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Responsive Supply Chain Management in Manufacturing Industry

By HWA | Publish On: May 23, 2011 | Posted In:

Responsive Supply Chain Management in Manufacturing Industry from

Responsive Supply Chain management in manufacturing industry is one of the aspects of emphasis.

In Supply Chain Management, we can see that supply chain managers are overwhelmed with a range of leading-edge supply chain strategies and new business initiatives. However, not all these initiatives and strategies are appropriate for all businesses. Supply chain managers need to understand the constraints of the supply of their products and the uncertainties with the right supply chain strategies.

In designing the supply chain in an e-biz environment, companies have to integrate various aspects of competitive priority, the nature of the product and the complexity of the manufacturing process in order to be successful. When designing a supply chain, some fundamental principals of the value chain should be exploited to respond quickly to the dynamic business environment. As such, supply chain design needs to be fine-tuned constantly to match the evolving industry paradigm.

When new product introductions are frequent and product variety is high, the responsive supply chain option is more attractive as it reacts quickly to market demand. When the product life cycle is long, demand is relatively stable and demand volume is high, the efficient supply chain is more appropriate. Both responsive supply chain and efficient supply chain can be applied to fast, medium and slow clock speed products.

Why choose

A product clock speed can be fast, medium or slow. A product life cycle and its manufacturing process life cycle is associated with the product clock speed.

An Overview of Responsive Supply Chain in Manufacturing Industry

Responsive supply chain and fast clock speed product – personal computer

  • The PC industry is a fast clock speed industry. Here the industry faces short product life cycles. The product is generally made in a make-to-order production environment. Facing this business environment, PC producers adopt the responsive supply chain strategy to reduce the order cycle, production cycle, and procurement cycle. Let us consider Dell Computer as an example.
  • Dell Computer designs manufacture and market a wide range of systems that include desktops, notebooks, workstations, and network servers. Dell also markets software and peripherals as well as service and support programs.
  • It is centered on two key elements: a direct business model and intense customer focus, Dell strives to eliminate retailers and other resellers so as to reduce product delivery cycle time and cost. Dell sells computer systems and related services directly to customers in the global market through the internet and call centers.
  • To reduce the order cycle, Dell uses the internet and call centers to promote its direct order model. The traditional PC supply chain has a distribution network as an additional link in the supply chain. Customers can order PCs directly from Dell and configure computers to meet their needs.
  • The orders are directly routed to the manufacturing floor. From there the PCs are built, tested and sent to the customers all within 5-7 business days after the customers placed the orders. Dell’s direct model allows for a better understanding of customer needs.
  • To reduce its procurement cycle time, Dell shifts from a traditionally fashioned assembly line to cellular manufacturing techniques and established strategic alliances with its key suppliers.
  • It forges partnerships with reputable suppliers rather than integrating backward into parts and components manufacturing. Since new parts and components are introduced so fast that inventory is obsolete in a matter of months or even quicker. Dell only holds its inventory for not more than 10 days.
  • Meanwhile, Dell supplies its inventory data and production needs to its suppliers at least once a day. Collaboration with suppliers is close enough to allow Dell to operate with only a few hours of inventory for some parts and a few days of inventory for other components. Dell’s direct model capitalizes the benefits of e-commerce.

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This article is in continuation with our previous article on Supply Chain Management

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