Competitive supply chain strategies lsm

COMPETITIVE SUPPLY CHAIN STRATEGIES BY:Madhuri Muniyal

Introduction• Definition: Designing a firm’s supply chain to

meet the competitive priorities of the firm’s operations strategy.

• Supply chain strategy to ensure superior value to the end customer in an efficient manner

• Optimum decision making between trade offs and costs.

• Innovation to obtain competitive advantage.16/11/2016 2Competitive Supply Chain

Strategies

Concepts related to Supply Chain Strategies• Customer Service and Cost Trade Offs• There are 4 components of Customer Service:1.Order Delivery Lead Time2.Responsiveness3.Delivery Reliability4.Product Variety

16/11/2016 Competitive Supply Chain Strategies

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Customer Service & Trade Offs• Costs are directly associated with service

provision.• Higher service in low cost is desirable.• A firm cannot operate beyond a certain limit in

increasing its efficiency by increasing costs for higher services.

• The firm’s revenue is also affected by its service levels at certain costs.


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Order Delivery Lead Time• The time taken by the supply chain from

placement of order to delivery is known as Order Delivery Lead Time

• The time take from sourcing of material to delivery is known as Supply Chain Lead Time.

• Penetration Point is the point at which customer places order. It is also known as Decoupling Point.

• Different types of models are followed to make efficient delivery like MTS, MTO & CTO.


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Supply Chain Responsiveness• The firm’s ability to handle the uncertainties of

market demand.

• Based on uncertainties, products are classified into:1. Functional Products2. Innovative Products

• Example: CISCO


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Delivery Reliability• The fraction of satisfaction obtained by the customer

within the promised delivery lead time.

• For achieving higher reliability, a quick inventory turnover is needed, stock outs needs to be prevented.

• Cost management at this stage is very important.

• Example: Safexpress16/11/2016 Competitive Supply Chain

Strategies7

Product Variety• Variety Explosion has occurred in large

number of goods.• It will also increase cost.• It increases complexity in supply chain.• Example: P&G


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Mass Customization


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• A strategy whereby a firm’s flexible processes generate a wide variety of personalized services or products at reasonably low costs. Eg. Dell

• Competitive advantages: Managing customer relationships. Eliminating finished goods inventory. Increasing perceived value.

• Disadvantages: Postponement is when some of the final activities in the

provision of a service or product are delayed until the orders are received.

Channel assembly is when members of the distribution channel act as if they were assembly stations in the factory.

DELL’s Order Fulfillment Process


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Outsourcing• A Make-or-buy decision is a managerial choice

between whether to outsource a process or do it in-house.

• Outsourcing: Paying suppliers and distributors to perform processes and provide needed services and materials.

• Example: Bharti Airtel Outsources its Network Operations.

• Toyota Outsources its electronic parts.


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Lean Supply Chains


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Three key activities are required to attain a lean supply chain:

1. Strategic Sourcing: Identifying items or services that are of high value or complexity and purchase them from a select set of suppliers with whom the firm establishes a close relationship.

2. Cost Management: Limiting the number of suppliers and focusing on helping them reduce their costs through trust and friendly collaboration.

3. Supplier Development: Shifting from price negotiations to cost management and working with suppliers to achieve lean operations.

Some Other Supply Chain Strategies

• Off shoring• Vendor Rationalization• Forward Integration• Backward Integration• Efficient Supply Chains• Responsive Supply Chains


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THANK YOU!


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Competitive supply chain strategies lsm

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