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What Is The Right Supply Chain For Your Product?
What Is The Right Supply Chain For Your Product?
Introduction
Nature of product
Conclusion
INTRODUCTION
STRATEGIC FIT
Competitive strategy
NATURE OF PRODUCT
Functional or innovative?
Functional
Stable,
predictable demand
Long life cycles
Low profit margins
Innovative
Uncertain
demand
Short life cycles
High profit margins
CUSTOMER NEED
SUPPLY UNCERTAINTY
Supply source incapability like
Frequent breakdowns
Unpredictable & low yields
Poor quality
Limited or inflexible supply capacity
Evolving production process
IMPLIED UNCERTAINTY
SPECTRUM
Predictable
supply &
demand
Salt at a
supermarket
Mix
Existing
automobile
model
Price
Customer Need
Highly
uncertain
supply &
Demand
New
communication
device
Responsiveness
9
Physical function
Conversion,
in SC
Efficiency
More important for functional products
11
COST-RESPONSIVENESS
EFFICIENT FRONTIER
High
Responsiveness
Low
High
Low
Cost12
RESPONSIVENESS SPECTRUM
Highly
efficient
Integrated
steel mill
Somewhat
efficient
Ready-made
garments
Somewhat
responsive
Highly
responsive
Most
automotive
production
Dell
13
14
of it
e
F
n
Zo egic
t
ra
t
S
Responsiveness
spectrum
Efficient
supply chain
Certain
demand
Implied
uncertainty
spectrum
Uncertain
demand
15
or innovative
or responsive
16
TYPE OF PRODUCTS
Functional
products
(predictable
demand)
Innovative
products
(unpredictable
demand)
> 2 yrs
3 months to 1 yr
Contribution margin
Product variety
5-20%
Low (10-20)
20-60%
High (millions)
10%
40%-100%
1%-2%
10%-40%
0%
10%-25%
6mth-1yr
1day-2wks
Attribute
PLC
17
Responsive
Primary goal
Lowest cost
Quick response
Modularity to allow
postponement
Pricing strategy
Lower margins
Higher margins
Mfg strategy
High utilization
Capacity flexibility
Inventory strategy
Minimize inventory
Buffer inventory
Supplier selection
strategy
Transportation strategy
18
Greater reliance on
responsive (fast) modes
Efficient
Functional
Innovative
Products
Products
Match
Mismatch
Mismatch
Match
Supply
Chain
Responsive
Supply
Chain
19
Move down
Move left
industry
industry
Toothpaste
Functional
cars
20
EFFICIENT SUPPLY OF
FUNCTIONAL PRODUCTS
Campbell soup
Continuous
EDI
replenishment program
Showed
Everyday
low price
Improved
Improved
EFFICIENT SUPPLY OF
FUNCTIONAL PRODUCTS
22
RESPONSIVE SUPPLY OF
INNOVATIVE PRODUCTS
Accurate
23
changes
As product goes through the life cycle, supply chain
changes from one emphasizing responsiveness to one
emphasizing efficiency
customization
24
CONCLUSION
There is no right supply chain strategy
independent of competitive strategy
There is a right supply chain strategy for a given
competitive strategy
25