RSM370H1 Lecture Notes - Lecture 2: Network Planning And Design, Value Proposition, Fixed Cost
Document Summary
Lecture 2: designing the supply chain network facility. Phase i: supply chain strategy and network design. Identify broad structure of supply chain network based on business strategy, customer segments served, product characteristics. Balance customer needs (response time, product variety, product availability, customer experience, order visibility, returnability) with cost of meeting needs (inventories, transportation, facilities and handling information) *note: omni-channel strategies are blurring lines between online and offline sales strategies. However, barnes and noble has more responsive strategy because they are bringing books closer to customers. Value proposition of responsiveness and convenience at detriment of efficiency. Amazon has economies of scale because fewer facilities. Cheaper to have one centralized facility than several stores. Lower for amazon because distribution centre cheaper than holding at local store. Can pool demand uncertainty with larger inventory base. Supplier sends to amazon who sends to customers. Better if many products in same order so amazon can merge products into same shipment to customer.
