Lifecycle of a Supply Chain strategy
For a certain period of planned time, it makes sense to choose a strategy and orient resources to it rather than trying to be excellent at everything.
Companies can become stuck on a particular stage of lifecycle and prevent themselves from getting the low hanging (but exponentially greater) fruits of the next stage of lifecycle.
With limited management bandwidth, most companies have to select which strategies to emphasise, and from that, select which tools can help them be most successful at those strategies.
Strategy needs to be sequenced properly
1. ๐๐ฟ๐ผ๐บ ๐ฐ๐ผ๐๐-๐ฐ๐๐๐๐ถ๐ป๐ด ๐๐ผ ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น๐ถ๐๐ฎ๐๐ถ๐ผ๐ป
Cost-cutting can be done in such a way that it yields higher quality and increased sales, and this approach to cost-cutting is the first step of an integrated supply chain strategy.
2. ๐๐ฟ๐ผ๐บ ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น๐ถ๐๐ฎ๐๐ถ๐ผ๐ป ๐๐ผ ๐๐๐ป๐ฐ๐ต๐ฟ๐ผ๐ป๐ถ๐๐ฎ๐๐ถ๐ผ๐ป
Rationalisation is an excellent platform for synchronisation since it exposes waste that results in misalignments and bottlenecks, both of which cause inconsistencies in performance levels.
3. ๐๐ฟ๐ผ๐บ ๐๐๐ป๐ฐ๐ต๐ฟ๐ผ๐ป๐ถ๐๐ฎ๐๐ถ๐ผ๐ป ๐๐ผ ๐ฐ๐๐๐๐ผ๐บ๐ถ๐๐ฎ๐๐ถ๐ผ๐ป
Synchronisation, enables the agility that is needed to deliver customised or personalised output. The engineering approach that is typically used in a high-volume, low-mix operation can be applied to finely sub-segment customer types and deliver a unique supply chain to each one.
4. ๐๐ฟ๐ผ๐บ ๐ฐ๐๐๐๐ผ๐บ๐ถ๐๐ฎ๐๐ถ๐ผ๐ป ๐๐ผ ๐ถ๐ป๐ป๐ผ๐๐ฎ๐๐ถ๐ผ๐ป
Customisation enables innovation by providing an understanding of customersโ needs and wants. When these are clear, innovations have a far better chance of succeeding.
This brings three benefits:
a) More profits accrue because the product is in the market longer before it reaches the decline stage of its product life-cycle;
b) the product commands higher margins for being in the market earlier than its competitors; and
c) the firm gets a reputation for being a market leader, which in turn may command even greater market share and higher margins.
5. ๐๐ฟ๐ผ๐บ ๐ถ๐ป๐ป๐ผ๐๐ฎ๐๐ถ๐ผ๐ป ๐๐ผ ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น๐ถ๐๐ฎ๐๐ถ๐ผ๐ป (๐ฎ๐ป๐ฑ ๐๐ต๐ฒ ๐ฐ๐๐ฐ๐น๐ฒ ๐๐๐ฎ๐ฟ๐๐ ๐ฎ๐ด๐ฎ๐ถ๐ป..)
Innovation inevitably leads to the need to clean up.
The decreasing chances of incremental sales must be balanced by the (sometimes increasing) cost of maintaining inventory and production at lower volumes. Here, the cost of holding inventory extends far beyond the financial carrying cost, which is usually low (around 5%). The real cost is the cost of obsolescence (throwing the unsold product away) and the administrative overhead cost of managing more unimportant and ageing SKUs. In a world of rapid SKU turnover, not having a process for withdrawing end-of-life SKUs is asking for trouble.
