The Right Supply Chain

What is the right supply chain for your product?

Nowadays there exists a strong competition among brands, because most of the companies are basically offering the same or similar products. If certain brand or company can deliver the goods with quality at the shortest possible time, it means that they have good operative system, therefore, an advantage over the competitors.

With the idea of satisfying customers, companies implement electronic data exchange, so that technology now plays a huge role in improving the operation and generating ideas for development. That is, at the moment that tastes of customers are known, it is necessary have an immediate and efficient response aimed at providing quality products in the shortest time possible.

"Never has so much technology and brainpower been applied to improving supply chain performance. Point-of-sale scanners allow companies to capture the customer's voice. Electronic data interchange lets all stages of the supply chain hear that voice and react to it by using flexible manufacturing, automated warehousing, and rapid logistics. And new concepts such as quick response, efficient consumer response, accurate response, mass customization, lean manufacturing, and agile manufacturing offer models for applying the new technology to improve performance."

Likewise, there are high costs, bad relationship among the company and retailers, dysfunctional industry practices such as over-reliance on the promotion, poor coordination between the links of the chain, excess demand and shortage. For this reason managers do not have a suitable scheme to decide the right supply chain for a specific product of their companies.

However, the strategy to develop and achieve an efficient supply chain is to consider the nature of demand for the products that the company provides, considering the product life cycle, demand predictability, product variety, market standards for lead times and service, classify the product based on their pattern of demand: functional or innovative (because they need a different kind of supply chain).

Is your product functional or innovative?

There is a big difference between functional and innovative products, because although both aims to meet needs demand and sale perspective are different therefore they need a different kind of supply chain. Functional products are commodities that people buy to meet their basic needs at a retailer. With a stable and predictable demand. Not change much over time, so their life cycle is long. Its stability makes them competitive and in turn they obtain lower profit margins. On the other hand, innovative products, seeking to add value to their products and technology innovation in fashion so there is great variety in the products. They seek to persuade the customer to buy. Change the product image constantly, and incur expenses of advertising, packaging, name and distribution, thereby requiring more functional supply chain that stable. The demand is not predictable and the life cycle is short (months) derived from imitations. There may be a shortage or oversupply, due to the uncertainty of demand.

The supply chain has two functions: one physical and other market intermediary.

Supply Chain: Physically Efficient includes the process of converting raw materials into parts, components and finished products. Consider transportation from point of supply chain to the next point after the manufacturing process. Spend costs of production, transportation, inventory and storage. There is a tenderness functional product price which allows you to freeze the programs use software to plan manufacturing resources to create a plan orders, production and delivery. Allows