Supply-Chain
Stategy
Operations Management
Dr. Ron Tibben-Lembke
Supply Chain Designs
Supply
Low
Uncertainty
High
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Demand Uncertainty
Low
High
Efficient
Responsive
Risk-Hedging
Agile
Efficient – economies of scale
Risk-Hedging – pooled resources, multiple
sources of supply, need good IT
Responsive – Changing consumer needs
Agile – responsive to changing needs,
pooled resources
Mass Customization
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Highly customized
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Integrate design, processes, supply network
Supply components cheaply to production
points
Fast, responsive production, quick
delivery
Higher weight, lower value
Managing the Supply Chain
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Postponement -- withhold any
modification until as long as possible.
Keep product generic “vanilla”
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HP
Benetton
Home Depot paint department
Channel Assembly -- have distributor
assemble products from components
HP Inkjet Printers
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Printers made in Vancouver, sent via
ship through Panama Canal to Europe
Europe warehouse stocks inventory by
country
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physically different-- power supply
manuals different languages
Substitution not allowed
Re-supply time very long
Euro Plugs
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No standardized
power supplies
for Europe
Different power
supply for every
country.
HP Inkjet Printers
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Redesigned printers so that power supply
added in Europe
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Re-engineer product, power supply
Assembly done in a warehouse (Quality?)
Manuals added in Europe
Many expensive changes
Store ‘vanilla’ boxes
Postpone point of differentiation
25% cost reduction
Delayed Customization
Before
Production
After
Storage
Shipping
Storage
Benetton
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Sweaters of undyed wool, dyed once demand
is known
Dyeing LT much faster than production
How many undyed sweaters to make?
How many Red, Green, Blue, also, if this
production process is cheaper, and you know
you’ll sell some minimum amount?
Behr Paints
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Small # of bases
Small # tints
Unlimited # combinations
Keep stock colors on hand?
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How many gallons?
Which ones?
Lower labor costs
Higher inventory costs
Bullwhip Effect
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Lack of information sharing can cascade
through the supply chain.
Small changes at retail level lead to huge
swings at manf., like bullwhip
Several retailers order all at once, distributor
thinks sales have jumped, orders a much
bigger order, etc.
Better: sales information shared across the
“Value Chain.”
Managing the Supply Chain
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Drop Shipping -- Supplier sends directly
to the store, not to store’s warehouse
Blanket orders -- Long-term pledge to
buy certain amount, shipped quickly
EDI -- standardized format for sending
electronic information computer-tocomputer