Revision
All supply chain processes can be broken down into four process cycles that connect the five
stages of the supply chain: the customer order cycle, the replenishment cycle, the
manufacturing cycle, and the procurement cycle.
The customer order cycle connects the customer with the retailer; this connection is made as
the book, perhaps Supply Chain Management by Chopra and Meindl, is selected and paid for by
the customer.
The replenishment cycle connects the retailer and the distributor and is triggered by the
retailers need to fill the empty shelf space with another copy of this tome.
The manufacturing cycle connects the distributor and the manufacturer. As demand for the book
is realized and distributors empty their warehouses, they signal the manufacturer to print
another million copies to fill their empty warehouses.
Finally, the procurement cycle connects the manufacturer and the supplier. The manufacturer
requires raw material inputs of paper, ink, etc., to begin the assembly process for another batch
of Supply Chain Management.
The push/pull boundary exists where demand switches from reactive (pull) to speculative (push)
production. For most bookstore supply chains the push/pull boundary is between the customer
order cycle and the replenishment cycle. The customer order pulls the book from the bookstore
shelf but the initial production of the book was triggered by a build order that moved materials
along the supply chain to the retail outlet.
What are some problems that can arise when each stage
of a supply chain focuses solely on its own profits when
making decisions? Identify some actions that can help a
retailer and a manufacturer work together to expand the
scope of strategic fit.
High inventories, poor quality, low customer service, increased returns
are just a number of problems that occur when each stage of a supply
chain focuses solely on its own profits. The trucking company requires
full truckloads for delivery forcing the retailer to carry more inventory
than wanted or needed. The supplier offers discounts to their buyers to
maximize production but forcing the buyers to purchase in larger
quantities than desired. This concept was very prevalent during the
1950s and 1960s as companies to minimize local costs and maximize
their own profits.
Today, retailers and manufacturers have the opportunity to plan
promotions jointly such as Wal-Mart and P&G. They can share sales
information to determine customer trends. Joint product development
opportunities are being explored throughout the supply chain between
retailers, manufacturers and raw material suppliers.
Why has the online channel been more successful in the computer
hardware industry compared to the grocery industry? In the future,
how valuable is the online channel likely to be in the computer
hardware industry?
The computer hardware industry is selling a constantly changing product
that is purchased on a per-household basis, less routinely than the
commodity products that make up groceries. A company like Dell can
leverage the Internet as a marketing and distribution tool to advertise
new capabilities and options before bricks and mortar retailers can. Dell
also removes whatever intimidation (or frustration) factor might be
experienced by conversing with in-store sales representatives.
Computers have a very high value to shipping cost ratio, so the
increased shipping costs when compared to a traditional store are
negligible. Groceries have a much lower ratio; although in-store shoppers
are incurring costs to pick up their groceries, those costs are hidden in
comparison to the delivery charge on an itemized bill from Peapod.
The online channel will continue to be a valuable tool in the computer
hardware industry but its value is likely to diminish as hardware
platforms become more standardized with most of the customization
occurring with software.