Aiming Supply Cycle
Hau D. Lee
Cal Management Assessment Reprint Series
©2002 by Regents from the University of California
CMR, Volume forty-four, Number several, Spring 2002
Aiming Supply String
Hau M. Lee
upply chain supervision has come about as one of the significant areas intended for companies to gain a competitive edge. Taking care of supply restaurants effectively is actually a complex and challenging process, due to the current business developments of expanding product selection, short product life cycle, elevating outsourcing, globalization of businesses, and continuous advances in information technology. The Internet features contributed to the two increasing requirements and chances for increased supply cycle management. While using Internet, businesses in a source chain could be connected instantly with information and know-how shared continuously, new products and services could be designed to ﬁt special industry segments, and new source chain structures can be developed to provide customers towards a more direct manner.
Each time a company confronts the pressure of abnormal inventory, degraded customer service, increasing costs and declining proﬁts, or a poor return upon assets, it is supply string is out of control. On the other hand, each time a company goes in to fresh markets or new systems, it must have its source chain prepared for the brand new business issues and opportunities. Although there are numerous new supply chain principles and fads designed to take advantage of the advantages of the Internet, successful companies realize that the right source chain strategy is dependent on the number of factors: ▪ The strategy must be tailored to fulfill speciﬁc requires of the clients. ▪ A product with a secure demand and a reliable source of supply must not be managed in a similar manner as one with a highly capricious demand and an untrustworthy source of source.
CALIFORNIA MANAGING REVIEW
VOL. 44, NO . 3
PLANTING SEASON 2002
one zero five
Aligning Supply Chain Approaches with Product Uncertainties
▪ The Internet can be a powerful instrument for helping or allowing supply chain strategies for goods with different demand and supply uncertainties. Supply sequence strategies that are based on a one-size-ﬁts-all or a try-everything attitude will fail.
The Uncertainty Framework
A simple although powerful approach to characterize a product the moment seeking to create the right supply chain strategy is the " uncertainty construction. ” This framework speciﬁes the two key uncertainties encountered by the product—demand and supply. Fisher introduced the matching of supply string strategies to the best level of demand uncertainties with the product. 1 This article grows his construction to include supply uncertainties.
Demand uncertainty is from the predictability from the demand for the product. Functional products are ones that have lengthy product life cycles and therefore steady demand, while innovative products are goods that have short life periods with large innovation and fashion contents—and which, therefore, have very unpredictable require. 2 Style apparel, expensive computers, the most up-to-date integrated brake lines, and mass customized goods are examples of innovative items, while home consumable products, basic foods, oil and gas, and basic apparel are examples of functional products. Clearly, distinct supply string strategies will be required for practical versus progressive products.
Functional items tend to have significantly less product variety than innovative products, wherever variety is usually introduced because of the fashion-oriented mother nature of the item or the rapid introduction of recent product alternatives due to PHYSIQUE 1 . Demand Characteristics
merchandise technology breakthroughs.
Demand for useful products is definitely
much easier to outlook, while
with regard to innovative goods is
Low demand questions
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