Chapter 10: Coordinated Product and Supply Chain Design 11-1
11-1 Chapter 10: Coordinated Product and Supply Chain Design
11.1A General framework Two distinct chains in organizations The supply chain which focuses on the flow of physical products from suppliers through manufacturing and distribution all the way to retail outlets and customers. and The development chain which focuses on new product introduction and involves product architecture, make/buy decisions, earlier supplier involvement, strategic partnering supplier footprint and supply contracts 11-2
11-2 11.1 A General Framework ⚫ Two distinct chains in organizations: ⚫ The supply chain which focuses on the flow of physical products from suppliers through manufacturing and distribution all the way to retail outlets and customers, and ⚫ The development chain which focuses on new product introduction and involves product architecture, make/buy decisions, earlier supplier involvement, strategic partnering, supplier footprint and supply contracts
Key Characteristics of Supply Chain o Demand uncertainty and variability, in particular, the bullwhip effect Economies of scale in production and transportation o Lead time, in particular due to globalization
11-3 Key Characteristics of Supply Chain ⚫ Demand uncertainty and variability, in particular, the bullwhip effect ⚫ Economies of scale in production and transportation ⚫ Lead time, in particular due to globalization
Key Characteristics of Development Chain o Technology clock speed Speed by which technology changes in a particular industr ●Make/ Buy decisions o Decisions on what to make internally and what to buy from outside suppliers ● Product structure Level of modularity or integrality in a product Modular product assembled from a variety of modules each module may have several options Bulk of manufacturing can be completed before the selection of modules and assembly into the final product takes place
11-4 ⚫ Technology clock speed ⚫ Speed by which technology changes in a particular industry ⚫ Make/Buy decisions ⚫ Decisions on what to make internally and what to buy from outside suppliers ⚫ Product structure ⚫ Level of modularity or integrality in a product ⚫ Modular product ⚫ assembled from a variety of modules ⚫ each module may have several options ⚫ Bulk of manufacturing can be completed before the selection of modules and assembly into the final product takes place Key Characteristics of Development Chain
nteraction between the Two Chains Fisher's concept of Innovative and Functional Products o Functional products characterized by o slow technology clock speed, low product variety, and typically low profit margins o Innovative products characterized by Co fast technology clock speed and short product life cycle, high product variety, and relatively high margIns 11-5
11-5 Interaction between the Two Chains ⚫ Fisher’s concept of Innovative and Functional Products ⚫ Functional products characterized by: ⚫ slow technology clock speed, low product variety, and typically low profit margins ⚫ Innovative products characterized by: ⚫ fast technology clock speed and short product life cycle, high product variety, and relatively high margins
What Is the Appropriate Supply Chain Strategy and Product Design Strategy for Each Product Type? o Each requires a different supply chain strategy o Development chain has to deal with the differing level of demand uncertainty
11-6 What Is the Appropriate Supply Chain Strategy and Product Design Strategy for Each Product Type? ⚫ Each requires a different supply chain strategy ⚫ Development chain has to deal with the differing level of demand uncertainty
Framework for Matching product Design and Supply Chain Strategies Product Product introduction architecture frequency Modular H PC/fashion Cell phone engines.Pull systems Push systems Dynamic pricing · Pasta/ diapers · Furniture/ tires · Push systen Push-pull Integral Demand H uncertainty Supply chain -Push- -Pull strategy FIGURE 11-3: The impact of demand uncertainty and product introduction frequency on product design and supply chain strategy
11-7 Framework for Matching Product Design and Supply Chain Strategies FIGURE 11-3: The impact of demand uncertainty and product introduction frequency on product design and supply chain strategy
11.2 Design for Logistics(DFL Product and process design that help to control logistics costs and increase service levels o Economic packaging and transportation o Concurrent and parallel processing Standardization
11-8 11.2 Design for Logistics (DFL) ⚫ Product and process design that help to control logistics costs and increase service levels ⚫ Economic packaging and transportation ⚫ Concurrent and parallel processing ⚫ Standardization
Economic Transportation and Storage o Design products so that they can be efficiently packed and stored o Design packaging so that products can be consolidated at cross docking points Design products to efficiently utilize retail space
11-9 Economic Transportation and Storage ⚫ Design products so that they can be efficiently packed and stored ⚫ Design packaging so that products can be consolidated at cross docking points ⚫ Design products to efficiently utilize retail space
Examples o Ikea o Worlds largest furniture retailer o 131 stores in 21 countries o Large stores, centralized manufacturing compactly and efficiently packed products ● Rubbermaid e Clear Classic food containers -designed to fit 14x14 Wa-Mart shelves 11-10
11-10 Examples ⚫ Ikea ⚫ World’s largest furniture retailer ⚫ 131 stores in 21 countries ⚫ Large stores, centralized manufacturing, compactly and efficiently packed products ⚫ Rubbermaid ⚫ Clear Classic food containers - designed to fit 14x14” Wal-Mart shelves