Supply Chain strategies

Topics: Supply chain management, Supply chain, Inventory Pages: 37 (1265 words) Published: April 28, 2014
An Integrated Approach to
Supply Chain Strategy:
Combining Lean and Agile
Solutions
Professor Martin Christopher
Cranfield School of Management
Cranfield University
Cranfield
Bedford MK43 0AL
United Kingdom
Tel : 44 (0)1234 751122
Fax : 44 (0)1234 751806
E-mail : m.g.christopher@cranfield.ac.uk

Agenda







New competitive realities
Lean and Agile – what’s the difference?
Attacking complexity and waste
Improving on-shelf availability
Building a consumer-driven supply chain

A

2

New Competitive Realities

3

The changing marketplace







The ‘shift to thrift’ continues
The rise of the ‘promiscuous’ shopper
Declining brand loyalty
The importance of availability
Meeting the multi-channel challenge

A

4

Diminishing brand loyalty

“When I find a brand I like, I tend to stick to it”
% agreeing
76
74
72
70
68
66
64
62
60
1988 1989 1990 1991 1992 1993 1995 1996 1997 1998 1999 2000 2001 2002

Source : BMRB/TGI 2003

A

5

The ‘Commoditisation’ of Markets

“Price premiums have eroded and margins are
following suit. Consumers are 50% more price
sensitive that then were 25 years ago. In recent
surveys of consumer-goods managers, seven out of
ten cited pricing pressure and shoppers’ declining
loyalty as their primary concerns.”
Source : Leonard M Lodish and Carl F Mella
Harvard Business Review, July-Aug, 2007

A

6

The importance of availability

In mature markets on-the-shelf availability can
transform profitability both for the manufacturer and
the retailer.
Two thirds of all shopping decisions are taken at the
point-of-purchase.
Availability can overcome brand loyalty where the
shopper selects from a ‘portfolio’ of brands

A

7

Increasing pressure from retailers

• Focus on cost reduction in the ‘last 50 metres’
• Demands for shorter order-to-delivery cycles

• On-shelf availability is critical
• Customised solutions are increasingly required

A

8

Lean and Agile – what’s the

difference?

9

Dictionary definitions

• lean

:

“having no surplus flesh or bulk”

• agile

:

“quick in movement : nimble”

A 10

The origins of ‘lean’

Lean thinking emerged from the Toyota
Production System (TPS) developed in
the early 1970s. Underpinning TPS was
the objective of the reduction or
elimination of waste (“muda”).
It came to be associated with ‘just-intime’ manufacturing and standard processes with a focus on the reduction
of process variation through ‘Six Sigma’
methods.
A 11

Lean works best when……

● Volume is high
● Variety is low
● Demand variability is low
● Where supply chain risk is low

A 12

Agile or lean?

Hi
“Lean” works best in
high volume, low
variety and predictable
environments.

AGILE
Variety/
Variability

“Agility” is needed in
less predictable
environments where
the demand for variety
is high.

LEAN

Lo

Lo

Hi
Volume
A 13

The decoupling point

Lean

Agile

● Forecast at generic
level

● Demand driven
● Localised
Configuration

● Economic batch
quantities

● Maximise
effectiveness

● Maximise
efficiencies

Strategic
Inventory
A 14

Attacking Complexity and Waste

15

Complexity – a definition

• “Complex is the opposite of independent whereas
complicated is the opposite of simple.”
• “Complex systems theory studies how relationships
between parts give rise to the collective behaviours
of a system and how the system interacts and forms
relationships with its environment.”
Source: Wikipedia

A 16

Complexity impedes agility

• One of the biggest barriers to improving agility in
the supply chain is complexity.
• Complexity is also one of the major drivers of cost
in the end-to-end supply chain.

• Supply chain managers must become ‘complexity
Masters’ if the goal is to enhance agility at less cost.

A 17

What is the cost of Variety?

Volatility

%...
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