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Supply Chain Management How is Strategic Fit Achieved?

Supply Chain Management How is Strategic Fit Achieved?. Step 1: Understanding the customer and demand uncertainty Step 2: Understanding the supply chain Step 3: Achieving strategic fit. Step 1: Understanding the Customer and Demand Uncertainty.

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Supply Chain Management How is Strategic Fit Achieved?

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  1. Supply Chain ManagementHow is Strategic Fit Achieved? • Step 1: Understanding the customer and demand uncertainty • Step 2: Understanding the supply chain • Step 3: Achieving strategic fit

  2. Step 1: Understanding the Customer and Demand Uncertainty • Identify the needs of the customer segment being served • Response time customers will tolerate • Variety of products needed • Service level required • Price of the product • Desired rate of innovation in the product • Demand uncertainty: uncertainty of customer demand for a product • Implied demand uncertainty: resulting uncertainty for the supply chain given the portion of the demand the supply chain must handle and attributes the customer desires The first step to strategic fit is to understand customers by mapping their demand on the implied uncertainty spectrum

  3. Impact of Customer Needs on Implied Demand Uncertainty In general, customers want more quantity, more variety, more novelty, more availability, they want it now, and they want it everywhere.

  4. Levels of Implied Demand Uncertainty Detergent Long lead time steel Purely functional products High Fashion iPod Entirely new products Customer Need Price Responsiveness Low High Implied Demand Uncertainty

  5. Correlation Between Implied Demand Uncertainty and Other Attributes

  6. Step 2: Understanding the Supply Chain • There is a cost to achieving responsiveness

  7. Step 3: Achieving Strategic Fit • Ensure that what the supply chain is consistent with target customer’s needs Responsive supply chain Dell Zone of Strategic Fit Responsiveness spectrum Barilla Pasta Efficient supply chain Uncertain demand Certain demand Implied uncertainty spectrum

  8. Comparison of Efficient and Responsive Supply Chains

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