Achieving Strategic Fit by Supply Chain

Strategic fit requires that both the competitive and supply chain strategies of a company have aligned goals. It refers to consistency between the customer priorities that the competitive strat­egy hopes to satisfy and the supply chain capabilities that the supply chain strategy aims to build. For a company to achieve strategic fit, it must

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Expanding Strategic Scope in the Supply Chain

A key issue relating to strategic fit is the scope, in terms of supply chain stages, across which the strategic fit applies. Scope of strategic fit refers to the functions within the firm and stages across the supply chain that devise an integrated strategy with an aligned objective. At one extreme, every operation within

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Challenges to Achieving and Maintaining Strategic Fit in the Supply Chain

The key to achieving strategic fit is a company’s ability to find a balance between responsiveness and efficiency that best matches the needs of its target customers. In deciding where this balance should be located on the responsiveness spectrum, companies face many challenges. On one hand, these challenges have made it much more difficult

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Financial Measures of Supply Chain Performance

In Chapter 1, we discussed how growing the supply chain surplus is the ultimate goal of a supply chain. Our premise was that increasing the surplus allows for a growth of supply chain profitability, which facilitates an improvement in the financial performance of each member of the supply chain. In this section, we define

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Drivers of Supply Chain Performance

The strategic fit discussed in Chapter 2 requires that a company’s supply chain achieve the bal­ance between responsiveness and efficiency that best supports the company’s competitive strat­egy. A supply chain’s performance in terms of responsiveness and efficiency is based on the interaction between the following logistical and cross-functional drivers of supply chain perfor­mance: facilities,

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Framework for Structuring Drivers of Supply Chain Performance

We provide a visual framework for supply chain decision making in Figure 3-1. Most companies begin with a competitive strategy and then decide what their supply chain strategy ought to be. The supply chain strategy determines how the supply chain should perform with respect to effi­ciency and responsiveness. The supply chain must then use

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Facilities in the Supply Chain

In this section, we discuss the role that facilities play in the supply chain and critical facility- related decisions that supply chain managers need to make. 1. Role in the Supply Chain Firms can increase responsiveness by increasing the number of facilities, making them more flexible, or increasing capacity. Each of these actions, however,

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Inventory in the Supply Chain

In this section, we discuss the role that inventory plays in the supply chain and how managers use inventory to drive supply chain performance. 1. Role in the Supply Chain Inventory exists in the supply chain because of a mismatch between supply and demand. This mismatch is intentional at a steel manufacturer, where it

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Transportation in the Supply Chain

In this section, we discuss the role that transportation plays in the supply chain and key transpor­tation-related decisions that supply chain managers must make. 1. Role in the Supply Chain Transportation moves product between different stages in a supply chain and affects both responsiveness and efficiency. Faster transportation is more expensive but allows a

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Information in the Supply Chain

In this section, we discuss the role that information plays in the supply chain, as well as key information-related decisions that supply chain managers must make. 1. Role in the Supply Chain Good information can help improve the utilization of supply chain assets and the coordination of supply chain flows to increase responsiveness and

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Sourcing in the Supply Chain

In this section, we discuss the role that sourcing plays in the supply chain and key sourcing- related decisions that managers need to make. 1. Role in the Supply Chain Sourcing is the set of business processes required to purchase goods and services. Managers must first decide whether each task will be performed by

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Pricing in the Supply Chain

In this section, we discuss the role that pricing plays in the supply chain. 1. Role in the Supply Chain Pricing is the process by which a firm decides how much to charge customers for its goods and services. Pricing affects the customer segments that choose to buy the product, as well as influ­encing

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The Role of Distribution in the Supply Chain

Distribution refers to the steps taken to move and store a product from the supplier stage to a customer stage in the supply chain. Distribution occurs between every pair of stages in the supply chain. Raw materials and components are moved from suppliers to manufacturers, whereas finished products are moved from the manufacturer to

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Factors Influencing Distribution Network Design in the Supply Chain

At the highest level, performance of a distribution network should be evaluated along two dimensions: Value provided to the customer Cost of meeting customer needs Thus, as it compares different distribution network options, a firm must evaluate the impact on customer service and cost. The customer needs that are met influence the company’s reve­nues,

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Design Options for a Distribution Network in the Supply Chain

In this section, we discuss distribution network choices from the manufacturer to the end con­sumer. When considering distribution between any other pair of stages, such as supplier to manu­facturer or even a service company serving its customers through a distribution network, many of the same options still apply. Managers must make two key decisions

Online Sales and the Distribution Network in the Supply Chain

In this section, we use ideas discussed earlier in the chapter to see how the Internet has affected the structure and performance of various distribution networks. The goal is to understand what drove the successful introduction of online sales in some networks and not others, and how these networks are likely to evolve. Similar

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Distribution Networks in the Supply Chain in Practice

The ownership structure of the distribution network can have as big an impact as the type of distribution network. The bulk of this chapter deals with different types of physical net­works and subsequent flows to distribute products successfully. However, equally important is who owns each stage in the distribution network. Distribution networks that have

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Distribution network of Blue Nile and Diamond Retailing

A customer walks into your jewelry store with printouts of diamond selections from Blue Nile, a company that is the largest online retailer of diamonds. The list price for the customer’s desired diamond is only $100 above your total cost for a stone of the same characteristics. Do you let the customer walk, or

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The Role of Network Design in the Supply Chain

Supply chain network design decisions include the assignment of facility role; location of manu­facturing-, storage-, or transportation-related facilities; and the allocation of capacity and mar­kets to each facility. Supply chain network design decisions are classified as follows: Facility role: What role should each facility play? What processes are performed at each facility? Facility location:

Factors Influencing Network Design Decisions in the Supply Chain

In this section we examine a wide variety of factors that influence network design decisions in supply chains. 1. Strategic Factors A firm’s competitive strategy has a significant impact on network design decisions within the supply chain. Firms that focus on cost leadership tend to find the lowest cost location for their manufacturing facilities,

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