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Flexibility
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Advanced Planning and Scheduling (APS)
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CHAPTER 6 A Roadmap to Change
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asset cushions of the past. They ll use a combination of internal flexibility (e.g., highly configurable products and effective use of postponement strategies), supplier flexibility, and the ability to substitute highly accurate information for physical inventory.
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Simultaneity refers to the execution of supply chain activities in parallel rather than sequentially. It results in start-to-finish transactions that can be completed quickly without further inputs, allowing greater customer responsiveness and lower transaction costs. This means that each participant has all the information needed to make decisions at the moment an event such as a new customer order or replenishment signal occurs. Within the extended supply chain, this information is available both within an enterprise and, for collaborative practices, between the organization and its trading partners. A supply chain that is transparent, flexible, and simultaneous can substitute execution based on real-time requirements for the frequent planning and replanning that characterize most supply chains today, enabling increased manufacturing responsiveness and automatic sequencing and fulfillment of customer requirements. Why are these elements so important For one thing, the supply chain is fast becoming a critical driver of both shareholder value and competitive differentiation. The pressures of global competition that exist today will increase in the years to come, making a focus on efficiency and ongoing cost reduction essential for staying power. In addition, supply chain performance will grow in importance as a competitive differentiator as companies become better at adapting their supply chain strategies and capabilities in accordance with changing market requirements. Solid processes will be the price of entry; superior processes will set companies apart. We ve noted that the next generation is all about integration and the innovation results in a highly integrated supply chain that can have an impact on both revenue and profitability. This means that you need to build your roadmap with a vision of the future in mind and the innovative practices and tools that will enable this vision to become a reality. While every industry is different, we see several trends that should be incorporated in any company s vision of the future. As the supply chain becomes a larger contributor to both the top and the bottom lines, activities that occur before and after a product ships will
Strategic Supply Chain Management
become increasingly important. In the next generation, the supply chain will be used as a way to increase sales opportunities and enhance customer relationships before, during, and after the sale. This means that you ll need to pay close attention to the front end of the supply chain the activities associated with demand creation and the increasing impact of the Internet, online marketplaces, and collaborative relationships. And as customers focus increasingly on their total cost of ownership, they will look for suppliers who can extend superior supply chain execution to their service offerings. Thus your roadmap also needs to include a focus on the service supply chain. We expect that today s trend toward outsourcing will continue to gather steam and that, in the future, companies will outsource even more heavily in an attempt to transition as many fixed costs to variable costs as possible. This means that effective collaboration will be even more critical to success. Companies will need to be highly skilled at evaluating their prospective partners and identifying those with whom a relationship will result in the maximum economic value for each party. Logistics service providers and manufacturing outsourcers will expand their skill sets, helping their customers increase efficiencies while reducing labor requirements. As technologies such as Web-enabled planning and optimization tools continue to advance, more data will be available, and integration with suppliers and customers will become more straightforward. At the same time, the functionality enabled by these technologies will become more modular, commoditized, and widely available. This means that information systems aren t likely to provide the level of competitive advantage they imparted in the past; as with robust processes, they simply will be the price of entry.
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