What is the right supply chain for your product?

Presented by

Anupam Sharma

TAPMI, Manipal

Latest technologies at useDysfunctional industry practicesPoor coordination among supply chain nodesToo much dependence on ForecastingHigh lead timesFrequent stock outs

It all boils down to one question: What is the nature of the demand?

The Current Scenario

Functional productDemand can be forecastedLower contribution marginsLow product variance Less or no clearance salesPLC of 2 or more years

Innovative ProductUnpredictable DemandHigher contribution marginsOften millions of variants per categoryStock out rate of 10%-40%PLC of 3 months to 1 year

Classification of the product offering

Step 1Is your product functional or innovative?

Step 2What is the nature of the current practices followed at every node of the supply chain?

Step 3Identifying, based on step 2, whether the supply chain is physically efficient or is market responsive

Where do you stand?

Matching supply chains with products

What should I consider doing?Do I make my product functional ?Do I make my processes more market responsive?

What factors should I consider?Would I make more by investing in the processes to

increase their responsiveness?Or does a functional product’s consistent, no-risk

offering sound more lucrative?

From a mismatch to a match

Age old practice of supplying an innovative product with a high lead time

Over emphasis on making the supply chain efficient

‘If a customer really wanted it, he would wait’Product availability still a problem at large

though product innovations continue to increase in number

Overcome the schizophrenia by making some of the products functional and the rest innovative

The schizophrenic Computer Industry!

Having a match does not solve all the problems

How do I supply my products efficiently?The Campbell messEfficient processes at all nodes of the supply

chainEDI links with retailerSlashed delivery lead time by continuous

replenishmentIntensive price promotions lead to chaos

Am I in the safe zone?

Step 1Accept the uncertainty

Step 2Strive to reduce uncertainty

Step 3Avoid uncertainty

Step 4Hedge against the residual uncertainty

Respond quickly to demand crests/troughs

Accepted the uncertaintyThe product provided 2 million options to

choose fromReduce uncertainty

Demand became more predictable with proper communication channels established

Avoid UncertaintyA lead time of 2 weeks was promised to the

customersHedge Against Uncertainty

Produce to order system allows National to match supply with demand

Makoto Komoto (President, Matsushita)

The nature of demand for your product offerings is to be considered before devising a supply chain

Following efficient practices need not necessarily imply that you are doing all the right things

Functional products require an efficient process

Innovative products require a market responsive process

You, a manufacturer, can increase your share of the pie by cooperating with the retailers by cutting costs throughout the system

Important Take Aways of the Article

Thank You!