Competitive supply chain strategies lsm
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This document discusses competitive supply chain strategies. It defines supply chain strategy as designing a firm's supply chain to meet operational priorities and ensure superior customer value. Key concepts covered include balancing customer service and costs, order delivery lead times, responsiveness, delivery reliability, product variety, and mass customization. Mass customization allows firms to provide variety at low costs through flexible processes. The document also discusses outsourcing, lean supply chains that focus on strategic sourcing and cost management, and additional supply chain strategies like offshoring and integration. Dell's order fulfillment process and Toyota outsourcing electronic parts are provided as examples.
Competitive supply chain strategies lsm
- 2. 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
- 3. Concepts related to Supply Chain Strategies • Customer Service and Cost Trade Offs • There are 4 components of Customer Service: 1.Order Delivery Lead Time 2.Responsiveness 3.Delivery Reliability 4.Product Variety 16/11/2016 Competitive Supply Chain Strategies 3
- 4. 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. 16/11/2016 Competitive Supply Chain Strategies 4
- 5. 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. 16/11/2016 Competitive Supply Chain Strategies 5
- 6. Supply Chain Responsiveness • The firm’s ability to handle the uncertainties of market demand. • Based on uncertainties, products are classified into: 1. Functional Products 2. Innovative Products • Example: CISCO 16/11/2016 Competitive Supply Chain Strategies 6
- 7. 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: Safexpress 16/11/2016 Competitive Supply Chain Strategies 7
- 8. 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 16/11/2016 Competitive Supply Chain Strategies 8
- 9. Mass Customization 16/11/2016 Competitive Supply Chain Strategies 9 • 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.
- 10. DELL’s Order Fulfillment Process 16/11/2016 Competitive Supply Chain Strategies 10
- 11. 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. 16/11/2016 Competitive Supply Chain Strategies 11
- 12. Lean Supply Chains 16/11/2016 Competitive Supply Chain Strategies 12 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.
- 13. Some Other Supply Chain Strategies • Off shoring • Vendor Rationalization • Forward Integration • Backward Integration • Efficient Supply Chains • Responsive Supply Chains 16/11/2016 Competitive Supply Chain Strategies 13
- 14. THANK YOU! 16/11/2016 Competitive Supply Chain Strategies 14