Chapter 10: CoordinatedProduct and SupplyChain Design11-1
11-1 Chapter 10: Coordinated Product and Supply Chain Design
11.1 A General FrameworkTwo distinct chains in organizations:The supply chain which focuses on the flowofphysical productsfromsuppliers throughmanufacturing and distribution all the way toretail outlets andcustomers,andThe development chainwhich focuses onnewproduct introduction and involves productarchitecture,make/buydecisions,earliersupplier involvement,strategic partneringsupplierfootprint andsupplycontracts11-2
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·Demand uncertaintyandvariability,inparticular,thebullwhip effectEconomiesofscaleinproductionandtransportationLeadtime,inparticularduetoglobalization11-3
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 oft ChainDevelopmentTechnology clock speedSpeed by whichtechnology changes ina particular福industryMake/BuydecisionsDecisions on what to make internally and what to buyfrom outside suppliersProductstructureLevel of modularity orintegrality inaproductModular productassembledfromavarietyofmoduleseachmodulemayhave several optionsBulkof manufacturingcanbecompleted beforetheselection of modules and assemblyintothe finalproduct takes place11-4
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
InteractionbetweentheTwoChainsFisher'sconceptof InnovativeandFunctionalProductsFunctionalproducts characterized by:·slowtechnologyclock speed,lowproductvariety,and typically low profit marginsInnovative products characterized byfasttechnology clock speed and shortproduct lifecycle,highproduct variety,and relativelyhighmargins.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
WhatIstheAppropriateSupplyChain Strategy and ProductDesign Strategy for Each ProductType?EachrequiresadifferentsupplychainstrategyDevelopmentchainhastodealwiththediffering level of demand uncertainty11-6
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
FrameworkforMatchingProductDesignand SupplyChainStrategiesProductProductintroductionarchitecturefrequencyHModular.PC/fashionCell phoneengines.Pull systemsPush systems.DynamicpricingB6·Pasta/diapers.Furniture/tiresPushsystem.Push-pullDADemandIntegralLHuncertaintyLSupplychain-Pull-Push-strategyFIGURE11-3:Theimpact of demanduncertainty andproductintroductionfrequency on productdesignand supply chain strategy11-7
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)Productandprocessdesignthathelptocontrol logistics costs and increase servicelevels·EconomicpackagingandtransportationConcurrentandparallelprocessingStandardization11-8
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 andStorageDesignproductssothattheycanbeefficientlypacked and storedDesignpackagingsothatproductscanbeconsolidated atcross dockingpointsDesignproductsto efficientlyutilizeretailspace11-9
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
ExamplesIkeaWorld's largest furnitureretailer131stores in21countries?Large stores, centralized manufacturingcompactly andefficiently packedproductsRubbermaidClear Classic food containers-designed to fit14x14"Wal-Martshelves11-10
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