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Outline
Competitive and supply chain strategies
Achieving strategic fit
A framework for structuring drivers
Supply chain drivers
What is the right supply chain
for your product(s)?
New Marketing
Product and Operations Distribution Service
Development Sales
Competitive Strategy
Wal Mart
High availability of a variety of reasonable
quality products at low prices
Dell
Customization and variety at a reasonable
cost with customer having to wait
approximately 1 week to get their product
Seven Eleven
Provide convenience and sufficient variety of
product for customers who are in a hurry
Strategic Fit
Strategic fit:
Consistency between customer priorities of
competitive strategy and supply chain
capabilities specified by the supply chain
strategy
Competitive and supply chain strategies
have the same goals
8
Understanding the customer
7 Eleven Japan and NTUC Warehouse Club
Attributes or Priorities
Price
Response time Implied
Service level Demand
Lot size Uncertainty
Product variety
Innovation
Competitive Strategy
Responsiveness
Critical Spare Parts (Aircraft spare parts,
medical equipment parts, server parts)
Innovative electronic product
Efficiency
Major grocery store eg NTUC
Comparison of Efficient and Responsive
Supply Chains
Efficient Responsive
Primary goal Lowest cost Quick response
Product design strategy Min product cost Modularity to allow
postponement
Pricing strategy Lower margins Higher margins
Mfg strategy High utilization Capacity flexibility
Inventory strategy Minimize inventory Buffer inventory
Lead time strategy Reduce but not at expense Aggressively reduce even if
of greater cost costs are significant
Supplier selection strategy Cost and low quality Speed, flexibility, quality
Transportation strategy Greater reliance on low cost Greater reliance on
modes responsive (fast) modes
High
Supply Chain B
Supply Chain A
Low
Cost
High Low
Cost-Responsiveness Efficient Frontier
Responsiveness
High
Future Frontier
Current Frontier
Supply chain A
Low
Cost
High Low
Responsivenes
s spectrum
Efficient
supply chain
22
Case Discussion
Dell whose business is in consumer e-
business is now selling its computers
through retailers like WalMart in US, Gome
Electrical Appliance Holdings in China,
Carrefour in Europe, Bic Camera in Japan,
and the Croma chain of electronics stores in
India’s Tata group. Based from the lecture
on competitive and supply chain strategies,
why do you think Dell is selling its
computers through retailers?
23
Facilities
Role in the supply chain
the “where” of the supply chain
Customer
DC
Customer
DC
Inventory: Role in the Supply
Chain
Role in the supply chain
Mismatch between supply and demand
32
Next Day Delivery
City 1 City 5
City 2 City 6
City 3 City 7
City 4 City 8
33
Seattle Detroit
San
New York
Francisco
Boston
Los Angeles
Phoenix Orlando
Miami
Dallas
Hub and Spoke Systems
Seattle
Detroit
San Francisco New York
Boston
Los Angeles
Phoenix Orlando
Miami
Dallas
Information: Role in
the Supply Chain
Role in the supply chain
The connection between the various stages in the supply
chain – allows coordination between stages
Crucial to daily operation of each stage in a supply chain –
e.g., production scheduling, inventory levels
Role in the competitive strategy
Supply chain to become more efficient and more
responsive at the same time reduces the need for a trade-
off
Warehouse Visibility
Sourcing
Role in the supply chain
Sourcing decisions are crucial because they affect the level
of efficiency and responsiveness in a supply chain
Role in the competitive strategy
Sourcing decisions are crucial because they affect the level
of efficiency and responsiveness in a supply chain
In-house vs. outsource decisions- improving efficiency and
responsiveness
Pricing
Role in the supply chain
Pricing determines the amount to charge customers in a
supply chain
Pricing strategies can be used to match demand and
supply
Role in the competitive strategy
Firms can utilize optimal pricing strategies to improve
efficiency and responsiveness
Low price and low product availability; vary prices by
response times
Dell
Less Than Container Load
(LCL)
Supplier 1
Walmart 1
Supplier 2
Walmart 2
Supplier 3
Walmart 3
Walmart 1
Walmart 2 -- Consolidation
Walmart 3
Supplier 1
Suppliers 1,2,3 & 4
consolidation Walmart 1
Supplier 2
DC
Walmart 2
Cross-Dock
Long Haul
Supplier 2
DC DC Walmart 2
Cross-Dock Cross-Dock
Supplier 3
Walmart 3
Supplier 4
Within a same region Within a same region
Store 2
Supplier 3 DC
Cross-Dock
Store 3
Supplier 4
DC
Cross-Dock Store 5
DC
Cross-Dock
DC Store 6
Cross-Dock
Store 4
Push/Pull View of
Supply Chain Processes
Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to customer demand
Pull
Push
Push/Pull View of
Supply Chain Processes
Useful in considering strategic decisions relating to
supply chain design – more global view of how
supply chain processes relate to customer orders
Example
NTUC
Dell
Customer order
arrives
Replenishment Cycle Supplier/
and Manufacturing Cycle Manufacturer
Push Process
Dell
Customer
Direct Shipment
Master Board
Customer’s Order
SRAM
FRIDAY , OCTOBER 23, 2015 THE STRAITS TIMES
50
TUESDAY , NOVEMBER 10, 2015 THE STRAITS TIMES
51
Latest move to
boost productivity
52
Glimpse of the Future
53
Summary
Why is achieving strategic fit critical to a company’s
overall success?
How does a company achieve strategic fit between its
supply chain strategy and its competitive strategy?
What are the major drivers of supply chain
performance?
What is the role of each driver in creating strategic fit
between supply chain strategy and competitive
strategy (or between implied demand uncertainty and
supply chain responsiveness)?