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Customer Segmentation: The first principle of any successful supply chain is to fully understand customers and their needs. Customers must be segmented based on service needs rather than the industry. The services must then be tailored according to the respective segments.
Logistics Network Customization: Tailor the logistics network and concentrate intently on the service needs and on the productivity of the identified customer segments.
Planning: Understand the market demand and plan consequently. Planning must cover the entire supply chain to trace signals of varying demand.
Product Differentiation: Differentiate product closer to the customer. Companies cannot hold inventory (safety or buffer stock) to account for poor demand forecasting
Strategic Supply Management: By working closely with key component suppliers the supply sources can be managed strategically, thereby reducing the overall costs of owning materials and services.
Supply chain wide IT strategy: To provide a clear view of the product, service and information flow an IT strategy that spans the entire supply chain and facilitates decision making at various levels must be formed.
Performance Management metrics: Implement performance evaluation metrics that are relevant to every link in the supply chain and measure true profitability at every stage.
By adopting a mixture of these best principles along with information technology, a company can gain integrated forecasting, planning, and execution capabilities with complete supply chain visibility. With such supply chain capabilities, a company can combine its orders and study the material requirements instantly
Dell Computers: Dells supply chain. Dell was struggling as a second tier PC maker until 1994. After it implemented a new business model, “build to order”, Dell eliminated its inventories and adopted a direct selling approach. The just-in-time (JIT) system yielded rich dividends. Dell quickly became a market leader. Dell was able to make computers much faster than it produced earlier. Plant uptime also went up to a record 95 percent. Click to download full text of this Case Study in PDF format: Dell's Supply Chain Management Strategy
Baxter: Baxter; in the hospital supply business established powerful partnerships with hospital customers in the mid 80’s. Baxter adopted ‘vendor managed inventory’ and managed its customer’s inventories within their hospital facilities. Also, by following ‘stockless system’, a supply chain innovation, Baxter transformed itself from a supplier of increasingly commodity like products to a distinguished provider of value added services.
Procter and Gamble (P&G): The ‘continuous replenishment system’ was pioneered by P&G when it partnered with Wal-Mart. Based on Wal-Mart’s product movement data; P&G replenished the stores. This supply chain innovation brought a striking turnaround in the consumer products and retail industries.
Scholastic, a world's leading publisher and distributor of children's books is another example of a supply chain master as it increased revenues substantially, by adopting a unique supply chain business model.
An innovative supply chain is largely driven through sharp business focus and synergy generated from an integrated functional approach. Some key factors that are essential to build an innovative supply chain are:
Innovation is not a new discipline in most organizations. However, the usual strategies in innovation and approaches adopted and succeeded in the '80s and '90s, are no longer sufficient. Organizations must involve in exciting experiments and innovation to reinvent the way they create the future, for "business as usual" does not always produce the desired results.
In a dynamic environment, organizations are forced to adopt an innovative supply chain management strategy to ensure success and long term survival. For best results, innovation should be backed by the management and elicit the participation of all the employees. Innovation has always led organisations to stand out
Essential principles for managing innovation:
• Comprehensive approach to innovation.
• Innovation must include an organised, systematic, and continual search for new opportunities
• Involve everyone in the innovation process.
• Work constantly to improve the environment for innovation.
Which Service Provider Is Right For Your Supply Chain Project?
IT View and Business View Market Overview, by Patrick M. Connaughton
Supply chain management (SCM) service providers play an important role in helping enterprises more efficiently plan and execute their supply chain strategies. Spending on SCM services will continue to grow due to increasingly complicated global networks, the mashing up of SCM operations with new mergers and acquisitions, and high profile sustainability issues that push SCM up to the C-level agenda. However, choosing a service provider can be a risky decision as many companies report missed expectations and failed projects. To avoid disappointment, buyers must select a consultancy that closely matches their needs by understanding the key characteristics of the four types of SCM service providers: 1) offshore/nearshore technology providers; 2) strategy consultants; 3) global, full-service systems integration firms; and 4) software vendor professional services.
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