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Supply-Chain Stategy

Supply-Chain Stategy. Operations Management Dr. Ron Tibben-Lembke. Low. High. Low. Efficient. Responsive. High. Risk-Hedging. Agile. Supply Chain Designs. Demand Uncertainty. Efficient – economies of scale Risk-Hedging – pooled resources, multiple sources of supply, need good IT

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Supply-Chain Stategy

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  1. Supply-Chain Stategy Operations Management Dr. Ron Tibben-Lembke

  2. Low High Low Efficient Responsive High Risk-Hedging Agile Supply Chain Designs Demand Uncertainty • 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 Supply Uncertainty

  3. Mass Customization • Highly customized • Integrate design, processes, supply network • Supply components cheaply to production points • Fast, responsive production, quick delivery • Higher weight, lower value

  4. Managing the Supply Chain • Postponement -- withhold any modification until as long as possible. Keep product generic “vanilla” • HP • Benetton • Home Depot paint department • Channel Assembly -- have distributor assemble products from components

  5. HP Inkjet Printers • Printers made in Vancouver, sent via ship through Panama Canal to Europe • Europe warehouse stocks inventory by country • physically different-- power supply • manuals different languages • Substitution not allowed • Re-supply time very long

  6. Euro Plugs • No standardized power supplies for Europe • Different power supply for every country.

  7. HP Inkjet Printers • Redesigned printers so that power supply added in Europe • 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

  8. Delayed Customization Production Storage Shipping Storage Before After

  9. Benetton • 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?

  10. Behr Paints • Small # of bases • Small # tints • Unlimited # combinations • Keep stock colors on hand? • How many gallons? • Which ones? • Lower labor costs • Higher inventory costs

  11. Bullwhip Effect • 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.”

  12. Managing the Supply Chain • 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-to-computer

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