What Is the Right Supply Chain for Your Product - Article Example

? What is the right supply chain for your product? What is the right supply chain for your product? Marshall Fisher inquires aboutthe right supply chain for one’s product. This question not only forms the basis of Fisher’s article, but serves as the title of the paper. Fisher poses this question stating the fact that new technologies and ideas established and executed have not necessarily resulted in enhanced performance. Fisher argues that in some instances, performance has significantly worsened as a consequence of costs rising to unprecedented levels (Fisher, 1997). Based on his ten years’ research on the topic of supply chain in different industries ranging from fashion, food and apparel to automobile, Fisher devised a framework aimed at assisting managers to settle on the best supply chain for their specific products and situations. Fisher’s article aims at assisting managers comprehend the nature of the demand of their products and services and create a supply chain, which can best suit this demand. Fisher begins by arguing that a lot of brain power and technology has been applied with the view of improving supply chains. Organizations have the capacity o acquire and retain the voices of their customers using sophisticated marketing tools. The primary aim of a successful supply is to accurately identify and respond to market demands. According to Fisher, the first and perhaps most important step in developing and effective supply chain strategy is to appreciate the nature of demand for one’s company’s products. In order to attain this objective, companies typically make use of agile manufacturing, automated warehousing and mass customization (Fisher, 1997). However, these efforts continue to prove ineffective as supply chains worsen with each passing day. A notable symptom of this problem is the notable excess of one product and the scarcity of another. This begs the questions of why firms are unable to develop the performance of their supply chains and how these problems can be tackled in an effective manner. Fisher shows that if an individual classifies products and services on the basis of their demand patterns, these products fall into two major categories: the products are either primarily innovative or functional. Each of these categories calls for a distinctly unique form of supply chain. A primary problem arises from the mismatch between the type of product category and form of supply chain utilized. Therefore, an effective supply chain must first identify the type of product through criteria such as demand unpredictability and lifecycle. Functional products fulfill basic needs and have long lifecycles and stable and predictable demand. Innovative products have short lifecycles and it is relatively difficult to predict their demand since they depend on prevailing fashion and lifestyle causing uncertain market reactions. Fisher argues that after ascertaining the type of product being supplied, a company should determine whether the company’s supply chain is responsive to the market or physically efficient before using a matrix to determine the ideal supply chain strategy (Fisher, 1997). Functional products typically need effective supply chain processes while innovative products require responsive processes. Companies dealing in functional products are presently realizing the detriments of focusing on cost reduction, which causes diminishing returns. Consequently, firms are shifting towards sustaining coordination with corporate stakeholders such as distributors and suppliers who play a pivotal role in the supply chain processes. This coordination presents growing opportunities especially in light of the development of electronic networks, which enable closer coordination. However, companies often use the cooperative and competitive strategies to their detriment since the two approaches need dramatically diverse behaviors (Fisher, 1997). On the other hand, companies dealing in innovative products seek systems that provide high levels of product availability in order to maintain some level of control over unstable demand that is characteristic of innovative products. Fisher provides examples of companies such as Campbell Soup, Sport Obermeyer and National Bicycle that deal in innovative products, but have found effective supply chain systems to manage the supply of their products despite their unstable demand. Fisher, however, concludes that although managers at many companies acknowledge the ineffectiveness of their supply chains, they are unable to deal with the product effectively. He argues that the primary problem could be a misalignment of the companies’ supply and product strategies (Fisher, 1997). However, the positive outcome of this situation is immense competitive advantages, which produce high sales and profit growth. Various concepts inherent in inventory and procurement and manufacturing are integrated in the consideration of the ideal supply chain based on product decision. Firstly, the idea of procurement strategies is closely linked to the management of a product’s supply chain. Effective procurement strategies support supply chain operations by providing for close working relationships between sellers and buyers. Specifically, strategies such as volume consolidation, value management and supplier operational integration are immensely considered in supply chain strategies (Pieplow, 2013). For instance, volume consolidation can be considered in supply chain approaches since it provides for reductions in the number of suppliers handling a particular product. Companies dealing in functional products, which are characterized by high numbers of suppliers, may use the procurement strategy of volume consolidation to manage the number of suppliers. Additionally, the supplier operational integration approach to procurement can be considered in supply chain strategies since the latter approach allows buyers and sellers to integrate their activities and process and work cooperatively to attain substantive performance improvements (Pieplow, 2013). Fisher demonstrates the existence of cooperation and coordination in modern supply chain approaches. The cooperative nature of supply chain approaches can also be linked to the supplier operational integration approach that seeks the cooperation between corporate stakeholders who are essential in the supply chain process. On the other hand, certain inventory concepts are related to supply chain systems and approaches. For instance, a critical issue that affects inventory is demand uncertainty. This concept is also taken into consideration in discovering the ideal supply chain processes and approaches, specifically with regard to innovative products. The discovery of ideal supply chain approaches to innovative products is often hindered by the characteristic of demand uncertainty inherent in innovative products. Sales forecasting anticipates unit demand throughout the course of inventory replenishment cycles (Pieplow, 2013). Like in determining the ideal supply chain for certain products (such as innovative products) demand often exceeds of falls short of what is anticipated in inventory planning and management. These relationships and concepts show a distinct link between inventory and procurement and supply chain systems and approaches. References Fisher, M. L. (1997). What is the right supply chain for your product: A simple framework can help you figure out the answer. Harvard Business Review, March-April, 105-116. Pieplow, T. (2013). Logistics and transportation (Custom edition for Athens State University). New York: McGraw Hill. Read More