Session 6-SCM(Y)

Date:12th October, 2017

CR1: Abhipsha Sahoo

1. Discussion on Topic Finalisation:

Points to be included: choose a particular company/ particular product, existing supply chain,
who are the different members they engage with (suppliers, logistics etc), pricing structure,
distribution network
1st discussion on the topic: 11th session
2. Supply Chain Strategies
What is a competitive strategy? How is it decided? Why is it important?
Example: Dell
Strategy: mass customisation, different from competitors based on price and quality
(performance)
They identified the need of the customers that was not met by current products. For
the same product different customers have different needs which defines the
competitive strategy.
Supply chain strategy is required to achieve competitive strategy, functional strategies
have to be aligned with competitive strategy
We have to identify the supply chain strategy in order to design the supply chain
Broad structure of the chain: identify the members of the supply chain, assign the
role of each member
Production strategy: identify the customer segments
Sales and marketing strategy: identifying the customer segments, placing the
product, pricing, distribution, advertising and promotion
Supplier strategy
Operations strategy

All the above must correlate with each other.

Strategic fit: to align the competitive strategy with the supply chain strategy and other
functional strategy
Main function of the supply chain is to deliver the customer what it needs
Different needs of the customer
No. of units needed in each lot
Variety (the need that Dell identified)
Response time they can tolerate
Price
Service level
Demand uncertainty while designing the supply chain:
Kind/attribute of demand
Uncertainty in demand and supply (depending on needs)
Implied demand uncertainty: due to increase in variety, demand forecasting
becomes difficult. As implied demand uncertainty increases, it becomes more
difficult to design the supply chain
 Customer Need Implied Demand Uncertainty
Range of quantity increases Increases
Lead time increases Decreases
Variety increases Increases
No. of channels increases Increases
Service level increases Increases

Finding the aggregate demand is not helpful, we have to push products into the supply
chain based on the implied demand uncertainty. Catering to the different needs of
different customers becomes difficult due to the implied demand uncertainty
Characteristics of product with low implied demand uncertainty:
Customer demand attribute is low
Accurate demand forecast->low stock out->low holding cost->small margin->cant
sell at premium
Characteristics of product with high implied demand uncertainty (new products):
Inaccurate demand forecast->high stock out->high inventory level->high holding
and obsolescence cost
Example: CISCO (frequently changing product, high implied demand uncertainty)
Supplier Uncertainty
Many varieties to be made
Many changeovers
Frequent breakdowns
Variability in lead time
Demand forecast is uncertain
Implied demand uncertainty spectrum:
Stable product------------------------------------------------------------------------New Product
Salt (low implied demand uncertainty) (high implied demand uncertainty)

Supply chain capability:

Highly efficient----------------------------------------------------------------highly responsive
(low supply chain cost, (high implied demand uncertainty,
Low demand and supply variability, high cost, multiple brands)
No variety, commodities)
Cost-Responsiveness curve and strategic fit curve
We need to decide what percentage of efficiency and responsiveness we need while
trying to fit the needs of the customer