Different Supply Chain Strategies
Wikipedia defines Supply Chain Management (SCM) as “the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.” However, for managing a well-designed and well-planned supply chain that allows on time delivery of value added goods, a well thought out strategy is required.
Just as “one size does not fit all” a generic supply chain strategy will not be able to meet the demands and requirements of companies manufacturing different kinds of products for various markets. Not all products have the same demand and the same lifecycle. Hence, depending on a generic supply chain strategy for manufacturing products would be in no way effective. The ultimate goal of designing a supply chain strategy is to improve efficiency and reduce costs. And this is possible only by coming up with a well-designed strategy that takes into account product attributes, customer requirements and market characteristics.
Supply chain strategies are divided into various categories namely Lean, Agile, Postponement and Speculation. Let’ look at each in detail.
Lean
It revolves around the concept of designing a well run supply chain by reducing waste and non-value added activities. In any form of supply chain, waste happens in the form of time, costs and inventory. To build a lean supply chain, companies must look at every process in their supply chain (such as manufacturing, warehousing, transportation and returns management) and implement corrective measures to reduce waste and resources. A lean supply chain strategy helps companies to enhance performance and profitability.
Agile
Agile supply chain strategy helps companies to respond to constantly changing customer demand. The key aspects of agile supply chain strategy are flexibility and speed. It revolves around the concept of ensuring customer satisfaction through swift, accurate and effective implementation of various supply chain activities.
Postponement
Supply chain postponement strategy deals with the concept of delaying the final manufacturing until the receipt of the actual customer order. Such a strategy helps in minimizing risks of wrong manufacturing or incorrect inventory. Moreover, supply chain postponement helps companies to not only avoid stocking unwanted products but also enhance customer satisfaction by delivering customers with latest products.
Speculation
This supply chain strategy focuses on increasing savings by manufacturing and distributing finished goods in bulk. It helps to reduce costs by maximizing the uses of resources, warehousing and transportation.
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