Assignment 01 - 2017010000078

Summary on seven principles of Supply Chain Management
Principle 1: Segment customers based on the service needs to distinct groups and adapt the
supply chain to serve these segments profitably.
Summary: Business managers and sales professionals traditionally specialize in customer needs
only. However, every business features a large base of consumers and that they got to divide or
as we call it in business terms ‘segment’ the purchasers into smaller groups. This segmentation
are often done on the idea of sales volume, demographics, customer types, etc. the first principle
suggests that for better efficiency of the supply chain management the purchasers should be
grouped on the idea of their service needs like same day delivery, one week delivery, etc.
Companies must analyze the profitability of segments, plus the costs and benefits of alternate
service packages, to ensure a reasonable return on their investment and the most profitable
allocation of resources.
Principle 2: Customize the logistics network to the service requirements and profitability of
customer segments.
Summary: Customization is that the key to providing the simplest service experience. Once
customers are segmented as per their service needs, tailor made supply chain networks must be
designed to satisfy separate customer segments. Many business houses run into the error of
employing a median technique of supply chain to succeed in bent all customers. However, the
2nd principle strongly holds that separate, distinct and customized logistics networks must be
implemented for various segments of consumers like different modes of transport, diverse
delivery type, etc.
Principle 3: Listen to market signals and align demand planning accordingly across the supply
chain, ensuring consistent forecasts and optimal resource allocation.
Summary: The third principle focuses on cumulative forecasting. One business involves many
departments like production, warehousing, sales, etc. it's of utmost necessity that forecasting of
market demand must be done at a cross functional level and not at a private department level
alone. Each department must plan towards a standard operational goal for minimizing costs,
lowering inventory levels and maximizing profits.
Principle 4: Differentiate product closer to the customer and speed conversion across the supply
chain.
Summary: The 4th principle stresses on having different variants of the merchandise for various
segments of the purchasers. The idea of product differentiation must be the customer needs.
There must be provisions for differentiation of the products together single standard product
cannot fulfil the stress and wishes of all customers. There must be a flexibility to switch, alter,
redesign the merchandise and also make it readily available to the top customer on time. The
redesigned products or parts of the merchandise must be readily available within a shorter time
interval. To realize this, the pliability to switch the merchandise must be as almost the top of the
assembly as possible.
Principle 5: Manage sources of supply strategically to reduce the cost of owning materials and
services.
Summary: Excellent supply chain management requires a more enlightened mindset.

Outsourcing a neighborhood or all of the operations must be done strategically. The fifth
principle suggests that having multiple players when it involves sourcing is that the key to take
care of a competitive environment and receive the simplest quote on the services. Every business
should be smart enough to understand that supplier costs are indirectly the value of the corporate.
The goal of cost reduction should be shared by the channel partners to lower market prices and
enhance the margin of profit.
Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of
decision and gives a clear view of the flow of products, services, and information.
Summary: Principle six is nothing but the IOT (Internet of Things). Even powerful and well
established businesses can enjoy the utilization of advanced technologies. However, the
utilization of advanced and sophisticated data system isn't the important solution to realize
reengineered business process. The knowledge system in use must be such it not only captures
the info concerning the supply chain management process but also translates them into
actionable and useful insights. These insights must help the business to raise their practices and
operations on a true time basis. An in depth report with all the knowledge that flows in and out of
the business but provides no real output isn't desirable by any business manager. Internet
applications and advanced systems should make the method easier and speed up the supply chain
management process by reducing time, effort and price through automated electronic
transactions, invoices and payment records.
Principle 7: Adopt channel-spanning performance measures to gauge collective success in

reaching the end-user effectively and efficiently.
Summary: The seventh and therefore the last principle of this context focuses on performance
measurement. No business can determine their success or identify new opportunities for
betterment until and unless their performance is often monitored and measured. Every supply
chain management also must have its own assessment card highlighting the achievement of its
goals and targets. This enables the method to showcase the areas of experience and also identify
scope for further utilization of those expertise to the general advancement of the supply chain
management process.

Assignment 01 - 2017010000078

Uploaded by

Copyright:

Available Formats

Assignment 01 - 2017010000078

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Assignment 01 - 2017010000078

Uploaded by

Copyright:

Available Formats

Summary on seven principles of Supply Chain Management

Summary: Excellent supply chain management requires a more enlightened mindset.

Principle 7: Adopt channel-spanning performance measures to gauge collective success in

You might also like