Supply reading

After reading this chapter, you lead be adequate to(p) to I. delineate the major drivers of piddle out r each(prenominal) process. 2. Discuss the role of each driver in creating strategic delay between the supplement drawstring dodge and the competitive strategy. 3. Detine the key metrics that track the per compriseance of the run drawstring in terms of each driver. In this chapter, we introduce the three logistical drivers-facilities, stocktaking, and deportation-and the three cross-functional drivers-information, sourcing, and pricing-that qualify the performance of any cater reach.We discuss how these drivers atomic number 18 apply in the role, planning, and operation of the supply chain of mountains. We define several metrics that merchantman be used to gauge the performance of each driver. The strategic fit discussed in Chapter 2 requires that a smart sets supply chain bring home the bacon the balance between responsiveness and efficiency that best sup ports the companys competitive strategy.https//donemyessay.com/numbers-101-900-spanish-1-lopez/To watch how a compa- ny can improve supply chain performance in terms of responsiveness and efficiency, we must examine the logisti- cal and cross-functional drivers of supply chain performance facilities, inventory, transportation, information, sourcing, and pricing. These drivers interact with each other to determine the supply chains performance in terms of responsiveness and efficiency. The goal is to structure the drivers to achieve the desired take of responsiveness at the lowest possible cost. First we define each driver and discuss its impact on the performance of the supply chain. . Facilities ar the actual physical locations in the supply chain network where harvesting is stored, assembled, or fabricated. The two major types of facilities are production sites and storage sites. Decisions regarding the role, location, capacity, and tractability of facilities have a signifi cant impact on the supply chains performance. For instance, an auto parts distributer striving for responsiveness could have many storage facilities located close to customers even though this pull reduces efficiency.Alternatively, a blue-efficiency distributor would have fewer warehouses to increase efficiency despite the fact that this practice will reduce responsiveness. 2. Inventory encompasses all raw materials, work in process, and finished goods within a supply chain. Changing inventory policies can dramatically alter the supply chains efficiency and responsiveness. For example, 41 42 dowry I Building a Strategic Framework to Analyze return Chains a clothing retail merchant can make itself more responsive by stocking large amounts of inventory and satisfying customer invite from stock.A large inventory, however, increases the retailers cost, thereby making it less efficient. Spanish apparel retailer Zara has worked hard to shorten new product and replenishment lead times. As a result, the company is very responsive but carries low levels of inventory. Zara therefrom plys responsiveness at low cost. 3. Transportation entails moving inventory from post to point in the supply chain. Transportation can take the form of many combinations of modes and routes, each with its own performance characteristics. Transportation picks have a large impact on supply chain respon- siveness and efficiency.For example, a mail-order compose company can use a faster mode of . transportation much(prenominal) as FedEx to ship products, thus making its supply chain more responsive, but also less efficient given the uplifted costs associated with using FedEx. McMaster-Carr and W. W. Grainger, however, have structured their supply chain to provide next-day service to most of their customers using ground transportation. They are providing a high level of responsiveness at let down cost. 4. Information consists of data and abbreviation concerning facilities, in ventory, transportation, costs, bells, and customers tthroughout the supply chain.Information is potentially the biggest driver of performance in the supply chain because it directly affects each of the other drivers. Information presents management with the oopportunity to make supply chains more responsive and more efficient. For example, with information on. customer study patterns, a pharmaceuti- cal company can produce and stock drugs in prognostication of customer demand, which makes the supply chain very responsive because customers will find the drugs they fatality when they need them.This demand information can also make the supply chain more efticient because the phar- maceutical firm is better able to call demand and produce only the required amount. Seven- Eleven Japan has used information to increase the responsiveness it provides while also lowering cost. 5. Sourcing is the choice of who will perform a particular supply chain aactivity such as pro- duction, storag e, transportation, or the management of information. At the strategic level, these decisions determine what functions a firm performs and what functions the firm outsources.Sourcing decisions affect both the responsiveness and efficiency of a supply chain. After Motorola outsourced much of its production to contract manufacturers in chinaware, it see its effi- ciency improve but its responsiveness suffer because of the long distances. To make up for the drop in responsiveness, Motorola started flying in some of its cell phones from China even though this choice increased transportation cost. Flextronics, an electronics contract manufactur- er, is hoping to twist both responsive and efficient sourcing options to its customers.It is trying to make its production facilities in the United States very responsive while keeping its facilities in inexpensive countries efficient. Flextronics hopes to become an effective source for all customers using this combination of facilities. 6. d etermine determines how much a firm will charge for goods and services that it makes gettable in the supply chain. Pricing affects the behavior of the buyer of the good or service, thus affecting supply chain performance.For example, if a transportation company varies its charges based on the lead time provided by the customers, it is very presumable that customers who value effi- ciency will order early and customers who value responsiveness will be willing to wait and order just before they need a product transported. Differential pricing provides reoponsiveness to customers that value it and low cost to customers that do nor value responsiveness as much. Our definition of these drivers attempts to delineate logistics and supply chain manage- ment.Supply chain management includes the use of logistical and cross-functional drivers to increase the supply chain surplus. Cross-functional drivers have become increasingly important in top the supply chain surplus in recent years. Whi le logistics trunk a major part, supply chain management is increasingly comme il faut focused on the three cross-functional drivers. It is important to realize that these drivers do non act independently but interact with each other to determine the overall supply chain performance. Good supply chain design and operation Chapter 3 Supply Chain Drivers and Metrics 43 ecognizes this fundamental interaction and makes the appropriate trade-offs to have a bun in the oven the desired level of responsiveness. Consider, for example, the furniture industry in the United States. Low-cost furni- ture sourced from Asia is available at many discount retailers. The immemorial goal of this supply chain is to deliver a low price and acceptable quality. Vvariety is typically low and retailers such as Wal-Mart stock inventory of finished goods. The low vvariety and stable replenishment orders allow furniture manufacturers in Asia to focus on efficiency. given the available inventory, low- cost modes of transportation from Asia are used.In this instance, relatively low-cost inventory at the retailer allows the supply chain to become efficient by lowering transportation and production costs. In contrast, some U. S. furniture makers have chosen to focus on providing vvariety. Given the high vvariety and high prices, keeping inventory of all variants at a retailer would be very expensive. In this case the supply chain has been designed so the retailer carries very little inven- tory. Customers place their orders with the retailer by seeing one variant of the furniture and selecting among the various options.The supply chain is made responsive by using information engineering to convey order information effectively, structuring very flexible manufacturing facil- ities to be able to produce in small lots, and using responsive transportation to deliver the furniture to the customer. In this instance, responsive facilities, transportation, and information are used to lower inven tory costs. As the rest of this chapter will illustrate, the key to achieving strategic fit across the supply chain is to structure the supply chain drivers appropriately to provide the desired level of responsiveness.