| The well publicised plight of manufacturing companies | | | | programme can therefore be tailored to suit the |
| in the United Kingdom has led to an ever increasing | | | | different supply chain requirements and so support |
| demand for reduction of internal costs and now, | | | | production needs and in turn the end customer in the |
| more than ever, the focus has been on the cost of | | | | most appropriate way. |
| supply chains. The nature of supply chains and their | | | | There are many tools and techniques available for |
| structure is however often overlooked, and many of | | | | improving overall supply chain performance, but few |
| the internal costs can be eliminated by examining the | | | | have been developed to help define a supplier |
| overall supply chain strategy. By developing a supply | | | | development strategy. |
| chain that reflects the needs of the internal | | | | One technique called 'Supplier Positioning' maps |
| customers, many of the previously unidentified | | | | customer perception of the risk and importance of |
| inefficiencies can be eliminated and subsequent | | | | its suppliers and also most importantly, the suppliers |
| performance improved. | | | | perception of the customer in terms of importance |
| There are three categories of product that can be | | | | and ease of business. This can provide useful |
| used to define the supply chain strategy for a typical | | | | information by identifying which suppliers are not likely |
| manufacturing company. Firstly there are the core | | | | to support supply chain improvements. For example, |
| products that are manufactured on a continuous | | | | many manufacturing companies will continue to |
| basis and form the bulk of production volume in any | | | | purchase relatively low volumes of parts from large |
| given period. Secondly there are products that are | | | | retailers, whose part cost, quality and delivery is |
| manufactured regularly to meet customer | | | | beyond the customer's control due to the supplier's |
| requirements or to satisfy a recurring demand, and | | | | perception of the customer being 'low value'. These |
| finally there are those products that are | | | | suppliers therefore have a disproportionate ability to |
| manufactured to specific customer requirements on | | | | detrimentally affect the manufacturing capability of |
| an irregular basis. The three categories are | | | | their smaller customers. |
| sometimes referred to as Runners, Repeaters and | | | | In improving the supply chain and creating the |
| Strangers. | | | | development strategy, 'Supplier Positioning' can be |
| There is an unquestionable link between the | | | | used to ensure that the integrity of supply will be |
| classification of these product types and the supply | | | | maintained by giving an understanding of how the |
| chain organisation that is required to support them. | | | | various suppliers view the customer and the degrees |
| Each classification requires a different supplier | | | | of interaction required to maintain good relationships. |
| strategy and stock policy in order to maximise | | | | This technique has an additional benefit in that it |
| inventory turnover. For example, replenishment | | | | identifies potential weaknesses or mismatches in the |
| systems such as Kanban may be highly applicable to | | | | supply chain relationships which, once highlighted, can |
| components used in the Runners group because of | | | | be resolved. |
| the rates of consumption but applied to the | | | | The application of product classification and then |
| Strangers group may introduce higher volumes of | | | | developing the supply chain to suit the production |
| inventory on long lead time parts. The selection of | | | | requirements can undoubtedly help identify the |
| the appropriate supply chain strategies will therefore | | | | strategic direction for supply chain improvement. The |
| lead to two distinct systems, one for the Runners | | | | resulting activities will not only develop a leaner supply |
| and one for the Strangers. The Runners supply chain | | | | chain but will introduce greater control of inventory |
| will tend to be highly efficient with a focus on | | | | and a better understanding of the needs of the |
| component cost, quality and the suppliers delivery | | | | internal customers. |
| performance. The Strangers supply chain however, | | | | There is an extricable link between the three main |
| will need to respond to the irregular customer orders | | | | influences within any manufacturing company. |
| and the focus will be more on supplier lead time and | | | | Identification of customer demand, production |
| the ability to meet these hard to forecast demands. | | | | capability and the flow of materials to satisfy this |
| The Repeaters are likely to incorporate both | | | | must combine with clearly defined parameters and |
| systems and require case by case decisions on which | | | | processes to generate the required output. Failings in |
| approach to follow for each component. The | | | | any one area will cause a domino effect that will |
| Repeaters therefore typically lend themselves to | | | | result in failure to deliver on time in full and ultimately |
| strategic stock holding which requires regular review | | | | unhappy customers. |
| but gives a defined capability for production. | | | | The rate of demand defines the requirements for |
| The classification of the products in this way | | | | capability and material flow but must never be |
| identifies the needs of production and in turn | | | | isolated or ignored as is often the case. Changes in |
| identifies the type of supply chain support required to | | | | demand or customer orders can only be fulfilled |
| achieve the desired output volumes. More | | | | efficiently by having a balanced circle. |
| importantly, and often over-looked, strategies based | | | | Each function in this model is dependant on the |
| on this simple analysis are more likely to support the | | | | others and must therefore work within the same |
| customers requirements. | | | | boundaries to achieve a common goal. The key |
| Having defined the groups of products and the styles | | | | therefore to reducing the inefficiencies in a supply |
| of supply chains required to support the differing | | | | chain lies in understanding and managing these |
| needs of these product groups, the supply chains | | | | relationships which is the start point for achieving a |
| themselves must be developed in accordance with | | | | reflective supply chain. |
| these needs. The resulting supplier development | | | | |