Page 250 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 11: Supply Chain Logistics Design

Notes

Notes To capture this information requires a progressive IT strategy. The data is required
for the firm to decide their demand flow strategy.

Managing demand uncertainty in a cost effective manner can lead to significant benefits for a
company from lower supply chain costs to improved customer service levels. More importantly,
this can be a huge competitive differentiator for Style and Grace. The merchandise order, the
ratio in which sizes need to be ordered, minimum base quantities and establishing reorder
points are determined by the demand flow strategy.
For the tailor-made products, the relationship with the suppliers and the speed of processing
and delivery are crucial. Style and Grace will have to maintain a collaborative or alliance
relationship with the suppliers.
Proper supplier relationship management becomes important. It will have to help its suppliers
in developing the capability to deliver high quality products. Also, speed has to be a focus. The
fitment time should not exceed three days and the suit should be delivered within a week.
Service quality is critical. In case there are any mistakes, the garment should be corrected on
priority and delivered at the place of the customer within 24 hours.
This example explains the concept and issues involved in designing a supply chain and the
concept of strategic fit. It also addresses the issue of separate supply chain processes within the
same business unit.

Strategic fit determines the extent to which the activities of organizations working in partnership
complement each other in such a way as to contribute to competitive advantage. A number of
generic techniques – namely, integrated supply chain, lead-time compression, waste elimination,
inventory and capacity buffers, process flexibility, level-scheduling, process redesign, can be
used when there are mismatches between strategy and demand uncertainty and this needs
correction. Always remember, an effective supply chain design is a supply chain whose strategy
is integrated with the competitive strategy of the firm.

Self Assessment

Fill in the blanks:
1. It is difficult to conceptualize the principles of …………………… and how it is applicable
in the design of supply chains without a practical example.
2. The …………………… profile of Style and Grace is high end and high middle income
group clientele.

3. For the …………………… products, the relationship with the suppliers and the speed of
processing and delivery are crucial.

11.2 Global Strategic Positioning

With increased globalization and offshore sourcing, global supply chain management is becoming
an important issue for many businesses. Like traditional, supply chain management, the
underlying factors behind the trend are reducing the costs of procurement and decreasing the
risks related to purchasing activities. The big difference is that global supply chain management
involves a company’s worldwide interests and suppliers rather than simply a local or national
orientation.

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