Professional Documents
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Learning Objectives
Define competitive and supply chain strategies Describe how a company achieve strategic fit between its supply chain strategy and its competitive strategy Understand the importance of expanding the scope of strategic fit across the supply chain Identify the major drivers of supply chain performance Define the role of each driver in creating strategic fit between supply chain strategy and competitive strategy Understand the major obstacles to achieving strategic fit
Managing supply chain flows and assets, to maximize supply chain surplus What is supply chain surplus?
Finance, Accounting, Information Technology, Human Resources New Product Development Marketing and Operations Sales
Distribution
Service
A company may fail because of a lack of strategic fit or because its processes and resources do not provide the capabilities to execute the desired strategy Example of strategic fit -- Dell
Less time to react to orders Demand per product becomes more disaggregated
Total customer demand is now disaggregated over more channels New products tend to have more uncertain demand
Predictable supply and uncertain demand or uncertain supply and predictable demand or somewhat uncertain supply and demand
Salt at a supermarket
High
Low
Cost
High Low
Responsiveness Spectrum
Highly efficient Integrated steel mill: production scheduled weeks or months in advance with little variety or flexibility
Somewhat efficient Hanes apparel: a traditional make-tostock manufactu rer with production lead time of several weeks
Somewhat responsive Most automotive production: delivering a large variety of products in a couple of weeks
Highly responsive SevenEleven Japan: changing merchandise mix by location and time of day
Responsive
Quick response Modularity to allow postponement Higher margins Capacity flexibility Buffer inventory Aggressively reduce even if costs are significant Speed, flexibility, quality Greater reliance on responsive (fast) modes
As the product goes through the life cycle, the supply chain changes from one emphasizing responsiveness to one emphasizing efficiency
Five categories:
The functions and stages within a supply chain that devise an integrated strategy with a shared objective One extreme: each function at each stage develops its own strategy Other extreme: all functions in all stages devise a strategy jointly Intracompany intraoperation scope (minimize local cost view)
Each stage of the supply chain devising strategy independently The resulting collection of strategies typically does not align, result in conflict Align all operations within a function
Intracompany intrafunctional scope (minimize functional cost view) Intracompany interfunctional scope (maximize company profit view) Intercompany interfunctional scope (maximize supply chain surplus view)
Sometimes can lead to conflict between stages of a supply chain
The different functions within a firm may have conflicting objectives Align all functional strategies with each other and the competitive strategy
Suppliers Manufacturer Distributor Competitive Strategy Product Development Strategy Supply Chain Strategy Marketing Strategy
Intercompany Interfunctional
Retailer
Customer
Information
Pricing
Facilities
Role in the supply chain the where of the supply chain manufacturing or storage (warehouses) Role in the competitive strategy economies of scale (efficiency priority) larger number of smaller facilities (responsiveness priority) Example: Toyota and Honda Components of facilities decisions
References
Chopra S. and P. Meindl, Supply Chain Management, 3e, Prentice Hall, 2008 Handfield, Monczka, Giunipero and Patterson, Sourcing and Supply Chain Management, 4e, South-Western, 2009 Cachon and Terwiesch, An Introduction to Operations Management, 2e, McGraw-Hill, 2009
Exercise
7-eleven case study