Aligning The Supply Chain Strategies With Product Uncertainties
Aligning The Supply chain
Strategies With Product
Uncertainties
Introduction
• Why Should We Align Supply Chain Strategy?
• Supply Chain Strategies in the Information Era
• Setting Up a Right Supply Chain Strategy to Match Product
Uncertainty
• Categorized products into two: Functional Product and Innovative
Product.
Two Types Of Risk
• Demand Uncertainty
• Based on Product attributes: Functional and Innovative.
• Supply Uncertainty.
• Based on Supply Processes: Stable and Evolving.
Demand Uncertainty
• Functional Products
•
•
•
•
Have stable Demand.
Long product life-cycle.
Low on product variety.
Volume per SKU is High so less stock-out cost.
• Innovative Products
•
•
•
•
Have short life-cycles with high innovations and fashion contents.
Highly Unpredictable demand.
Many different variety of products.
Volume per SKU is low due to uncertain demand and stock-out cost is high.
Demand Uncertainty Framework
How to Reduce Demand Uncertainty
1.Demand uncertainty reduction strategies
Sharing demand information and synchronized planning across the supply chain with the internet
2.Supply uncertainty reduction strategies
1. Free exchanges of information along with product life cycle
2. Early design collaboration
3. Supplier hubs
Supply Uncertainty
• Stable Supply Process:
• It is the process where manufacturing process and underlying technology are mature and the supply base is well established.
• Evolving Supply Process:
• It is the process where manufacturing process and underlying technology are under developing stage and changes rapidly.
Supply Chain Strategies
• Efficient Supply Chain
• Strategies aimed at Cost efficiency by eliminating non value adding activities and by pursuing economies of scale.
• Internet plays important role in Supply Chain integration.
• Risk-Hedging Supply Chain
• Strategies aimed at pooling and sharing resources in supply chain so that risk in supply could be shared.
• Single supply source is more venerable to disruptions
Strategies With Product
Uncertainties
Introduction
• Why Should We Align Supply Chain Strategy?
• Supply Chain Strategies in the Information Era
• Setting Up a Right Supply Chain Strategy to Match Product
Uncertainty
• Categorized products into two: Functional Product and Innovative
Product.
Two Types Of Risk
• Demand Uncertainty
• Based on Product attributes: Functional and Innovative.
• Supply Uncertainty.
• Based on Supply Processes: Stable and Evolving.
Demand Uncertainty
• Functional Products
•
•
•
•
Have stable Demand.
Long product life-cycle.
Low on product variety.
Volume per SKU is High so less stock-out cost.
• Innovative Products
•
•
•
•
Have short life-cycles with high innovations and fashion contents.
Highly Unpredictable demand.
Many different variety of products.
Volume per SKU is low due to uncertain demand and stock-out cost is high.
Demand Uncertainty Framework
How to Reduce Demand Uncertainty
1.Demand uncertainty reduction strategies
Sharing demand information and synchronized planning across the supply chain with the internet
2.Supply uncertainty reduction strategies
1. Free exchanges of information along with product life cycle
2. Early design collaboration
3. Supplier hubs
Supply Uncertainty
• Stable Supply Process:
• It is the process where manufacturing process and underlying technology are mature and the supply base is well established.
• Evolving Supply Process:
• It is the process where manufacturing process and underlying technology are under developing stage and changes rapidly.
Supply Chain Strategies
• Efficient Supply Chain
• Strategies aimed at Cost efficiency by eliminating non value adding activities and by pursuing economies of scale.
• Internet plays important role in Supply Chain integration.
• Risk-Hedging Supply Chain
• Strategies aimed at pooling and sharing resources in supply chain so that risk in supply could be shared.
• Single supply source is more venerable to disruptions