Aligning Supply Chain

Aligning Supply Chain

1. Managing supply chains

   • Is a complex and challenging task, due to the current business trends of expanding product variety, short product life cycle, increasing outsourcing, globalization of businesses, and continuous advances in information technology
     • Strategies with Product Uncertainties
       • The Uncertainty Framework
         • This framework specifies the two key uncertainties faced by the product
           • Demand
           • Supply
         • Functional products
           • Are ones that have long product life cycles and therefore stable demand
         • Stable Supply
           • Is where the manufacturing process & the underlying technology are mature & the supply base is well established
         • Evolving supply
           • Is where the manufacturing process & the underlying technology are still under early development & are raidly changing
       • Changing the Uncertainty Landscape
         • Two kinds of strategies that improve supply chain performance through uncertainty reduction
           • Demand uncertainty reduction
             • Is more easy to work with the right column & in the lower row than the left & the upper row
           • Supply uncertainty reduction
       • Demand Uncertainty Reduction Strategies
         • Sharing of demand information and synchronized planning across the supply chain are crucial for this purpose.
           • Information sharing and collaborative replenishments up and down the supply chain are best facilitated by the use of the Internet.
       • Supply Uncertainty Reduction Strategies
         • Free exchanges of information—starting with the product development stage and continuing with the mature and end-of-life
           • Supplier hubs have also been used by manufacturers to reduce the supply risks of their manufacturing lines.
       • Supply Chain Strategies in the Information Age
         • Risk-Hedging Supply Chains
         • Efficient Supply Chains
         • Responsive Supply Chain
         • Information technologies and the Internet have played an important role in shaping such strategies.
         • Agile Supply Chains
       • The Right Supply Chain Strategy to Match Product Uncertainty
         • Given the different nature of demand and supply uncertainties of different products, different supply chain strategies are needed for different products
         • Functional Products with Stable Supply Processes
           • There are two dimensions of efficiency
             • Cost
               • Cost efficiency can be gained by productivity improvements, which in turn are the result of basic elements of manufacturing excellence, such as justin-time systems, automation, economies of scale, facility layout, and workflow streamlining.
                 • Eliminating steps in the distribution channel reduces costs.
                   • Cost efficiency can also be gained hy having a highly effective logistics system.
             • Information Coordination
         • Functional Products with Evolving Supply Processe
           • Risk-hedging
             • Here is where inventory pools can be most effective.
               • When supply processes are still evolving and therefore are faced with uncertainties regarding yield, process reliahility, supply source, and lead-time, companies must find ways to prevent such uncertainties from ultimately affecting demand fulfillment.
             • The Internet
               • The Internet can also be used to support risk-hedging supply chains.
                 • First, supply conditions can be shared quickly and accurately via the Internet, so that the downstream sites can use that information to plan accordingly.
                 • Second, the Internet enables a buyer to quickly identify alternative supply sources in the face of supply uncertainties.
                 • Third, the Internet, via market exchanges, can extend the reach of a typical buyer to suppliers from a global market,
         • Innovative Products with Stable Supply Processes
           • The cost of inventory for innovative products can be significant, since the product life cycles are short. Companies with such products should pursue strategies with a "responsive" supply chain.
         • Innovative Products with Evolving Supply Processes
           • Companies with innovative products and evolving and unstable supply processes have to utilize the combination of risk-hedging and responsive strategies.
             • The appropriate strategy here is to establish "agile" supply chains.