| Supply chain management is a powerful management | | | | practice will through some light into non value adding |
| tool to win over competition. Well designed supply | | | | logistic tasks. Redesign of end to end supply chain |
| chain for different products will look different. Supply | | | | can improve logistic efficiency. WalMart, a pioneer in |
| chain for supplying pasta will be different from supply | | | | retail supply chain, ships stable demand products |
| chain for selling fashion jewelry or rushing airline spare | | | | directly to the store from its supplier thereby |
| parts. Supply chain for producing and delivering pasta | | | | eliminating expenses due to intermediate handling, |
| will be designed for productivity and efficiency. Supply | | | | inventory management and transportation. |
| chain for airline spare parts or offshore drilling | | | | When the supply side uncertainty is high, risk pooling |
| equipment will give utmost importance to timely | | | | input materials can help Inventory can be piled up for |
| delivery and availability at any cost. Nature of the | | | | low value input materials. Usually there is a risk |
| product, customer expectation, production method | | | | associated with creative or high-value parts. |
| and parts used are some of the factors to be | | | | Inventory can be pooled, shared and managed along |
| considered when designing a fitting supply chain. | | | | with other users if the inputs items are scarce high |
| Demand and supply side uncertainty are the key | | | | value items which are difficult to obtain in bulk. |
| determining factor when designing a supply chain for | | | | Maintaining substitute materials and alternative |
| a product. Well designed supply chain that suits a | | | | suppliers is a time tested tactic used to manage |
| product or category is a competitive advantage. | | | | supply side risk. Practise of allowing substitute parts |
| Product nature can be broadly classified as either | | | | or materials earlier during the design time is also a |
| functional or aesthetic. Functional products like pasta | | | | supply side risk management strategy famously called |
| have stable demand whereas demand for aesthetic | | | | as "Design for Supply Chain". Firms in the down |
| products like fashion goods is erratic. Innovative | | | | stream of supply chain use more custom parts to |
| aesthetic products enjoy high profit margins but at | | | | differentiate their products from their competitors. |
| the same time have seasonal demand and short | | | | Special attention is required to maintain uninterrupted |
| product life cycle. It is difficult to stock enough of | | | | supply of such custom made parts critical to product |
| each items from broader product portfolio but a | | | | differentiation. Various supplier relationship strategies |
| stock out of a popular item can tarnish brand | | | | such as controlling stake, partnership, future |
| reputation. On the other hand functional products like | | | | contracts and other supply hedges to secure steady |
| pasta or bread have predictable demand. Product | | | | supply of critical parts. |
| nature determines demand uncertainty which in turn | | | | Demand is unpredictable for items like fashion apparel |
| determines the nature of the supply chain. While | | | | and hi-tech gadgets. These products rarely face any |
| product nature lends demand uncertainty, supply side | | | | supply side uncertainty. Demand for items such as |
| uncertainty can emanate from multiple factors. | | | | fashion apparel, movie and books are known only |
| Uncertainty at the production stage can originate | | | | when the product reaches the store shelf. If the |
| form unpredictable yield or change in production | | | | market reception for new items is not good, excess |
| technology or change in process. Uncertain lead time, | | | | inventory is sold at a discount. Strategies such as |
| small supply base and weather are also some of the | | | | postponement, store level configuration, parallel |
| non-production factors that contribute to supply side | | | | features and Internet orders can help tackle excess |
| uncertainty. | | | | stock due to unpredictable demand. HP, a leading |
| When the supply side and demand side variations are | | | | consumer electronics manufacturer, tackled the |
| low, operational efficiency is the key to successful | | | | problem of uncertain demand for its high end printers |
| supply chain. Production intensive industries can | | | | by postponing the minor but important assembly |
| improve operational efficiency by optimizing the | | | | tasks to regional distribution centers. Generic products |
| production process and eliminating non value adding | | | | are customized just before delivery time to meet |
| activities. An important issue to keep in mind during | | | | demand for different types of same product. Reseller |
| supply chain design is visibility to actual demand from | | | | or dealer level configuration can be used to |
| end customer. Stable demand from end consumers | | | | customize products which are easy to configure. |
| may become lumpy and unpredictable to second and | | | | For low value items like self service manuals and |
| third level suppliers due to bulk ordering practice of | | | | warranty cards, printing and packaging in multiple |
| distributor and retailer. Supply chain planning becomes | | | | languages is an effective strategy for multi national |
| difficult when the demand is unpredictable. Trust | | | | and multi cultural supply chains. Opening online |
| based collaboration between the supplier and buyer | | | | channels may work well for items like music, video |
| for sharing real demand information is the solution for | | | | games etc. Apple iTunes site for iPod is a notable |
| avoiding demand lumping in the supply chain. Stable | | | | example. Dell's popular assemble to order process for |
| and even demand facilitates better demand forecast, | | | | PC manufacturing is a revolutionary example of |
| effective planning, optimum levels of safety stock, | | | | supply chain design for demand volatility. Products |
| better customer service levels, less waste and | | | | with variable demand and supply can use a |
| improved profit margins. Logistics is core to operation | | | | combination of above techniques. Collaborative |
| of distribution intensive firms. Firms in distribution | | | | demand forecasting with buyers and collaborative |
| intensive industries like retail and 3PL must focus on | | | | planning with suppliers can maximize the value of |
| improving logistic efficiency. Careful review of | | | | overall supply chain. |
| transportation, storage and distribution network and | | | | |