
delivery to the customer.

Example: Walmart and “Big Box” Retailers

Walmart succeeds by having fewer links in its supply chain, and buying more generic goods
directly from manufacturers, rather than from suppliers with brand names and markup. It uses
“Vendor Managed Inventory” to mandate that manufacturers are responsible for managing
products in warehouses owned by Walmart. The company is also is particularly choosy with
suppliers, partnering only with those who can meet the quantity and frequency it demands with
low prices, and with locations that limit transportation needs. They manage their supply chain
like one firm, with all partners operating on the same communication network. 
 
By buying at large enough quantities to take advantage of economies of scale, moving products
directly from manufacturers to warehouses, and then delivering to stores which are large
enough to be distribution centers, it reduces links in the supply chain and cost per item,
translating to low prices for consumers. 
C. “Monitor Customer Value Over time” – Why and give the explanation in Supply Chain
Context. Answer according to your group discussion
Answer: Demand to provide the optimal customer experience continues to escalate, and
companies must continually seek out better ways to deliver customer satisfaction and retention.
Many companies find that value-added logistics services help give their supply chain a
competitive edge. Here are some points where monitoring customer value over time helps
company to rise day by day.
1. Expand product offerings. From building gift baskets to creating twin-packs, value-added
services help give your customers more buying choices.

2. Get products shelf ready. Value-added services such as price marking, tagging, and display
building help to streamline the process of getting products on store shelves.

3. Manage inventory more efficiently. With the ability to customize products, you're able to
stock fewer SKUs, thereby reducing the cost of carrying and managing inventory.

4. Reduce the number of suppliers. By asking your existing partners to perform more value-
added functions, you can reduce the number of suppliers and streamline your supply chain.
Even materials such as cardboard for displays can be shipped to a third-party logistics (3PL)
provider to be built and sent out with customer orders to eliminate one step in the process.

5. React faster to changing business needs. With value-added operations close to the end
customer, you can delay product configuration until the last possible minute to respond more
accurately to customer demand.

6. Manage transportation costs. The closer packaging facilities are to manufacturing

operations, distribution centers, or end destinations, the more cost effectively you can transport
products.

7. Control labor costs. With automated solutions and careful review of supply chain processes,
value-added services can help eliminate downtime and reduce the number of touches required
in the packaging process—ultimately saving money on labor.
8. Ensure continuous improvement. If you team up with a 3PL, they can assist with process
reengineering, packaging needs assessment, component purchasing, and supplier evaluation to
ensure value-added services are delivering what customers demand.

D. Explain 3rd Principle of Supply Chain- Listen to signals of market demand and plan
accordingly…Why Do Nokia Fail in Android Smart Phone Technology. Why in Bangladesh
Aromatic Soap / Keya declined but Lux Still retaining “Customer” since Long.
Answer: The Third Principle focuses on cumulative forecasting. A single business involves
many departments like production, warehousing, sales, etc. It is of utmost necessity that
forecasting of market demand must be done at a cross functional level and not at an
individual department level alone. Each department must plan towards a common
operational goal for minimizing costs, cutting down inventory levels and maximizing profits.
Nokia was one of the biggest mobile phone company in the world but today’s date the
company Nokia has literally disappeared. Every phone they use to produce, use to be sold
out within few months. But today we don’t see Nokia in market due to lack of market
understanding and not been able to give what customer desire and also because of last of
supply chain. Customers needs changes with day to day and Nokia didn’t shift to android at
the right time and Customers demand for android increased and Nokia was the same it was
before. For which the market of Nokia fell and we don’t see Nokia any more in the market.
When we see soap, we think of good smell item by which we can take shower. As Aromatic
Soap/ Keya wasn’t able to provide the correct product for which the customer shift to
another company LUX which provided the correct product in the market and they had
proper stock up for which there selling rate increased and Keya’s market fell within few
years.