MBA: Supply Chain & Logistic

Management

1. Supply Chain Basics

Navdeep Yadav
Co-Founder Float
Product Manager |MBA|
Supply Chain Management Basics
 What is a Supply Chain ?
An entire system of producing and delivering a product or service, from sourcing the raw
materials to the final delivery of the product or service to end-users.

Stage 1 Supply chain begins with the vendors or suppliers

that provide raw materials.

Step 2 Manufacturing converts the raw materials into

products that are ready to sell.

Step 3 Distribution through intermediaries like

wholesalers, retailers, distributors, and even the internet.
 Process flow of a Supply Chain ?

Tier 2
Supplier
Tier 1
Distributor
Supplier
Tier 2
Supplier End
Manufacturer Retailer
consumer
Tier 1
Distributor
Supplier
Tier 2
Supplier

The forward flow of Material and Goods

The reverse flow of Material and Goods

The flow of Money (Cash flow)

The flow of information (Both Direction)

 Supply chain example

Generic Supply Chain – Begins with the sourcing and extraction of raw
materials which then reach to supplier and manufacturer with the help
of a logistics provider and finally reaches the end consumer with the
help of a retailer and wholesaler.

Supply Chain for an e-Commerce Company

• The customer places an order on the website
• The website is powered by a third-party product such as
Shopify.
• The payment processors like stripe, and paypal then
accept the payment transactions on their behalf and
update the order management system
• Order is then picked, packed and shipped directly to the
end consumer using a third-party logistic provider like
FedEx etc
Supply Chain of Tesla (Product) ?

Process flow in the supply chain

 Electricity supply chain (Service)

Consumer

Industry

Electricity Electricity Electricity

generators Transmission Distribution
 Supply chain planning and execution
When it comes to supply chain keep this planning and execution system in mind
Components of Supply Chain Management
Components of Supply Chain Management
Components of Supply Chain Management

Logistic
Management

Demand
Procurement
Management

Supply chain

Finance and Inventory

Accounting Management

Product life
Cycle and
Pricing
Components of Supply Chain Management
 How does supply chain management work?
1. Planning
Plan and manage the sourcing of raw materials. So demand planning and lead time management
to avoid stock out.

2. Sourcing
Choose suppliers to provide the goods and
services.
• Right vendor offering the ideal price
• Capacity to deliver required volumes
• Turnaround time.

3. Manufacturing
Organize the activities required to accept raw materials,
manufacture the product, test for quality, a package for shipping
and schedule for delivery.

4. Inventory
• Enough raw materials
• Inventory turnover ratios
 How does supply chain management work?
5.Delivery and Logistics
Coordinate customer orders, schedule deliveries, dispatch loads,
invoice customers and receive payments.
• Storage space
• Volume
• Logistic cost

6.Returning
Create a network or process to take back
defective, excess or unwanted products.
How does supply chain management work?
Supply chain of your favourite product - Assignment
Supply chain of your favourite product - Assignment

Step 2 Step 3 Step 5

Step 1 Step 4 Step 6

The global supply chain of Apple - Assignment Example
The global supply chain of Boeing – Assignment Example
Factors impacting Supply Chain Complexity
 Factors impacting Supply Chain Complexity

Simple Complex
Supply chain Supply chain
 Factors impacting Supply Chain Complexity
Supply chains are made from combinations of four entities, and the interactions between those
entities are what drive supply chain operations and complexity

The four entities are:

Product — things in demand at various facilities

Number of components – iPhone have thousands of

components in it.

Permissibility and availability – How fast you want the

product

Facilities — places where products are made, stored, sold

or consumed

Vehicles — mechanisms to move products between

facilities to meet demand

Routes — paths are taken by vehicles to move products

between facilities
 Product type deciding Complexity in Supply Chain

Supply chain of Supply chain of

tissue paper mobile phone
Product type deciding Complexity in Supply Chain

Innovative and functional product

Business model deciding complexity in supply chain

Good customer service

More visibility
Higher cost structure

Bad customer service

Less visibility
Lower cost structure
 Distribution channels in supply chain

>More about this in d2c, distribution, logistic videos

Apple components supplier/partners - Assignment
Upstream and downstream Supply Chain ?
 Upstream and downstream Supply Chain
These different stages within the supply chain are referred to as upstream or downstream.
Upstream operations are those in which the materials flow into the
organization.

Downstream operations are those in which materials (mostly in the

form of finished products) flow away from the organization to the
customers.
 Process flow of a Supply Chain ?

Upstream Downstream

Tier 2
Supplier
Tier 1
Distributor
Supplier
Tier 2
Supplier End
Manufacturer Retailer
consumer
Tier 1
Distributor
Supplier
Tier 2
Supplier

The forward flow of Material and Goods

The reverse flow of Material and Goods

The flow of Money (Cash flow)

The flow of information (Both Direction)

Upstream and downstream Supply Chain
Vision, Goal and Objective/Core Values of a company
 Vision, Goal and Objective of a company

“Begin with the end in mind,”

Stephen Covey in his book “The 7 Habits of Highly Effective People,”

This means a company needs to focus on achieving its long-term goals and
aspiration before even attempting to accomplish anything.
 Vision, Goal and Objective of a company

Why do we need these in the supply chain course?

The entire corporate level and functional level strategy works towards
achieving these vision, mission, goals and objective
 Vision, Goal and Objective of a company

Vision Statements - Paint the future in the next 5-

10 years.

Mission statements – Fundamental reason why you

exist today.

Goals, Objectives and Values

 Vision

A vision statement paints a picture of where you are going and why you
want to go there.

Paint the future in the next 5-10 years.

 Vision Statement

Where and why

Where are you going as a company?
What does success look like in the future for you?

Example:-
Company XYZ wants to be a leader in the manufacturing of Electric vehicles

A vision statement should be :

• Short and Brief
• Written in simple language
• Crystal Clear and should complete from all aspects
• Non-ambiguous and Non-conflicting
• Motivation for employee
 Mission

Mission talks about the “What’s the fundamental reason why you came in this business ”
(Purpose for existing)

Example:-
Company XYZ wants to make the most compelling car of the 21st century.

The mission statement explains the company’s reason for being present, while the vision gives
its purpose for the future.

These two Mission and Vision defines the overall growth strategy of any company
 Tesla Motor

Vision statement:
“To accelerate the world’s transition to sustainable energy.”

Mission statement:
To create the Most compelling car company of the 21st
Century by driving the World’s transition to electric vehicles.
 Google

Vision statement:
To provide access to the world’s information in one click.

Mission statement:
Organizing the world’s information and making it
universally accessible and useful
 Amazon

Vision statement:
Our vision is to be earth’s most customer-centric company; to build a place where
people can come to find and discover anything they might want to buy online.

Mission statement :
We strive to offer customers the lowest possible price, the best available selection,
and the utmost convenience
 Goals- SMART

Goals are defined from what company wants to realize (profit or good customer service)

These should be measurable hence we use SMART (Specific, Measurable, Attainable, Realistic
and Timebound).

Say for example our one of goals could be to have 15% increase in revenue or 10% decrease in
non-value added activities.
 Objectives

Objectives are the specific actions taken to achieve these goals

Example:-
Goal - “Increase revenue by 10% and decrease waste reduction by 5%”.

The objective for Goal 1

“Increase revenue by 10%” – Just Add 5 new customers and retain at least 2 customers.

The objective for Goal 2

“Decrease waste reduction by 5%” - Optimize the process Or outsourced some processes to
save cost and time.
 Amazon Mission and Vision Statement Analysis

How Amazon's mission and vision statements, and core values

paved the way for the company's leadership in the industry.
 Amazon Vision Statement
Vision statement:
Our vision is to be earth’s most customer-centric company; to build a place where people
can come to find and discover anything they might want to buy online.
 Amazon Mission Statemen
Mission statement :
We strive to offer customers the lowest possible price, the best available selection, and
the utmost convenience
 Amazon Mission and Vision Statement Analysis
For you to understand how they do it you have to understand their flywheel diagram
 Goal of Supply chain

Improve the overall organization performance and customer satisfaction

Right Right
Product Place

Right Right
Quantity time

Right Right
Quality Cost
 Vision, Goal and Objective of a Digital Marketing firm

-> Let’s move forward this is not a human resource management course
 Supply Chain objective
Implementing 3V in achieving supply chain objective

1.Increase Visibility
It is the ability to view important information throughout the Variability Visibility

supply chain like order tracking, fleet management and

stock management etc
Example :- Your amazon order
Velocity

2.Increase Velocity
The relative speed of all transactions within a supply chain
indicates a higher asset turnover and faster order-to-
delivery
Example – Faster delivery(OTD) on amazon means more
orders on amazon which further means higher assets
turnover

Ways to faster the delivery time

• Distribution centre or warehouse
• Catalogue limitation (Top selling product in the category is prime)
• Prime umbrella for stickiness and flywheel.
Amazon Flywheel powering efficient supply chain
 Supply Chain objective
Reduce variability – The natural tendency of a business to fluctuate above or below an
average value. It can in the form of lead time, demand variability, defect rate or daily sales

Other strategies to reduce variability is :

Safety stock, bullwhip effect, back order etc
Supply Chain KPIs & Metrics
Vision, Goal and Objective of supply chain management
 Goals of supply chain management
The functional goal is efficiency: operating as smoothly as possible.
Proper SCM removes friction throughout a company’s supply chain: procurement and
manufacturing, receiving and warehousing, picking, packing, and fulfilment, as well as reverse
logistics (returns).
This means mapping your supply chain to ensure visibility and clear communication at each
point:

• Sourcing
• Manufacturing
• Shipping and receiving
• Distribution
• Reverse logistics
Types of supply chain
 Types of supply chain

Types of
Supply chain

Market
Structure Sustainability
Demand

Pull Supply Push Supply Vertical Horizontal Circular

Linear Close loop
chain chain Supply chain supply chain supply chain
How does supply chain management work?
 Vertical and horizontal supply chain
In a Vertical supply chain, the company takes
complete control over one or more stages in the
production or distribution of a product.
Example Tesla, Apple

In Horizontal supply chain is the acquisition of

business activities that are at the same level of
the value chain in similar or different industries.
Example – Foxconn, Nvidia
Vertical and Horizontal supply chain
Pull and Push supply chain
 Pull and Push supply chain
In the pull system, production orders begin upon inventory reaching a certain level, while in the
push system production begins based on demand (forecasted or actual demand).
 Pull and Push supply chain

Push-based supply chain as products is pushed

through the channel from the production side to the
retailer.

• The manufacturer sets production levels with

historical ordering patterns from retailers.

• Great cost advantages due to economies of scale

• It takes longer for a push-based supply chain to

respond to changes in demand which can result in
overstocking or bottlenecks and delays (the
bullwhip effect)
 Pull and Push supply chain
Pull-based supply chain, procurement, production
and distribution are demand-driven rather than a
forecast.

The characteristic is
• Used when there is a high demand uncertainty
• No economies of scale
• Require flexible manufacturing facility
• Used more in innovative products and expensive
product
Summarising pull and push supply chain
Summarising pull and push supply chain
 The Benefits of Using a Hybrid Push-Pull Strategy

As with Just-in-Time vs Just-in-Case, Push vs Pull is not

black and white.

Most companies have some sort of a hybrid of the two,

on a spectrum between the two ends.

The push-pull strategy is usually suggested for

products with high demand uncertainty and high
importance of economies of scale.

Example
Toyota Motors follow the "supermarket model" where
limited inventory is kept on hand and is replenished as
it is consumed.

In Toyota's case, Kanban cards are used to signal the

need to replenish inventory.
 Pull-push process for the supply chain of Dell

Dell pre-orders and stocks up on raw materials and components.

However, from this point on, they do not produce their computers until an order is actually
placed.
They initially “push”, but then switch to “pull’’ in the production and assembly process.

PULL

Customer

Customer order cycle

Manufacturer

Procurement Cycle
Supplier
PUSH
 Types of supply chain

Types of
Supply chain

Market
Structure Sustainability
Demand

Pull Supply Push Supply Vertical Horizontal Circular

Linear Close loop
chain chain Supply chain supply chain supply chain
Linear, Closed-loop and circular supply chain configuration
 Linear, Closed-loop and circular supply chain configuration
Circular fashion supply chain creates a highly
sustainable system by designing, sourcing, and
producing products with the intention of using
them for as long as possible in their most valuable
form.

This involves reusing and recycling products for as

long as possible to minimize waste and avoid
landfills.

Traditional linear supply chain is often described

as the ‘take-make-waste’ approach.

Recycle supply chain includes the proper

disposable of product
Linear, Closed-loop and circular supply chain configuration
Linear, Closed-loop and circular supply chain configuration
 Closed-loop supply chain simulation in Tesla
Just like rockets how a disruption in the reverse supply chain may affect the performances of the
company
 Biggest Challenges in Supply Chains

The reason we need a responsive and fast supply chain is because of these factors
-Product life span
-Bullwhip effect
-Effective vs responsive product
Challenges with blood bank Supply Chain
 Challenges with blood bank Supply Chain

Challenges with blood bank Supply chain

• The supply of blood fully relies on human donations and is not

a product that can be manufactured. (Forecasting)

• Blood is a perishable product, especially platelets must be used

within 5 days of donation, and red blood cells can only be
stored for 42 days (Quality Control)

• Lastly, inaccuracies of supply and demand can become a

matter of life and death (Distribution)
 Solving blood supply chain issues
Blood donor Logistic Blood bank (Storage, Logistic Clinic & hospital
testing)

Collection Matching and

Recruiting Transfusion
process verification
 Solving blood supply chain issues

Collection Matching and

Recruiting Transfusion
process verification

-Building Awareness -Paperwork -Monitoring batch -Stored for months

-Eligibility Screening -Donor time -Compatibility testing -Immediate transfusion
-Persuading donors -Snacks/ Reward -Packaging, shipping and -Blood utilization review
-Community Building -Confirmation transporting
-Confirmation
Supply Chain of COVID 19 Vaccines
Strategy levels in supply chain
 Strategy levels in supply chain
Corporate strategy needs to define how you are going to be
different and better than your competitors, and it needs to set
specific, measurable goals.

Business strategy helps you choose the side: Least cost, differential,
focus strategy etc

Organizational strategy – how to satisfy the customer and grow the

business

Business Organization Supply chain

strategy strategy strategy
 Strategy levels in supply chain
Let’s oversimply this with an example (Amazon‘s e-commerce)

Business strategy – Cheaper (Maintain the lowest prices )

Organization strategy – Better (Prime Subscription Umbrella )

Supply chain strategy – Faster (with warehouse or distribution centre)

Business Organization Supply chain

strategy strategy strategy

Aligning all these strategies is important

(Walmart can’t implement one-day delivery due to non-penetration of logistics)

So alignment of vision, mission ,financial objective and core capabilities and

value proposition is important
 Strategy levels in supply chain
Corporate strategy needs to define how you are going to be different and better than your
competitors, and it needs to set specific, measurable goals.

Business Organization Supply chain

strategy strategy strategy

-> More on BPM and TPS video

Strategy levels Assignment - Apple vs Samsung - Assignment

Business Organization Supply chain

strategy strategy strategy
 The 5 Components of Supply Chain Management

Production:- Whether building factories with a lot of excess

capacity and using flexible manufacturing techniques to
produce a wide range of items or limited capacity with the
standard process for one product(EOS)

Inventory:- Whether Stocking products at regional

distribution centres (DCs) for faster fulfilment or centralising
inventory.

Location – Whether Opening up lots of stores in high footfall

or volume markets or only a few central locations.
Transportation – Whether it should be shipped Fast with aeroplanes or flexible with trucks and or
slow but cost-effective with train. Should you use a central hub facility or distribution centre (DC).

Information – It enhances the performance of the other four

supply chain driver when companies collect and share
accurate and timely data generated by the operations of the
other four drivers.
Planning in supply chain management
 Planning in supply chain management
Planning involves phases of decision to answer questions such as;

– How and when to source the product?

– What manufacturing strategy is best to convert the material to a final product?
– What mode of transportation to use in moving inventories?
– How to optimally design a distribution network
– How supply chain risks are managed?
– How costs are reduced without compromising quality?
– What information system support is needed to facilitate information sharing?
 Levels of planning
Strategic planning – Influences the creation of policies and procedures for procurement, manufacturing,
and logistics to meet a long-term plan (planning horizon usually 3 to 10 years).

– How many distribution facilities are needed and

where?
– Increase revenue by 10%
– Mergers and acquisitions to expand market share
– Supply chain configuration

Tactical planning – strategic plan needs to be

broken down into deliverables, so it is workable
and achievable (6 months to a year)

Operational planning – these are the day-to-day or

weekly activities needed to carry out tactical goals.
Biggest Challenges in Supply Chains
 Supply chain management risks and challenges
1.Cost structure complexity – Too much can deplete your cash flow and too less can
cause stock out
 Supply chain management risks and challenges
There will always be supply-chain related challenges you’ll need to deal with over time.

2.Overly lengthy lead times - Longer lead times mean more chances for things to go wrong.

If a supplier’s order is delayed by 5 days it can cause many problems

1. Stock out of inventory
2. Bad customer experience
 Supply chain management risks and challenges
3.Operation complexity:- Many companies also struggle with multichannel sales and
fulfilment due to working capital cycle, theft, damages etc
 Supply chain management risks and challenges
4.Overall risk management - Risk is inevitable, but it helps when you have a proactive
plan in place.
 Other challenges in Supply Chains

Order Changes and Cancellations:- The retailer is stuck with excess

product, the wholesaler deals with fewer orders and backing up
inventory, and every other supplier feels the waves.

Workers Unavailable:- If workers are ill or absent unexpectedly, that

can dramatically affect a supplier’s capability.

Production Facility Failure: Worse in case of Just-in-time production

Late Delivery of Materials: Transportation issues, theft and piracy

Suppliers’ Conflicting Obligations: In case of overcommitment and

prioritizing other orders.
 Supply Chain Management Basics
If the vehicles transporting your bread and milk breakdown for an hour
• Long queue in the store Right
• Your Breakfast timing will get delayed time

• Your kid might start crying

• Your office meeting will be affected

In reality, we have multiple stores and backup for this but you got the point

Now Just replace the above example with blood

• Blood is a perishable
• Matters of life and death
Lean Kaizen in Supply Chain
 Lean Kaizen in Supply Chain
For Lean to be truly effective, it must focus not only on
the manufacturing process but on the entire supply
chain.

Creating a leaner supply chain

+ + +
Procurement Manufacturing Warehousing Transportation

Avoid duplicate Improve quality and Keep inventory Consolidate multiple

procedures in the precision prevents levels as low as is products into a single
different defects and return reasonable shipments
departments. goods
 Lean Kaizen in Supply Chain

This will reduce costs and improve the processes and productivity.

➢ Reducing process lead time – excessive wait time

➢ Eliminating unnecessary movement of products
➢ Minimising excess inventory–raw material, work-in-process or
finished goods
➢ Reducing wastages in packaging
➢ Reducing damages and spillages
➢ Optimise space
➢ Improving On-time delivery
➢ Eliminating wasteful energy in the supply chain including
electricity, gas, utilities etc
Value chain analysis (VCA)
 Value chain analysis (VCA)
It identifies business activities that can create value and
competitive advantage for the business

Competitive advantage types

Cost advantage Differentiation advantage
When you compete on costs When you strive to create
and want to understand the superior products or
sources of their cost services use a differentiation
advantage. examples: advantage examples: Apple,
Amazon.com, Wal-Mart, Google, Samsung
McDonald’s, Ford, Toyota) Electronics, Starbucks)
 Value chain analysis (VCA)
It identifies business activities that can create value and
competitive advantage to the business

Primary Activities
1. Inbound logistics – This is how materials and
resources are gained from suppliers.

2. Operations - how materials and resources are

produced, resulting in a final product or service.

3. Outbound logistics - Describes the delivery and

distribution process.

4. Marketing and sales - presented and sold to your

ideal target market.

5. Service - Support and training for the product,

warranties, and guarantees.
 Value chain analysis (VCA)
Support activities help the primary activities in
creating an advantage over competitors.

Support Activities

• Firm Infrastructure This entails all the management,

financial, and legal systems

• Human resource management encompasses all the

processes and systems involved in managing
employees

• Technology development helps a business innovate.

• Procurement This is how the resources and materials

for a product are sourced and suppliers are found.
 Impact of supply chain management

Businesses have several avenues to increase profit.

It could either be
• Boosting marketing efforts to improve sales
• Increase the selling price
• Introduce a product to the new market.

While those strategies are good, their impact on profitability is less.

The best and easy way to increase the margin is to improve your supply chain performance.

Cost of goods sold is 60% of total sales leaving 40% for operating expenses and income.

What if we can reduce the cost of raw materials by 5% to 20%?

 Impact of supply chain management

Reducing the cost of materials has a profound

impact on the bottom line.

Other expenses are difficult to reduce because

they are necessary to run the business

Therefore, supply chain management is a key

driver in maximizing a company’s financial
health.
What is bullwhip effect?
What is bullwhip effect?
 Bullwhip effect Simplified ?
Retailers become highly reactive to demand, and in turn, amplify expectations around
it, which causes a domino effect along the supply chain.

Retailer typically keeps 100 six-packs of sanitiser in stock.

Normally Sales - 20 six-packs a day

One day – 80 six-packs a day

Retailers Response
Order 250 instead of 100 this time

Stockiest response
Stock 350 this time

Manufacturer response
Make 500 this time
 What is bullwhip effect?
How small fluctuations in demand at the retail level can cause progressively larger
fluctuations in demand at the wholesale, distributor, manufacturer and raw material supplier
levels.
Variance increase up the supply chain

Why does it happen?

• Over- or under-reacting to demand
expectations (Decision Separation)
• Lead-time issues such as manufacturing
delays (Delays due to lead time)
• Uncertainties & Unreliability
• Inaccurate forecasts
 Controlling the Bullwhip (How to Improve a Supply Chain)

Avoid Bullwhip Effect

Technology to reduce delay (ERP)
▪ More frequent updates
▪ Reduce response times to orders
▪ Shorter lead times

Improve the inventory planning process

• Stock management
• Lean, Six Sigma, TQM, TPM,FIFO,LIFO
• Point Of Sale (EPOS)

MOQ and stable pricing

▪ Demand Forecasting
▪ Discounts
▪ Marketing spend
 Efficient Vs Responsive Supply Chain

Efficient
 Efficient and Responsive Supply Chain

Efficient Responsive

Efficiency requires predictability and stability – often absent now

Responsiveness differentiates products, avoids “race to the bottom” price wars

It depends on the product life cycle

 Hallmarks of an efficient supply chain:

Optimization - Shipping routes, warehouse locations and avoiding

Half-empty trucks, and unused warehouses are simply a waste of
your assets.

High-quality partners – Your 3PL should have state-of-the-art

technologies, a policy of transparency and a proven track record.

Inventory management - Too much inventory is costly to purchase,

handle, store and track. Too little inventory can mean lost production
time, expensive last minute orders and even angry customers.

Customer satisfaction - Gets your products into the hands of the

people who need them quickly and at the best price.
 Efficient Supply Chain
An efficient supplyEfficient
chain is tuned to deliver products at the
most optimal costs.

This is done with investment in economies of scale and large

batches that drive marginal cost down.

Typically these supply chains have long lead times, high set-
up costs, and predictably consistent output.

The efficient supply chain is efficient at all the level Functional Product
• Production (without wasting materials or man-hours)
• Inventory (Less inventory holding cost)
• Transportation and location (speed and cost )

Efficiency saves money and increases profits and can be

particularly beneficial to your bottom line.
 Responsive Supply Chain

Responsive supplyEfficient
chains are all about speed.
It is characterized by quick, nimble changes made possible by small
batch sizes, excess capacity, and an ear to the market allowing
organizations to respond quickly to changes in demand.

Responsive supplies are typically not the most optimized for low cost
but are designed to respond to changes.

A responsive supply chain has to be responsive to both your and customers’

needs Innovative Product
• Order-fill accuracy - Guarantee of quick delivery can be a real selling
point.
• Scalable fulfilment - Can accommodate changes in sales volume in
seasonal and economic variation.
• Communication - Open lines of communication for feedback, concerns
and customization
 Efficient Vs Responsive Supply Chain

Efficient
 Efficient and Responsive Supply Chain

WHEN Efficient
TO BE EFFICIENT AND WHEN TO BE RESPONSIVE

In Reality, a supply chain should be

“As responsive as required, as efficient as possible.”

The truth is, when it comes to Supply chain, no single company or process is the best.
Finding right balance in Supply Chain
 Finding right balance in Supply Chain

Functional products
• Staple food products such as breakfast cereals and milk where
demand is predictable with the long product life cycle.
• They have low-profit margins because they’re considered a
commodity with many substitutions (generic products) are
VS
available.

Innovative products
These are new and often revolutionary products that have a demand
stream that’s not well-known and unpredictable.

These show variable demand with shorter product life cycles, and
higher profit margins.
Examples of innovative products include most consumer electronics,
computer games, and fashion apparel

The supply chain needs for a product with stable demand (a well-
established or mature product) are different from those for a
product with less predictable demand (an innovative product).
 Finding right balance in Supply Chain

Trade-offs:- We teach that "functional" products should be matched

with an efficient supply chain and innovative products with
responsive supply chains.

A mismatch will lead to either too many costs or a lack of competitive

capabilities.

Efficient supply chain: Usually a make-to-stock (MTS) producer that

draws from a large finished goods inventory

Responsive supply chain: Usually produces make-to-order (MTO)

products. With their high demand variability
 Finding right balance in Supply Chain
In pandemics most out-of-stock products are the result of
efficient supply chain models: think toilet paper.

Ramping up the production and delivery of toilet paper is very

hard since it is optimized for long lead times, steady
production, very minimal inventory and consistent demand.

The Demand has never increased for TP just the demand for
hoarding TP has increased.

This caused bullwhip effect will cause excess inventory all over
the place (including homes, retailers, warehouses, and
outhouses) in a manner of a few weeks or months.

The same happened with PPE as well.

 Finding right balance in Supply Chain

The truth is, when it comes to Supply chain, no single company or process is the best.
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 Supply chain resilience report

75% 64%
of companies have experienced externally
of companies consider supply disruptions
caused disruptions to their supply chain in the
a serious concern
past year

63% 56%
of companies have implemented measures in
the past year to build supply chain resilience of companies have experienced more supply
chain disruptions this year than last year

98%
of companies believe measures should be
taken to avoid future supply chain disruptions

57%
of companies believe diversifying their
the supply chain is the best way to avoid disruptions in the future
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