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Outline
Why achieving strategic fit is critical to a companys overall success? How a company achieves strategic fit between its supply chain strategy and its competitive strategy? Importance of expanding the scope of strategic fit across the supply chain The major obstacles that must be overcome to manage a supply chain successfully
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Competitive strategy: how the customer prioritizes product cost, delivery time Different companies have different set of customers
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Product Development Strategy: specifies the portfolio of new products that the company will try to develop Marketing and Sales Strategy: specifies how the market will be segmented and product positioned, priced, and promoted Supply Chain Strategy:
determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product Consistency and support between supply chain strategy, competitive strategy, and other functional strategies is important (cannot work in isolation)
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Finance, Accounting, Information Technology, Human Resources New Product Development Marketing and Operations Sales
Distribution
Service
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A company may fail because of a lack of strategic fit or because its processes and resources do not provide the capabilities to execute the desired strategy Example of strategic fit -- Dell
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Between1993 and 2006: Dells competitive strategy was to provide a large variety of customizable products at reasonable price Supply chain was very responsive
Low cost and large volumes: problem in strategic fit Designed to use common components and allow rapid assembly 2007: altered its competitive strategy and supply chain
With continuation to offer customization, it sells PCs through retail stores like Wal-Mart
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Maintained inventory at Wal-Mart Customers competitive strategies are changing from customized products (flexible and responsive) to low cost How to maintain strategic fit?
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Variety of products required increases Demand per product becomes more disaggregated
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Salt at a supermarket
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Low
Cost
High
2007 Pearson Education
Low
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Responsiveness Spectrum
Highly efficient
Somewhat efficient
Somewhat responsive
Highly responsive
Hanes apparel
Dell
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Responsiveness spectrum
Uncertain demand
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Responsive
Quick response Modularity to allow postponement Higher margins Capacity flexibility Buffer inventory Aggressively reduce even if costs are significant Speed, flexibility, quality Greater reliance on responsive (fast) modes
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