4.3. Five Strategies To Match Product Distretty
4.3.5 Strategies to match product uncertainty
As described in the previous sections uncertainty can have a huge impact on supply chain processes and its performance. Lee brought Fishers and his findings together and developed a framework that provides four strategies which considers uncertainties on demand and supply side (Lee, 2002): Figure 1: Product uncertainty (Source: Lee, 2002)
For products with low demand and low supply uncertainties companies should focus on improving the efficiency of its supply chain to gain competitive advantage.
As already mentioned this can be done by applying lean principles.
When supply processes are still instable and therefore companies has to consider uncertainties regarding supply source, lead time …show more content…
The entire supply chain has to be enabled to respond quickly on changing demand. This can be done by using agile principles and making use of postponement or decoupling concepts (Lysons & Farrington, 2012). The principles of postponement and decoupling will later be explained in detail.
A combination of risk-hedging and responsive strategies is recommended if a company has to tackle both, uncertainties in demand and supply. To hedge uncertainties in the supply suppliers pooling could be an appropriate way. To counteract uncertainties in demand postponement or decoupling approaches should be applied. In general an intra-organizational integration of all functions should be established to ensure information sharing through-out the entire supply chain.
4.4 Hybrid supply chain strategies
In the past lean and agile supply chain approaches has been seen as separate, incompatible concepts. But requirements of the market have massively changed.
Customer preferences are changing constantly and fluctuations in demand volumes are challenging companies as they want to provide short lead-times and high product availability to their customers at an reasonable price. Therefore, a combination of lean and agile approaches is often necessary to satisfy customer requirements. The term “leagile” is often used in this …show more content…
Chopra and Meindl (2013) provide a visual framework which allows companies to structure the right combination of three cross-functional and three logistical drivers. “The combined impact of these drivers then determines the responsiveness and the profits of the entire supply chain” (Chopra & Meindl, 2013, p. 55). Figure 2: Supply Chain Decision Making Framework (Source: Chopra & Meindl, 2013)
To understand in which area of the supply chain performance can be improved the logistical and cross-functional drivers has to be examined. These are:
Logistical drivers:
• Facilities - warehouse or storage locations or production sides
• Inventory: Stock of raw materials or finished goods
• Transportation: Moving of from point to point
Cross functional drivers:
• Pricing: Price of goods and services
• Information: Data and information regarding inventory, transportation, historical data about demand
• Sourcing: Functions a company performs and outsourced functions
Each of this driver must be fully leveraged if supply chain management can support the business strategy. Strength of each driver must be fostered and
As described in the previous sections uncertainty can have a huge impact on supply chain processes and its performance. Lee brought Fishers and his findings together and developed a framework that provides four strategies which considers uncertainties on demand and supply side (Lee, 2002): Figure 1: Product uncertainty (Source: Lee, 2002)
For products with low demand and low supply uncertainties companies should focus on improving the efficiency of its supply chain to gain competitive advantage.
As already mentioned this can be done by applying lean principles.
When supply processes are still instable and therefore companies has to consider uncertainties regarding supply source, lead time …show more content…
The entire supply chain has to be enabled to respond quickly on changing demand. This can be done by using agile principles and making use of postponement or decoupling concepts (Lysons & Farrington, 2012). The principles of postponement and decoupling will later be explained in detail.
A combination of risk-hedging and responsive strategies is recommended if a company has to tackle both, uncertainties in demand and supply. To hedge uncertainties in the supply suppliers pooling could be an appropriate way. To counteract uncertainties in demand postponement or decoupling approaches should be applied. In general an intra-organizational integration of all functions should be established to ensure information sharing through-out the entire supply chain.
4.4 Hybrid supply chain strategies
In the past lean and agile supply chain approaches has been seen as separate, incompatible concepts. But requirements of the market have massively changed.
Customer preferences are changing constantly and fluctuations in demand volumes are challenging companies as they want to provide short lead-times and high product availability to their customers at an reasonable price. Therefore, a combination of lean and agile approaches is often necessary to satisfy customer requirements. The term “leagile” is often used in this …show more content…
Chopra and Meindl (2013) provide a visual framework which allows companies to structure the right combination of three cross-functional and three logistical drivers. “The combined impact of these drivers then determines the responsiveness and the profits of the entire supply chain” (Chopra & Meindl, 2013, p. 55). Figure 2: Supply Chain Decision Making Framework (Source: Chopra & Meindl, 2013)
To understand in which area of the supply chain performance can be improved the logistical and cross-functional drivers has to be examined. These are:
Logistical drivers:
• Facilities - warehouse or storage locations or production sides
• Inventory: Stock of raw materials or finished goods
• Transportation: Moving of from point to point
Cross functional drivers:
• Pricing: Price of goods and services
• Information: Data and information regarding inventory, transportation, historical data about demand
• Sourcing: Functions a company performs and outsourced functions
Each of this driver must be fully leveraged if supply chain management can support the business strategy. Strength of each driver must be fostered and