Supply Chain Management Overview

Supply Chain Network

• Supply chains are complex networks
• Logistics costs are a significant portion of final product prices and they keep increasing due to longer supply chains, tight capacity, and high demand.

SHEIN

• SHEIN utilizes a fast fashion model, focusing on quick turnaround times and trend-driven products
• They use a combination of contract manufacturing in China and other countries
• Their supply chain involves a large number of suppliers and manufacturing facilities to support rapid production

Reshoring

• Reshoring involves moving manufacturing and other business operations back to a company's home country.
• It can lead to increased efficiency by reducing transportation costs and lead times, and improving communication with suppliers.

Key Questions

• What are the key elements that drive the solution to a problem?
• What makes a supply chain effective?
• What are the different strategies available to manage a supply chain?
• What are the advantages and disadvantages of each strategy?

Push/Pull Postponement Strategy

• Push/Pull postponement strategy is a hybrid approach that combines elements of both push and pull strategies
• This approach delays product customization until the point of sale or delivery, allowing for greater flexibility and responsiveness to changing customer demands.
• The manufacturer begins production based on a forecast and continues production until the final stage, where it creates a specific product based on the customer's order, which could be a specific color, size or configuration, that is then packaged and shipped.

Supply Chain Integration Strategies

• Supply chain integration strategies aim to improve the effectiveness and efficiency of a supply chain by coordinating and collaborating with different stakeholders.
• The level of integration and the flow of information vary depending on the position within a company's supply chain.

IKEA

• IKEA focuses on flat-pack furniture, self-assembly, and a highly efficient supply chain strategy
• IKEA builds its products at the point of sale, instead of in advance, by using a pull-based approach.
• They maintain low inventory levels, reducing storage costs and waste, and are able to ship products to customers quickly and efficiently.

Traditional Manufacturer

• Traditional manufacturers rely on a push-based supply chain strategy, where they base orders on the forecasts of retailers
• They have a large amount of inventory on hand, which can lead to high warehousing costs and a risk of obsolescence.
• They use a traditional pull-based supply chain model, where orders are based on customer demand rather than forecasts.

Push-Based Supply Chain

• A push-based supply chain relies on forecasts to determine production levels and push products through the supply chain.
• This approach can be efficient for products with stable demand and predictable lead times.
• It is also used for products with a long production lead time.

Pull-Based Supply Chain

• A pull-based supply chain responds to actual customer orders, where products are manufactured only when they are needed.
• This strategy is more flexible and responsive but can be challenging to implement in a complex and dynamic environment.
• This approach is often used for products with short lead times and high variability in demand.

Push/Pull Boundary

• The push-pull boundary marks the point in the supply chain where the strategy shifts from a push to a pull-based approach
• The location of the boundary depends on the product, the market, and the company's overall business strategy.

3D Printing

• 3D printing can enable manufacturers to produce products on demand, reducing lead times and increasing customization options.
• However, 3D printing is not yet widely adopted for large-scale production, and its cost effectiveness can vary depending on the application.

E-Fulfillment

• E-fulfillment is the processing of online orders
• The supply chain of online retailers is vastly different from traditional stores, and they experience much higher return rates
• E-commerce companies need to focus on creating a seamless and convenient customer experience.

Amazon Prime

• Amazon Prime uses an extreme push strategy, proactively sending products to customers for them to try before buying.
• This strategy aims to increase conversion rates by giving customers a hands-on experience.

Uber and Thuisbezorgd

• Third-party delivery services, such as Uber Eats and Thuisbezorgd, use an extreme pull strategy.
• They only supply products to customers when an order is placed, and they primarily act as intermediaries rather than manufacturers.

Walmart and Amazon

• The internet has a significant impact on how companies like Walmart and Amazon sell their products.
• They use online platforms to offer a wider selection of products and provide customers with convenient ways to shop.

The Great Inventory Correction

• This case discusses the significant oversupply of inventory in the tech sector which led to significant financial write-downs.
• This downturn was due to a rapid decline in demand that caught many companies off guard.

Altera's Strategy Modification

• Altera shifted from a push-based model to a more flexible strategy that involves:
• Maintaining minimum inventory levels at key stages
• Relying heavily on contract manufacturers
• Using "quick turn" assembly plants to respond to changing demand.
• Implementing collaborative planning forecasting and replenishment (CPFR) to improve information sharing with suppliers.

Flextronics Information Leverage

• Flextronics has access to information about demand patterns and market trends which their clients may not have.
• They leverage this information to forecast demand more accurately, optimize production levels, and make better decisions about inventory management.

Disadvantages of Push-Based Supply Chains

• The push-based model can result in inventory backlogs and increased cost of carrying excess inventory.
• It can cause extended lead times and can be difficult to adapt to fluctuating demand.

Advantages of Push-Based Supply Chains

• The push-based model is an efficient way of producing and distributing large quantities of goods with stable demand.
• It can lower the costs of production due to the predictability of demand and can be a good fit for products that take a long time to produce.

Customer Reactions to Changes in Supply Chain Strategy

• Customers may become frustrated with longer lead times and reduced product availability when a company shifts to a pull-based strategy.
• However, customers typically appreciate improved flexibility, quicker response times, and better accuracy in fulfilling orders.

Total Working Processing Time

• The total working processing time indicates the time it takes for a product to be manufactured and delivered.
• It includes all the steps in the supply chain, such as procurement, manufacturing, and shipping.
• The calculation is a combination of the time it takes to manufacture the products, the time it takes to ship them, and the time it takes to receive an order and process it.

Explore the complexities of supply chains, focusing on logistics costs, fast fashion models like SHEIN, and the concept of reshoring. This quiz addresses key elements that drive effective supply chain management and various strategies to enhance it. Test your knowledge on how these factors influence modern business operations.