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Chapter 2

BU435 Chapter 2: BU435 Chapter 2

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Hamidreza Faramarzi

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BU435 TextbookLecture Notes Chapter 2: Supply Chain Performance 2.1 Competitive Supply Chain Strategies Competitive Strategy: defines, relative to its competitors, the set of cr needs that it seeks to satisfy through its productsservices Based on how cr prioritizes product cost, delivery time, variety quality Value Chain: o New Product Devt MarketingSales Operations Distribution Service o (Finance, Accounting, Info tech, HR) supportfacilitate functioning of value chain Product Devt Strategy: specifies portfolio of new products that a company will try to develop MarketingSales strategy: specifies how the market will be segmentedhow product will be positioned, priced promoted Supply chain strategy: determines nature of procurement of raw mtrls, transportation of mtrls to and from the company, manufacture of productoperation to provide service distribution of product to cr, along wany follow up servicespecification of whether these processes will be performed in houseoutsourced All functional strategies must support one another competitive strategy 2.2 Achieving Strategic Fit Strategic Fit: requires that both competitive supply chain strategies have aligned goals Consistency bw cr priorities that the competitive strategy hopes to satisfy SC capabilities that the SC strategy aims to build MUST HAVE: 1. Competitive strategy all functional strategies must fit together to form a coordinated overall strategy (each functional strategy must support other functional strategies help firm reach competitive goal) 2. Different functions in company must appropriately structure their processes resources to be able to execute these strategies successfully 3. Design of overall SC role of each stage must be aligned to support SC strategy How is Strategic Fit Achieved? 1. Understanding the customer SC uncertainty: understand cr needs for each targeted segment uncertainty these needs put on SC help define desired costsservice rqmts o Helps identify the extent of the unpredictability of demandsupply that SC must be prepared for 2. Understanding the SC capabilities: understand what its SC is designed to do well 3. Achieving Strategic Fit STEP 1: UNDERSTANDING THE CR SUPPLY CHAIN UNCERTAINTY Must identify needs of cr Customer demand from different segments varies along several attributes: o Quantity of product needed in each lot: An emergency order for mtrl needed to repair production line is likely to be small Order for mtrl to construct new production line is likely to be large o Response time that crs are willing to tolerate: tolerable response time for emergency is likely to be short o Variety of products needed: cr may place high premium on availability of all parts of an emergency repair order from a single supplier o Service level required: cr placing emergency order expects high lvl of product availability Cr may go elsewhere if all parts of order arent immediately available o Price of the product: cr placing emergency order less price sensitive then construction order o Desired rate of innovation in the product
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