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HAT IS THE Right Supply Chain FOR Your Product
HAT IS THE Right Supply Chain FOR Your Product
HAT IS THE Right Supply Chain FOR Your Product
INTRODUCTION
Technology & brainpower has not improved SC performance Framework to decide the best SC Consider nature of demand for product before devising SC strategy Match type of product and type of SC
STRATEGIC FIT
Consistency between customer priorities of competitive strategy and supply chain capabilities specified by the supply chain strategy Competitive and supply chain strategies have the same goals All functional strategies support the above
Competitive strategy
Defines, relative to its competitors, the set of customer needs a firm seeks to satisfy through its products and services
determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product
NATURE OF PRODUCT
Functional or innovative?
Functional
Innovative
SUPPLY UNCERTAINTY
Supply source incapability like Frequent breakdowns Unpredictable & low yields Poor quality Limited or inflexible supply capacity Evolving production process
Mix
Salt
Price
Customer Need
Physical function
Matching supply with demand Responsiveness More important for innovative products
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Respond to wide ranges of quantities demanded meet short lead times Handle a large variety of products Build highly innovative products Meet a very high service level Handle supply uncertainty
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COST-RESPONSIVENESS EFFICIENT
FRONTIER
High
Responsiveness
Low
12 Cost
High
Low
RESPONSIVENESS SPECTRUM
Highly efficient
Somewhat efficient
Somewhat responsive
Highly responsive
Ready-made garments
Dell
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Ensure that what the supply chain does well is consistent with target customers needs All functions in the chain must support the competitive strategy to achieve strategic fit
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Responsiveness spectrum
Efficient supply chain Certain demand Implied uncertainty spectrum Uncertain demand
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Functional or innovative
Efficient or responsive
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TYPE OF PRODUCTS
Attribute PLC Contribution margin Product variety Avg. forecast error Functional products (predictable demand) > 2 yrs 5-20% Low (10-20) Innovative products (unpredictable demand) 3 months to 1 yr 20-60% High (millions)
10%
1%-2% 0% 6mth-1yr
40%-100%
10%-40% 10%-25% 1day-2wks
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Innovative Products
Mismatch
Mismatch
Match
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Toothpaste
Functional cars
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Campbell soup
Continuous replenishment program EDI links with retailers Showed negative impact of price promotions viz. forward buying Everyday low price Improved service (in-stock availability) Improved efficiency (reduction of retailers inventory)
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Partners can interact to cut costs Get higher profits for the chain of price sensitive products Cooperation & competition? Share cost information
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Mass customization
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CONCLUSION
There is no right supply chain strategy independent of competitive strategy There is a right supply chain strategy for a given competitive strategy
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