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Questions and Answers

What defines the set of customer needs a firm seeks to satisfy through its products and services?

Supply chain strategy

Marketing and sales strategy

Product development strategy

Competitive strategy (correct)

Which strategy specifies how the market will be segmented and products positioned?

Product development strategy

Competitive strategy

Marketing and sales strategy (correct)

Supply chain strategy

What is essential for achieving a strategic fit?

Focus solely on cost reduction in supply chain

Consistency between customer priorities and supply chain capabilities (correct)

Maximizing product output regardless of market needs

Alignment between supply chain capabilities and competitor analysis

Why might a company fail regarding strategic fit?

Lack of strategic fit or inadequate resources to execute the strategy Signup and view all the answers

What can be considered an example of a company achieving strategic fit?

Dell with its integrated supply chain and customer focus Signup and view all the answers

What does a supply chain strategy determine?

The nature of material procurement and product distribution Signup and view all the answers

Which functional strategies need to be consistent with supply chain strategy?

All functional strategies including competitive and marketing strategies Signup and view all the answers

Which of the following is NOT a component of achieving strategic fit?

Market competition evaluation Signup and view all the answers

What is the primary view focused on in the intracompany intrafunctional strategic scope?

Minimize Functional Cost Signup and view all the answers

Which strategic scope aims to maximize the company's overall profit?

Intracompany Interfunctional Signup and view all the answers

What is a key goal of the intercompany interfunctional strategic scope?

Maximize Supply Chain Surplus Signup and view all the answers

How does intracompany intraoperation strategic scope primarily benefit a company?

By minimizing local costs Signup and view all the answers

Why is expanding the scope of strategic fit across the supply chain important?

To enhance overall company performance Signup and view all the answers

What is the primary characteristic that a supply chain should prioritize during the early stages of a product's life cycle?

High product availability Signup and view all the answers

How does Levi Strauss manage its supply chain for customized jeans compared to standard-sized jeans?

Customized jeans are manufactured more flexibly. Signup and view all the answers

What happens to the supply chain strategy as products mature in their life cycle?

It shifts from responsive to efficient. Signup and view all the answers

In the later stages of a product's life cycle, what becomes a significant factor in customer choice?

Price Signup and view all the answers

What is the strategy employed by W.W. Grainger for managing inventory of high implied demand uncertainty products?

Store fast-moving items in decentralized locations Signup and view all the answers

Which of the following is NOT a hallmark of the demand uncertainty in the beginning stages of a product's life cycle?

Low product availability Signup and view all the answers

What is the main supply chain goal for a pharmaceutical firm introducing a new drug?

Responsiveness with high product availability Signup and view all the answers

What is the effect of competition on margins in the later stages of a product's life cycle?

Margins decrease due to increased competition Signup and view all the answers

What is essential for a firm to retain strategic fit over time?

Adjusting supply chain strategy as competitive conditions change Signup and view all the answers

Which supply chain lever is NOT listed for managing uncertainty?

Quality Signup and view all the answers

What characterizes the intra-company intraoperation scope?

Minimize local costs within operations Signup and view all the answers

What outcome does the intercompany interfunctional scope strive for?

To maximize supply chain surplus Signup and view all the answers

Which element is NOT a proposed category of expanding strategic scope?

Intrapersonal functional scope Signup and view all the answers

How does the Internet influence competitive conditions for supply chains?

It enables companies to offer a wider variety of products Signup and view all the answers

What do strategic fit and supply chain strategy mainly require firms to evaluate?

The entire supply chain perspective Signup and view all the answers

What should a firm focus on to adapt to increasing competitive pressures?

Providing a greater variety of products at reasonable prices Signup and view all the answers

Which aspect is NOT a part of supply chain responsiveness?

Reducing operational costs Signup and view all the answers

How does increasing responsive capabilities affect supply chain efficiency?

It results in higher costs and lower efficiency Signup and view all the answers

What is represented in the cost-responsiveness efficient frontier?

The relationship between responsiveness levels and associated costs Signup and view all the answers

What is the primary goal of achieving strategic fit in a supply chain?

To ensure consistency between supply chain capabilities and customer needs Signup and view all the answers

What do firms aim to connect on the uncertainty/responsiveness map?

Supply chain capabilities with implied demand uncertainty Signup and view all the answers

Which range of stockout rates corresponds to a highly responsive supply chain?

10%-40% Signup and view all the answers

What is a typical characteristic of a firm with high supply chain responsiveness?

Short lead times Signup and view all the answers

In the context of supply chain management, what does a forced season-end markdown of 10%-25% indicate?

Potential overstock situations leading to markdowns Signup and view all the answers

What key factor does implied demand uncertainty depend on?

Product attributes and customer needs Signup and view all the answers

What happens to implied demand uncertainty when the variety of products required increases?

It increases Signup and view all the answers

How does a decrease in lead time affect implied demand uncertainty?

It increases the uncertainty Signup and view all the answers

Which customer need would likely lead to a higher implied demand uncertainty?

High required service level Signup and view all the answers

What attribute is inversely related to implied demand uncertainty?

Product margin Signup and view all the answers

Which of the following is NOT a characteristic of implied demand uncertainty?

Quality of product materials Signup and view all the answers

What signifies a predictable supply and uncertain demand?

Introduction of a new electronics device Signup and view all the answers

When looking to achieve strategic fit, which aspect is NOT included in understanding customer needs?

Organizational structure Signup and view all the answers

The spectrum of implied demand uncertainty includes which of the following categories?

Completely predictable demand Signup and view all the answers

Increasing the number of channels through which products are sold will have what impact on implied demand uncertainty?

It will cause demand to be disaggregated Signup and view all the answers

Study Notes

Supply Chain Management

These slides are for learning purposes only in the Global Supply Chain Management course.
Slides are not a substitute for textbook readings and complement them.
Do not distribute the slides.

Achieving Strategic Fit and Scope

Strategic fit is crucial for a company's success.
A company's failure can be due to a lack of strategic fit.

Competitive and Supply Chain Strategies

Competitive strategy defines a firm's customer needs.
Product development specifies the portfolio of new products.
Marketing and sales specify how the market will be segmented.
This includes product placement, pricing, and promotion.
Supply chain strategy determines material procurement, transportation, manufacturing, and distribution of products.
Consistency between supply chain, competitive, and other functional strategies is important.

The Value Chain: Linking Supply Chain and Business Strategy

New Product Development, Marketing and Sales, Operations, Distribution, and Service are parts of the value chain.
Finance, Accounting, Information Technology, and Human Resources support these sections.

Achieving Strategic Fit

Strategic fit is the match between customer priorities and supply chain capabilities.
Competitive and supply chain strategies share common goals.

How is Strategic Fit Achieved?

Step 1: Understanding the customer and supply chain uncertainty
Step 2: Understanding the supply chain
Step 3: Achieving strategic fit.

Step 1: Understanding the Customer and Supply Chain Uncertainty

Identifying customer segment needs is critical.
Factors like quantity ordered and response time are important.
Variety, service level, price, and desired rate of innovation are elements to consider
Overall and implied uncertainty of customer demand impacts the supply chain.

Levles of Implied Demand Uncertainty

Predictable and uncertain supply and demand characteristics need to be understood
The level of uncertainty varies based on how much unpredictability exists in customer demand and supply characteristics.
Examples include salt at a supermarket and a new communication device

Correlation Between Implied Demand Uncertainty and Other Attributes

For products with low implied demand uncertainty, there is low product margin, 10% average forecast error rate, and 1-2% average stockout rate
For products with high implied demand uncertainty, there is high product margin, 40 to 100% average forecast error, and 10-40% average stockout rate.

Step 2: Understanding the Supply Chain

Firms must understand how they best meet demand.
Supply chain responsiveness defines the ability to respond to various demands and handle large product varieties and innovative products, as well as meet high service levels.

Step 2: Understanding the Supply Chain - Continued

There are costs involved in supply chain responsiveness.
Supply chain efficiency: the cost of making and delivering a product to a customer
Increasing responsiveness will result in higher costs, which decrease efficiency.
Cost-responsiveness efficient frontier shows the spectrum of responsiveness and costs.

Step 3: Achieving Strategic Fit

Supply chain strengths must align with customer preferences and needs.
Uncertainty/Responsiveness maps identify the correct balance between various strategies.
There is a zone of strategic fit demonstrating the alignment between responsiveness and uncertainty
All functions in the value chain must support the competitive strategy for strategic fit.
Examples include efficient supply chains/Barilla and responsive supply chains/ Dell.

Step 3: Achieving Strategic Fit - Continued

There is no right supply chain strategy independent of competitive strategy.
The firm needs a right supply chain strategy contingent on competitive strategy which varies according to factors like products/functional and products/innovative.

Hau Lee's Supply Chain Uncertainty Framework

Hau Lee's model for various supply chain strategies for low and high demand uncertainty and supply uncertainty.
The model demonstrates 4 distinct strategies (Efficient SC, Responsive SC, Risk-Hedging SC, and Agile SC)
The model defines the various types of supply chain strategies including:
Examples of strategies include: Toothpaste, Fashion clothing, Oil reserve, and Hi-Tech components

Comparison of Efficient and Responsive Supply Chains

Different aspects of efficient and responsive supply chain strategies are presented.
Primary goals, product/design strategies, pricing strategies, manufacturing strategies, inventory strategies, lead time strategies, supplier selection strategies, and transportation strategies are outlined as differing characteristics between the two strategies.

Other Issues Affecting Strategic Fit

Multiple products and customer segments
Product life cycle
Competitive changes over time
Growing supply chain uncertainty

Multiple Products and Customer Segments

Firms must balance efficiency and responsiveness between different customer segments and their products
Two approaches are differentiated supply chains and tailor supply chains to the needs of each product

Multiple Products and Customer Segments - Continued

Examples of firms balancing different types of products and customer segments are shown.
Examples of multiple products and customer segments include a departmental store carrying seasonal items with high uncertainty (ski jackets) and low uncertainty (T-shirts).

Tailoring the Supply Chain

Balancing efficiency and responsiveness is critical to effective supply chain strategies.
Using different delivery methods is one way that firms tailor their supply chains.

Product Life Cycle

Products undergo predictable stages in their lifecycles.
During the beginning stages of a product, responsiveness and high product availability are crucial factors
Later stages of product life cycle may require the adoption of efficiency to decrease costs

Changes in Supply Chain Strategy (over the PLC)

As products mature, the supply chain strategy should shift from responsive to efficient.

Key Point

Strategic fit is achieved by tailoring the supply chain to meet the needs of different customer segments.
Adapting supply chain strategy is critical to maintaining strategic fit over the life cycle of a product and in response to competitive landscape changes.
Companies must consider factors of competitive changes and the need for adaptability in supply chain strategies.

Competitive Changes Over Time

Competitive pressures can change over time
Increased emphasis on variety and reasonable pricing may result from more competitors.
The internet and e-commerce make offering a wider variety of products easier

Supply Chain Levers to Deal with Uncertainty

Capacity, Inventory, Time, Information, and Price levers are used in making supply chains more responsive to uncertain conditions

Expanding Strategic Scope

Strategic fit includes all functions and stages in the supply chain with shared objectives.
All functions in each stage can develop their individual strategies
Five categories of strategies exist : Intracompany intraoperation, intracompany intrafunctional, intracompany interfunctional, intercompany interfunctional, flexible interfunctional
Firms must evaluate all supply chain actions to maximize company surplus

Expanding Strategic Scope - Continued

The intra-company intraoperation strategy has the goal of minimizing local costs.
The intra-company intrafunctional strategy prioritizes minimizing functional departmental costs.
The intra-company interfunctional strategy focuses on maximizing company profits.
Intercompany interfunctional aims to maximize supply chain surplus.

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