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PartIBuildingaStrategicFrameworktoAnalyzeSupplyChainsChapter1,chapter2andchapter3
ThegoalofpartIistoprovideastrategicframeworktoanalyzethedesign,planningandoperationaldecisionswithinsupplychains.
CHAPTER2SUPPLYCHAINPERFORMANCEACHIEVINGSTRATEGICFITANDSCOPEInthischapter,wedefinesupplychainstrategyandexplainhowcreatingastrategicfitbetweenacompany"scompetitivestrategyanditssupplychainstrategyaffectsperformance.Wealsodiscusstheimportanceofexpandingthescopeofstrategicfitfromoneoperationwithinacompanytoallstagesofthesupplychain.
2.1COMPETITIVEANDSUPPLYCHAINSTRATEGIESCompetitivestrategy:thesetofcustomerneedsthatthecompanyseektosatisfythroughitsproductsandservices.Competitivestrategyisdefinedbasedonhowthecustomerprioritizesproductcost,deliverytime,variety,andquality.Readthefirstparagraph,comparethestrategyofWal-MartandDell.
Toseetherelationshipbetweencompetitiveandsupplychainstrategies,westartwiththevaluechainforatypicalorganization.
ThevaluechaininacompanyNewProductDevelepmentMarketingandSalesOperationsDistributionServicesFinance,Accounting,InformationTechnology,HumanResources
Toexecuteacompany"scompetitivestrategy,allthesefunctionsplayarole,andeachmustdevelopitsownstrategy(whateachprocessorfunctionwilltrytodoparticularlywell).Itisimportanttorecognizethatthesupplychainstrategydefinesnotonlywhatprocesseswithinthefirmshoulddowellbutalsowhattheroleplayedbyeachsupplychainentityis.
Thevaluechainemphasizesthecloserelationshipbetweenthefunctionalstrategieswithinacompany.Eachfunctioniscrucialifacompanyistosatisfycustomerneedsprofitably.Thus,thevariousfunctionalstrategiescannotbeformulatedinisolation.Theyarecloseinterwinedandmustfitandsupporteachotherifacompanyistosucceed.
2.2ACHIEVINGSTRATEGICFITStrategicfitmeansthatboththecompetitiveandsupplychainstrategieshavealignedgoals.Strategicfitreferstoconsistencybetweenthecustomerprioritiesthatthecompetitivestrategyhopestosatisfyandthesupplychaincapabilitiesthatthesupplychainstrategyaimstobuilt.
Allprocessesandfunctionsthatarepartofacompany"svaluechaincontributetoitssuccessorfailure.Theseprocessesandfuncionsdonotoperateinisolation;Nooneprocessorfunctioncanensurethechain"ssuccess,failureatanyoneprocessorfunctionmayleadtofailureoftheoverallchain.
Keyslinktoacompany"ssuccessorfailureThecompetitivestrategyandallfunctionalstrategiesmustfittogethertoformacoordinatedoverallstrategy.Eachfunctionalstrategymustsupportotherfunctionalstrategiesandhelpafirmreachitscompetitivestrategygoal.Thedifferentfunctionsinacompanymustappropriatelystructuretheirprocessesandresourcestobeabletoexcutethesestrategiessuccessfully.Thedesignoftheoverallsupplychainandtheroleofeachstagemustbealignedtosupportthesupplychainstrategy.
Acompanymayfaileitherbecauseofalackofstrategicfitorbecauseitsoverallsupplychaindesign,processes,andresourcesdonotprovidethecapabilitiestosupportthedesiredstrategicfit.Ifaligningthesupplychaindesignandallofthecorefunctionalstrategieswiththeoverallcompetitivestrategyisnotachieved,conflicsarisebetweendifferentfunctionalgoalswithinthefirm,orbetweenthegoalsofdifferentsupplychainstages.Suchconflictsresultindifferentfunctionswithinthefirmandstagesacrossthesupplychaintargetingdifferentcustomerpriorities.
HowisstrategicfitachievedToachievestrategicfit,acompanymustensurethatitssupplychaincapabilitiessupportitsabilitytosatisfythetargetedcustomersegments.
1.Understandingthecustomerandsupplychainuncertainty;2.Understandingthesuppplychaincapabilities;3.AchievingStrategicFit.Thethreebasicstepstoachievingthestrategicfit
ComparethecustomerofSeven-elevenandSam"sclub,tellusthedifference.UnderstandingthecustomerandsupplychainuncertaintyAttributesofdifferentcustomerdemandThequantityoftheproductneededineachlot;Theresponsetimethatcustomersarewillingtotolerate;Thevarietyofproductsneeded;TheserviceLevelrequired;Thepriceoftheproduct;Thedesiredrateofinnovationintheproduct.
SinglemeasuretodiscribethecustomerdemandImpliedDemandUncertaintydemanduncertaintyduetotheportionofdemandthatthesupplychainistargeting,nottheentiredemand.
Demanduncertaintyreflectstheuncertaintyofcustomerdemandforaproduct.Implieddemanduncertaintyistheresultinguncertaintyforonlytheportionofthedemandthatthesupplychainplanstosatisfyandtheattributesthecustomerdesires.Thedistinctionbetweendemanduncertaintyandimplieddemanduncertainty
Demanduncertaintyreflectstheuncertaintyofcustomerdemandforaproduct.Implieddemanduncertaintyistheresultinguncertaintyforonlytheportionofthedemandthatthesupplychainplanstosatisfyandtheattributesthecustomerdesires.
Theimpactofservicelevel:Asasupplychainraisesitslevelofservice,itmustbeabletomeetahigerandhigerpercentageofactualdemand,forcingittoprepareforraresurgesindemand.Thus,raisingtheservicelevelincreasestheimplieddemanduncertaintyeventhoughtheproduct"sunderlyingdemanduncertaintydoesnotchange.