2. CHAPTER 2 SCM - STRATEGIC FIT CUSTOMERS DEMAND PRODUCTS WITH DIFFERENT CHARACTERISTICS – Cost Customization Quantity Quality Speed Service Flexibility Features (C, Q, S, F) 2 These requirements can vary dramatically for customers and products. Consider some examples.
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4. SCM - STRATEGIC FIT ACHIEVING FIT - UNDERSTANDING: 1. THE CUSTOMER/PRODUCT REQUIREMENTS – CQSF 2 ALSO - IMPLIED DEMAND UNCERTAINTY 2. THE SUPPLY CHAIN - RESPONSIVE VS. EFFICIENT 3. STRATEGIC FIT - THE ZONE OF STRATEGIC FIT
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6. The Value Chain: Linking Supply Chain and Business Strategy New Product Development Marketing and Sales Operations Distribution Service Finance, Accounting, Information Technology, Human Resources Business Strategy New Product Strategy Marketing Strategy Supply Chain Strategy
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9. Impact of Customer Needs on Implied Demand Uncertainty (Table 2.1) Firm now has to handle unusual surges in demand Required service level increases New products tend to have more uncertain demand Rate of innovation increases Total customer demand is now disaggregated over more channels Number of channels increases Demand per product becomes more disaggregated Variety of products required increases Less time to react to orders Lead time decreases Wider range of quantity implies greater variance in demand Range of quantity increases Causes implied demand uncertainty to increase because … Customer Need
10. Levels of Implied Demand Uncertainty Low High Price Responsiveness Customer Need Implied Demand Uncertainty Detergent Long lead time steel High Fashion Emergency steel
11. Correlation Between Implied Demand Uncertainty and Other Attributes (Table 2.2) 10%-25% 0% Avg. forced season-end markdown 10%-40% 1%-2% Avg. stockout rate 40%-100% 10% Avg. forecast error High Low Profit margin High Implied Uncertainty Low Implied Uncertainty Attribute
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14. Understanding the Supply Chain: Cost-Responsiveness Efficient Frontier (Fig. 2-3) High Low Low High Responsiveness Cost BOSE RADIO DELL WAL-MART BARILLA
15. Responsiveness Spectrum (Figure 2.4) Integrated steel mill Dell Highly efficient Highly responsive Somewhat efficient Somewhat responsive Hanes apparel Most automotive production
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17. Achieving Strategic Fit Implied uncertainty spectrum Responsive supply chain Efficient supply chain Certain demand Uncertain demand Responsiveness spectrum Zone of Strategic Fit
18. Achieving Strategic Fit with Same Firm with Various Products PRODUCT LINE A CUSTOMER A PRODUCT LINE A - CUSTOMER B PRODUCT LINE B CUSTOMER B PRODUCT LINE B CUSTOMER A Implied uncertainty spectrum Responsive supply chain Efficient supply chain Certain demand Uncertain demand Responsiveness spectrum Zone of Strategic Fit
19. Achieving Strategic Fit Product Life Cycle Progresses/Competition INTRODUCTION MATURING COMMODITY Implied uncertainty spectrum Responsive supply chain Efficient supply chain Certain demand Uncertain demand Responsiveness spectrum Zone of Strategic Fit
20. Strategic Scope Suppliers Manufacturer Distributor Retailer Customer Competitive Strategy Product Dev. Strategy Supply Chain Strategy Marketing Strategy VERY LOCAL OPTIMAL BY OPERATION W/I LOCAL OPTIMAL BY FUNCTION FUNCTIONALLY OPTIMAL
Strategic scope must cover all boxes, at least at the supply chain end. Each stage must have fit across its vertical boxes and supply chain strategy spanning all players. This fit allows the countering of multiple owners and helps avoid local optimization.
Strategic scope must cover all boxes, at least at the supply chain end. Each stage must have fit across its vertical boxes and supply chain strategy spanning all players. This fit allows the countering of multiple owners and helps avoid local optimization.
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