What is the Right Supply Chain for your Product?
Summary:
With today’s advances in technology, it is assumed that supply chains would be fast performing
and well-oiled operations. Unfortunately, that is not the case in our world. In this article, Fisher
explains the reason for these poor performing supply chains. Fisher suggests that many
companies do not know how to frame their supply chain. Fisher stresses the importance on
framing the supply chain correctly to be able to meet demand efficiently. He describes two steps
in framing the supply chain. The first step is to decide what the nature of the demand in the
company’s product. He states the product can either be functional or innovative. Once the
product’s nature of demand is confirmed, the next step is to decide whether the company’s
supply chain is physically efficient or responsive to the market. Fisher then uses two main
example companies, Campbell’s and Sports Obermeyer, to depict the concepts in a real life
setting. As Fisher uses these examples, it helps reiterate the importance of understanding the
framework of the supply chain.
Key issues
First Step: Decide if your demand of the product is innovative or functional
 Functional: Staples to people that can be bought pretty much anywhere. Their demand is
very stable and predictable which allow for low profit margins. Examples: Produce,
cleaning supplies, etc
 Innovative: New concept of product to people, something that is new to the market.
These products have very short life cycles. Their demand is unpredictable and have high
profit margins. Examples: Fashion, Computers
Second Step: Decide if your supply chain is physically efficient or responsive to the market
 Physically Efficient: supply predictable demand at the lowest cost, minimize inventory,
maximize performance. Basically this is for products that can be predictable and the
supply chains are looking to minimize all costs
 Market Responsive Process: Responds quickly to unpredictable demand in order to
minimize stock outs but can have markdowns happen on old inventory. Example: Sport
Obermeyer
Third Step: Use Matrix to devise the ideal supply chain strategy
This matrix will point out if the combination of the first and second step is the correct match for
your product. The correct matches include an efficient supply chain and the functional product.
The other match is a responsive supply chain and an innovative product.
Why did we read this article/how does it apply to your organization?
This article helps explain the importance of knowing the demand of your product and how your
supply chain functions as a whole. By understanding the different categories outlined by Fisher it
is easy to decide where the product your company produces falls into. Once you have identified
the two categories the product is in, then the matrix helps identify whether this is the right
strategies to use with the product. This applies to my recent organization because the product that
was produced was actually a staple to people and was often requested day in and day out. The
demand was predictable but the supply chain operated as a responsive supply chain. So the
products were produced according to that day’s orders or what the management thought the
demand was going to be for that month. This created a disaster for the company.
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