...What is the Right Supply Chain for your product? -Marshall Fisher Summary prepared by Sunny Bhambhwani for Great Lakes Institute of Management Chennai Need for the Right Supply chain Before judging the correct supply chain for your organisation, we first need to understand what a supply chain is. A supply chain is a system of moving a product/service from supplier to customer. It involves organisations, people, technology, resources and activities. Hence, a right supply chain would be the one that not only delivers the product/service to the customer, but also helps the producer match the demand of the product/service to his supply, thereby causing no excess or shortage of inventory. In the current competitive marketplace, a producer cannot afford to lose any customer due to unavailability of the product when the customer needs it, nor can he afford to bear excess cost for inventory surplus which might be unsold for a long time. Hence, deciding the right supply chain is of prime importance in the operational functioning of the organization. Types of products To judge the right supply chain, the producer first needs to identify his product as functional or innovative. A functional product is the one that generally satisfies basic needs, has a long life cycle and has a predictable demand. Basic commodities fall under this category. Due to the stability in the demand, competition is fierce for functional products and hence, producers tend to differentiate their product from...
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...A – Supply Chain Strategy The supply chain strategy chosen for the power tool company is a long term partnering relationship with few suppliers. The long term vision of the company is to make quality products and constantly stay ahead of the competition with innovation. The best way to accomplish this strategic long term goal is to partner with key suppliers that operate using a strategy of long term thinking based on trust and transparency. Ray Kroc was one of the pioneers on forming partnerships with the management teams of his suppliers back in 1955 (Vitasek & Manrodt 2012). Ray Kroc defined the McDonald’s supply chain partnerships with his suppliers as a “system” with everyone working together to drive costs out of the supply chain. This philosophy has proved tried and true for over 50 years and is what makes McDonald’s the successful company it is today. By partnering with few suppliers and building trust between the two organizations the customer and supplier can work together to better understand the drivers of the supply chain costs. There are many advantages of using a long term partnering supply chain strategy over some of the other strategies adopted by other companies. One of the major advantages of partnering with few suppliers is that you are able to build strong relationships with your supply base and both the supplier and customer grow the business together. One of Ray Kroc’s famous quotes was, “none of us is as good as all of us.” (Vitasek & Manrodt...
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...Task 3 Supply Chain Strategy by Daniel Alcaraz 11-7-11 A) Keiretsu Network: There are several choices of strategies we can adopt when we are talking about the supply chain of a company. The first strategy I would recommend and adopt over vertical integration or a virtual company which I will explain later is the strategy of a Keiretsu Network. It was founded by Japanese manufactures in which its part of a collaboration and part purchasing from suppliers and its also part vertical integration. The manufactures are major financial supporters of the suppliers through their ownership or loans. The suppliers become a major part of the company's coalition called Keiretsu. Any members of this network are assured long term relationships and are expected to to behave as partners and provide their expertise on quality production to the manufacture. Members can also have Keiretsu father down the supply chain which makes second and even third suppliers apart of this coalition. Finding the right strategy for our company will be the start of our supply chain strategy. The main three are the Keiretsu network, virtual company, vertical integration. All three have their advantages and disadvantages. An example of a Keiretsu network would be our company working closely with a supplier, such as a motor manufacturer but not necessarily owing their company. A virtual company is network of independent companies—suppliers...
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...Supply Chain Management Executive Decision The purpose of this business report is to guide the investors on the decisions they should make for designing and organizing their supply chain for their line of power hand tools, including electric drills, saws and sanders. This report will explore the option of using vertical integration as the supply chain strategy and they approach the investors should take towards operations management. Metrics, issues, organizational structure, and cost effectiveness will also be presented in this business report. The investor will have within this report also, the results that provide sustainable dominant competitive advantage to have the right amount of the right product in the right place at the right time. Supply Chain Management Supply Chain Strategy In any manufacturing business the first this to consider is the supply chain strategy that will effectively fit and grow with your business. In researching the right supply chain strategy for your business which is to manufacture and market a line of power hand tools, including electric drills, saws and sanders, the supply chain to be used is vertical integration. Vertical integration is “developing the ability to produce goods or services previously purchased or actually buy a supplier or distributor” (Heizer, Render, 426). Because you the investor choose to own and operate your own production facility and are also considering ownership of any other component of the products...
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...Supply Chain Management According to APICS, a supply chain is a “Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution and cash.” The Basic Supply Chain consists of three units….Supplier, Producer and Customer Four basic flows connect these entities together: 1. The flow of physical materials and services from suppliers to producer to customer 2. The flow of cash from the customer back “upstream” toward the supplier 3. The flow of information back and forth along the chain 4. The reverse flow of products returned for repairs, recycling or disposal.(This is called reverse supply chain and is handled by reverse logistics.) Value Chain (Vs) Supply Chain A Value Chain can be any series of activities that increases the value of a product or service as it passes through stages of development and distribution before reaching the end user. Supply Chain is but one part of value Chain. In basic terms, your supply chain consists of your suppliers, your customers and of course, yourself—the producer. Your extended supply chain adds your supplier’s supplier and your customer’s customers to create your extended supply chain. In order to maximize your competitive advantage you need to strengthen your whole supply chain (the extended supply chain) and turn-it into a value chain. Converting supply chains into value chains is a powerful strategy. Supply chains consist of weak bonds and can be broken...
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...for Supply Chain Leaders: Dell's Transformative Journey Through Supply Chain Segmentation Matthew Davis Faced with ever-changing customer needs, product commoditization, unique global requirements and new, low-cost competitors, Dell embarked on a three-year journey to segment its supply chain response capabilities. The company designed its supply chains based on a mix of cost optimization, delivery speed and product choices that customers value, while aligning internally across all functions to execute against this vision. Key Findings Dell's market and business strategies changed, requiring the company to move from a single supply chain to a customer segmentation supply chain approach. A unified, cross-functional business strategy with collaborative, decision-making processes across sales, marketing, product design, finance and supply chain is essential for segmentation. Segmentation is enabled by a cost-to-serve (CTS) methodology to dynamically allocate costs to business decisions, highlight net profitability and drive the right actions for each supply chain. Supply chain segmentation is a multiyear journey enabled by the development and alignment of organizational skills to the needs of the journey's different phases. Recommendations Start with segmentation of your company's customers and channels to understand the different demand rhythms and cycles. Focus on decreasing the time required to sense or shape changes to end-customer demand. Begin the design of your supply...
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...Research Publication Date: 12 November 2010 ID Number: G00208603 Case Study for Supply Chain Leaders: Dell's Transformative Journey Through Supply Chain Segmentation Matthew Davis Faced with ever-changing customer needs, product commoditization, unique global requirements and new, low-cost competitors, Dell embarked on a three-year journey to segment its supply chain response capabilities. The company designed its supply chains based on a mix of cost optimization, delivery speed and product choices that customers value, while aligning internally across all functions to execute against this vision. Key Findings Dell's market and business strategies changed, requiring the company to move from a single supply chain to a customer segmentation supply chain approach. A unified, cross-functional business strategy with collaborative, decision-making processes across sales, marketing, product design, finance and supply chain is essential for segmentation. Segmentation is enabled by a cost-to-serve (CTS) methodology to dynamically allocate costs to business decisions, highlight net profitability and drive the right actions for each supply chain. Supply chain segmentation is a multiyear journey enabled by the development and alignment of organizational skills to the needs of the journey's different phases. Recommendations Start with segmentation of your company's customers and channels to understand the different demand rhythms and cycles. Focus on decreasing...
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...going to discuss the issues of global sourcing. What things you should be taken considered and what are the pros and cons by purchasing the products from suppliers outside the North America. We know your corporate objective is GROWTH and your strategy is to focus in narrow and differentiate market. You can provide unique product mix that other competitors cannot. As your company growth, you need huge amount of SKU to meet your customers’ needs. And now, you found a corporate global sourcing initiative. Global sourcing is one thing that we all thought it will be beneficial to TSC in somehow. Let me analysis the pros and cons of purchasing products from suppliers outside the North America. * (Since you are expending your company, your customers will increase relatively. TSC might need much more products’ mix to in order to meet the customers’ needs. Now global sourcing helps. It can provide more diverse products from suppliers outside the North America. You may not need to worry about find the right product to your customers.) * (We assume your current suppliers who are within the North America also purchasing their products from suppliers outside the North America. If TSC purchases products from suppliers outside the North America, it will cut off the Middle-man’s who are the suppliers TSC currently dealt with which imply the cost of the products will decrease at the same time. But here, I am just saying the cost of the product itself, not including freight.) This two paragraphs...
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...Finding the Right Fit: Matching Product Development with Supply Chain Design 2/23/15 1 Finding the Right Fit: Matching Product Development with Supply Chain Design Impact of product design on supply chain design Mass Customiza@on SCM 450 S09 Closed loop supply chains Stenger Copyright 2009 2 DEMAND CHARACTERISTICS OF PRODUCTS FUNCTIONAL INNOVATIVE Aspects of Demand Predictable Unpredictable Product life cycle >2 years 3 mos. to 1 yr. Contribution margin 5% to 20% 20% to 60% Product variety low (10 to 20 variants) high (often in millions of variants) Average margin of error in forecasting at time of production commitment 10% 40% to 100% Average stockout rate 1% to 2% 10% to 40% Average forced end of season markdowns as % of full price 0% 10% to 25% Lead time required for make to order products 6 months to 1 year 1 day to 2 weeks Adapted from Marshall L. Fisher, “What is the Right Supply Chain for Your Product?” Harvard Business Review, March-April 1997, p. 107. SCM 450 F09 Stenger, Copyright 2009 3 EFFICIENT VS RESPONSIVE SUPPLY CHAINS RESPONSIVE EFFICIENT Primary purpose supply predictable demand at low cost respond quickly to unpredictable...
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...Supply Chain Management (Logistic features and challenges) Outlines: * History of logistics * Introduction to Logistics and SCM * Business Logistics * DISTINGUISHED PROBLEMS OF LOGISTICS * 3 Logistical Challenges Every Growing Business Must Overcome * WalMart * Conclusion History of logistics:- Logistics has been playing a fundamental role in global development for almost 5,000 years now. Since the construction of the pyramids in ancient Egypt, logistics has made remarkable strides. Time and again, brilliant logistics solutions have formed the basis for the transition to a new historical and economic era. Examples of this fundamental progress include the invention of the sea-cargo container and the creation of novel service systems during the 20th century. Both are integral parts of globalization today. Around 2700 B.C.: Material handling technology in pyramid construction. Blocks of stone weighing several tons were transported and assembled at the construction site. To build the Great Pyramid of Giza, which is 146 meters high and weighs 6 million tons, the Egyptians needed sophisticated material transport equipment capable of moving the massive building blocks and putting them into place. Even today, we still cannot fully explain how this level of precision was achieved using the hoisting equipment and means of transport available around 2700 B.C. Around 300 B.C.: Revolutionary Greek rowing vessels – the new foundation...
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...the importance of effective supply chain management in achieving organisational objectives * Explain the link between supply chain management and business functions in an organisation * Discuss the key drivers for achieving an integrated supply chain strategy in an organisation | 2 | * Evaluate the effectiveness of strategies used by an organisation to maintain supplier relationships * Use information technology to create strategies to develop an organisation’s relationship with its suppliers * Develop systems to maintain an organisation’s relationship with its suppliers | 3 | * Assess how information technology could assist integration of different parts of the supply chain of an organisation * Evaluate how information technology has contributed to the management of the supply chain of an organisation * Assess the effectiveness of information technology in managing the supply chain of an organisation | 4 | * Explain the role of logistics in supply chain management in an organisation * Evaluate procurement practices in an organisation * Discuss the factors that must be considered when improving logistics and procurement practices in an organisation | 5 | * Plan a strategy to improve an organisation’s supply chain * Assess how a supply chain improvement strategy will benefit overall business performance in an organisation * Explain how barriers will be overcome in an organisation when implementing a supply chain improvement strategy | ...
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...Development Page 5 ▪ Principle 7 Performance Pages 5 - 6 • Recommendation ▪ The Right Attitude Pages 6 - 7 ▪ Adapt to Changes Page 7 • Conclusion Page 7 • References Pages 8 - 9 Introduction In this assignment, we are to critic an article by Anderson D.L, Britt F.F and Favre D.J on their seven principles of supply chain management. To start off we must first understand what does Supply Chain Management (SCM) means, SCM simply means the managing of a product or service flow during its life cycle M. Rouse, (2010). The average understanding of a product or service flow is usually from the provider to the direct customers. However, there is more to the flow than we know. For example there is the “backward flow” from your first tier supplier to your second tier supplier and so on, also the flow usually does not end at your direct customers or in this case first tier customer, in some industry your first tier customers may be suppliers of product and services to your second tier customers. For example, your first tier customer could be a distributor to retailers, the second tier customers and in turn they sell to end users such as you and me who are the third tier customer Achilles (2013) using Apple as an example in Figure 1 as an estimate to explain such a supply chain map for mobile phones. Figure 1 Of course there are also many other factors in the SCM...
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...scp-uk.co.uk How Supply Chains Create Shareholder Value by Dr. David Lascelles, Supply Chain Planning UK Limited S upply chain management is no longer a boring Cinderella of the business world. Not since the mid-nineties when enterprises as diverse as Amazon, Cemex, Cisco Systems, Dell Computers and Zara started to create dominant competitive positions, build huge market capitalisations and delight their shareholders through the brilliant management of their supply chains. No, supply chain management has become a hot topic in boardrooms worldwide. The case histories of Internet retailer, Amazon; web systems builder, Cisco; PC giant, Dell; and Spanish fashion retailer, Zara are well documented. But Cemex, a Mexican cement supplier? Well, you don’t need to be in hi-tech or high fashion to reap the benefits of supply chain excellence. The effects can be just as dramatic for a commodity supplier. As a result of its supply chain performance improvement efforts, Cemex enjoys the highest value-to-sales ratio of the world’s six largest cement manufacturers. These enterprises represent just the tip of the iceberg. More than one study indicates that superior performing supply chains increase free cash flows – the key driver of shareholder value – by up to 20% on average. Supply chain excellence is a crucial engine of economic growth. And yet, even though it represents one of the most exciting opportunities to create value and build market share, the supply chain remains one of the...
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...Introduction A supply chain is basically a group of independent organizations connected together through the products and services that they separately and/or jointly add value on in order to deliver them to the end consumer while supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize systemwide costs while satisfying service level requirements. Supply chains can be triggered by product supply (commodities) or by customer demand (customized products). The degree of customization dictates how much and in which format the supplying company holds inventory: no stock at all, raw or basic materials only or sub-assemblies of their products as in the famous example of Dell computers. The strategies and associated decoupling of product supply from customer demand form a crucial part of supply chain management. Supply Chain Council has developed the supply chain operations reference model (SCOR) that depicts the broad spectrum of generic functional processes in the supply chain and shows that the functional processes of plan, source, make, deliver and return take place within every stage of the supply chain. When you start engaging in supply chain management, you will most likely be confronted with some of these questions: * How many products are you going to...
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...Licensed to: CengageBrain User Licensed to: CengageBrain User This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest. Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Licensed to: CengageBrain User Managing Supply Chains: A Logistics Approach, Ninth International Edition John J. Coyle, C. John Langley Jr., Robert A. Novack, Brian J. Gibson Vice President of Editorial, Business: Jack W. Calhoun Editor-in-Chief: Joe Sabatino Senior Acquisitions Editor: Charles McCormick, Jr. Developmental Editor: Daniel Noguera Editorial...
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