Professional Documents
Culture Documents
1. The competitive strategy and all functional strategies must fit together to form a
coordinated overall strategy. Each functional strategy must support other functional
strategies and help a firm reach its competitive strategy goal.
2. The different functions in a company must appropriately structure their processes and
resources to be able to execute these strategies successfully.
3. The design of the overall supply chain and the role of each stage must be aligned to support
the supply chain strategy.
Strategic Fit – competitive and supply chain strategies have aligned goals
Implied demand uncertainty – resulting uncertainty for the supply chain given the portion of the
demand the supply chain must handle and attributes the customer desires
The cost-responsiveness efficient frontier curve shows the lowest possible cost for a given level of
responsiveness
3) Strategic Fit
Ensure that the degree of supply chain responsiveness is consistent with the implied uncertainty
Assign roles to different stages of the supply chain that ensure the appropriate level of
responsiveness
Ensure that all functions maintain consistent strategies that support the competitive strategy
Supply Chain’s performance in terms of responsiveness and efficiency is based on the interaction
between 6 logistical and cross-functional drivers of supply chain performance.
1) Facilities
2) Invetory
3) Transportation
4) Information
5) Sourcing
6) Pricing
Exercises
Average Inventory (I) = Average Flow Rate (D) x Average Flow Time (T)
The maximum rate with which the process can generate supply is called capacity of the process.
1. The number of flow units contained within the process is called inventory or work in process
(WIP). Keep this in mind when assessing the case of the Morrison Company!
2. The rate at which the process is delivering output is called the flow rate or the throughput rate. In
the motivating example, the throughput was 11 patients per day (10 hours per day).
3. The time it takes a flow unit (e.g., patient) to get through the process is called flow time. The flow
time takes into account that the item (flow unit) may have to wait to be processed because there
other flow units (inventory) competing for the same resources. In our motivating example, the
average patient takes about 2 hours to leave the hospital.
Remmeber Unit of Analysis when using the Little’s Law.
Inventory Turns
From a shareholder perspective, return on equity (ROE) is the main summary measure of a firm’s
performance