What is the right supply chain for your product ? is the question asked by Marshall L. Fisher in his article titled, “What is the Right Supply Chain for Your Product ?” published in March-April 1997 issue of the Harvard Business Review. Author raises the question stating the fact that new ideas and technology implemented haven’t lead to improved performance. Performance has not become better but rather in at least some cases, has worsened due to costs rocketing to unprecedented levels.
Based upon his ten years research on supply chain issues in diverse industries such as food, fashion, apparel and automobiles he devises a framework which will help managers to decide which supply chain would be best for them. It intends to help managers understand the nature of the demand for their products and devise a supply chain that can best satisfy that demand.
He argues that the first and most important step in devising effective supply chain strategy is to understand the nature of the demand for the products one’s company supplies. He found that if one classifies products on the basis of their demand patterns, they fall into one of two categories : they are either primarily functional or primarily innovative. Each category requires a distinctly different kind of supply chain. The root cause of the problem would be the mismatch between the type of the product and the type of supply chain. Functional products require an efficient process, on the other hand innovative products require a responsive process.
According to him, functional products are those which satisfy basic needs, such as food and gas. These products have long life cycles and predicable (usually stable) demand. Due to their stability, functional products attract many competitors who desire a share of the profits. Companies in order to avoid a decrease of their profits, have to gradually introduce innovative...