Responsive Supply Chain

Figure 22.5 shows how product, customer, and market characteristics can determine different SCM strategies and design implications. For example, the strategic choice to serve niche customers with high price specialty chemicals is only tenable if the high-value inventory is centralized to reduce costs, and if a fast, responsive supply chain is set up to fill customer orders within the requested lead time from central inventory. 

Online auctions for business are an extension of supply chain applications of the Internet, by which firms seek parts and supplies from a large pool of potential business partners. The real-time interaction in these auctions differs significantly from contract-based supply relationships, which may be stable but often inefficient in terms of costs. A more flexible and responsive supply chain relationship is required as the manufacturing process itself becomes more flexible to meet changing demands in real time. Especially for digital products, the business relationship between suppliers and producers may be defined by the requirement for immediate delivery of needed components. 

An interesting responsive supply chain approach is from Zara. Zara keeps nearly half of its production in-house. Rather than asking its manufacturers to maximize the output, Zara focuses on building extra capacity, instead of economies of scale, Zara manufactures and distributes in small amounts, managing all production, inventory, and transportation functions itself [4]. Authors report that... 

Zara s responsive supply chain delivers 600 stores worldwide in 15 days. Zara offers new products with limited quantity. That is a supply chain model for products with short life-cycles. 

In the process of writing this book in a center seat on a flight, I had a discussion with a physician. 1 was writing intently, and it piqued his interest. When I explained the premise of the manuscript, he commented, Isn t corporate social responsibility an oxymoron " He then laughed and retorted that he was not sure what was the greater obstacle, the "ox" or the "moron." I smiled. Building the responsible supply chain is certainly a paradigm shift. 

The responsive supply chain. The responsive supply rhain is designed for short cycles. This supply chain has high volumes, but also high demand and supply variability due to factors like seasonality, weather, short life cycles, and high levels of demand shaping in the channel. 

Consumer packaged goods (CPG). The most common type of CPG supply chain is based on flows turn volume, promoted volume, and new product introductions. Hirn volume (frequently ordered products with stable demand) supply chains are designed to drive an efficient response. Heavily promoted items require a responsive supply chain and new products need an agile supply chain. New product introductions introduce the greatest variability and risk. The challenge is adapting the supply chain over time as companies launch promotions and new products into the market. 

Flexibility to morph outside-in. When the Coca-Cola bottling system was defined, Walmart was a regional player. As Walmart gained power and established a national presence, a regional bottling system became a liability. Walmart wanted a more efficient and responsive supply chain. The company wanted one voice to the customer with flawless execution. 

Quadrant I Responsive Supply Chain Short Cycles... 

Table 2.1 Physically efficient vs. market responsive supply chains (Fisher 1997)...

Propose a responsive supply chain business model Proposed a reference model for designing business processes in demand driven fruit supply chain in Europe Describe the design and implementation of demand driven freight transport application... 

Bayraktar E, Demirbag M, Koh S, Tatoglu E, Zaim H (2009) A causal analysis of the impact of information systems and supply chain management practices on operational performance evidence from manufacturing SMEs in Turkey. Int J Prod Econ 122(1) 133-149 Bowersox D, Lahowchich N (2008) Start pulling your chain leading responsive supply chain transformation. OGI Enterprises, Port St. Lucie... 

Bowersox D, Lahowchich N (2008) Start pulling your chain leading responsive supply chain transformation. OGI Enterprises, Pearland... 

Responsive supply chains, like fashion apparel or popular music, operated in low-uncertainty, stable markets and are highly iimovative. They targeted responsive, flexible, build-to-customer-order strategies, andfollowedthechangingneeds of the customer. These responsive supply chains, where demand and supply commimications channels intertwine, deliver business-determined, information-based, customer-targeted outcomes that may be termed e-supply chains. 

Fisher asserts that these two product types require fundamentally different supply chains. Functional products require an efficient supply chain innovative products require responsive supply chains. This has implications for defining flexibility and other requirements where these differences must be drawn. 

The other dimension in Figure 9.3 is value. Value, in this application, is the product s importance either to the customer or to the company. High-value products sell for high prices and generate profits for the company. As described in Section 5.1.3, innovative products, by definition, are high value (quadrants I and II) while functional products are often low value (quadrants III and IV). Innovative products need responsive supply chains while functional products need efficient ones. 

Reichhart, A., Holweg, M., 2007. Creating the customer-responsive supply chain a reconciliation of concepts. Int. J. Opr. Prof. Mangmt. 27 (11), 1144—1172. 

Customer engagement. This issue takes a holistic view of sales and customer relationships. Customer relationships management and business analytics techniques are used to provide customized customer services on a global scale. From the supply chain perspective, it changes cost optimization focus to customer service focus implying not only high fill rates and responsiveness but also social responsibility, supply chain transparency, and environmental consciousness (Carter and Rogers 2008 Danese and Romano 2013). 

Sustainability and social responsibility. Supply chains are designed and operated with regard to social, cultural, and environmental issues. 

Fischer further argues that it is eritical that the right supply chain strategy is chosen in order to match the demand and the product, so that innovative products with a high margin are channelled trough a responsive supply chain. 

Physically Efficient vs. Market-Responsive Supply Chains... 

The correlation matrix indicates reinforcing or conflicting supply chain features. An example might be the conflict between costly inventories to provide short turnarounds in a responsive supply chain and the need for cost reduction in an efficient supply chain. 

Thus it can be argued that visibility and velocity are the foundations for a responsive supply chain. 

The computer company Dell has long been seen as one of the most agile businesses in the industry. The success of Dell is in large part due to its highly responsive supply chain, which is capable of building and delivering customised products in a matter of days with minimal inventory. 

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