barcode using vb.net Strategic Supply Chain Management in Software

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Strategic Supply Chain Management
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F I G U R E 1 1
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Types of operations strategies.
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When to Choose This Strategy For standardized products selling in high volume
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Strategy
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Bene ts Low manufacturing costs; meeting customer demands quickly Customization; reduced inventory; improved service levels Low inventory levels; wide range of product options; simpli ed planning Enables response to specific customer requirements
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Make to stock
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Con gure to order
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For products requiring many variations
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For customized products or products with infrequent demand For complex products that meet unique customer needs
Engineer to order
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Operations strategies by industry.
Consumer Packaged Goods Chemicals, Pharma Semiconductors A&D, Auto, Industrial Computers Telecom, Electronics Medical Devices 0% Make to Stock 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Configure to Order
Make to Order
Engineer to Order
Copyright 2004 The Performance Measurement Group, LLC
CHAPTER 1 Core Discipline 1: View Your Supply Chain as a Strategic Asset
We worked with these companies to combine make-to-stock and configure-to-order strategies. Vanilla products were produced and stored in a central distribution center. When orders came in from each market, products were customized and shipped accordingly. Availability shot up and inventory went down in part due to the central inventory but also because the new approach simplified supply chain planning since procurement and manufacturing could focus on generic products instead of hundreds of language variants. It may be to your advantage to choose different operations strategies for different products or market segments. Automobile makers have long pursued a make-to-stock strategy, but some especially European manufacturers of high-end vehicles have aggressively pursued make-to-order and configure-to-order strategies, an approach we call Dell on Wheels. 1 However, make to order has its limits, as automobile makers are finding. Offering passenger cars on a make-to-order basis while maintaining a competitive lead time is a tremendous challenge given the millions of potential end configurations. Unless suppliers can be fully integrated into the maketo-order supply chain, the inventory risk is very high. In addition, changing the manufacturing process to allow each car to match a unique set of characteristics is a very costly undertaking that few OEMs have been willing to embrace. In 2002, only about 20 percent of passenger cars sold in North America were made to order. The rest were made to stock and sold from dealer lots. In Europe, the percentage of made-to-order vehicles was greater. In the German domestic market, for instance, about 60 percent of the high-end cars made by BMW, Audi, Porsche, and Mercedes were made to order. Like the other supply chain configuration components, operations strategy is dynamic. A key driver is the product life cycle. As demand for products peaks and then decreases, companies can move from make to stock to make to order to reduce inventory risk while still ensuring availability at a competitive price. Another driver is the number of product variants. It is not unusual to find that 80 percent of volume shipments comes from just 20 percent (yes, Pareto at work again) of your sales item numbers (or possible configurations). In this circumstance, a hybrid make-to-stock and make-to-order strategy may be more appropriate.
Channel Strategy
Your channel strategy has to do with how you ll get your products and services to buyers or end users. These decisions address such issues as whether
Strategic Supply Chain Management
you ll sell indirectly through distributors or retailers or directly to customers via the Internet or a direct sales force. The market segments and geographies you re targeting will drive your decisions in this area. Since profit margins vary depending on which channels are used, you have to decide on the optimal channel mix and who gets the goods in times of product shortages or high demand. Market leaders use effective channel strategies to reap significant gains. Dell, with its direct-sales model, and Wal-Mart, with its superstore model, offer compelling examples of how channel choices can deliver a competitive advantage. Novell s value-added reseller channel, one of the best early examples of a technology-oriented channel, helped prop the company up at a time when it had serious technological problems to overcome. And Microsoft s dealer channels provide a range of services to buyers from leasing to training and help-desk support. Consider the multi-billion-dollar bottled water industry and its two major markets: spring water and distilled water. While spring water requires on-site bottling, distilled water can be bottled at any municipal water source using any local bottling company. The industry uses three different distribution methods to serve its three major consumer segments: Traditional retail distributors serve the retail customers, vending machines serve the individual consumer market, and service agents install, maintain, and replenish onsite water units for home and office users. Each segment requires different supply chain processes, assets, channels, and supplier relationships and performance levels. If you were a new player in the bottled water industry, would you sell your product through distributors that already have relationships with key retailers or distribute directly to those retailers If you chose the distributor channel, would you integrate your order management and inventory management systems with the distributors systems If so, to what extent, and who should pay for it Would you maintain dedicated inventory for all distributors or only those distributors which you consider to be strategic partners These decisions drive your company s asset and cost performance and must be a part of your overall channel strategy along with decisions on pricing, vendor financing policies, promotions, and other terms and conditions.
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