SupplyChainManagementbyFisher(2,18)

SupplyChainManagementbyFisher(2,18) -...

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How do you decide what to produce  How do you decide what to produce  when you don’t know what your  when you don’t know what your  customers will buy? customers will buy? Marshall Fisher UPS Professor, The Wharton School Cofounder and Chairman, 4R Systems ISC/SCLC SPRING 2006 MEETING Hilton Marco Island     APRIL 29, 2006 © 2006 Marshall L.
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Cost of lost sale Risk of obsolescence Forecast accuracy Product variety Product life cycle High Low Low Low High High High Low Short Long Functional Innovative Products differ © 2005 Marshall L.
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And supply strategies differ Factory focus Inventory Strategy Lead-time focus Supplier selection Product-design strategy Low cost trumps short lead-time High utilization High turns Low cost Maintain buffer capacity Significant buffer stocks of components and FGs Aggressively shorten lead-time Modular to enable postponed differentiation Integral for max performance at min cost Physically efficient Market responsive © 2005 Marshall L.
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match match mismatch mismatch Life cycle > 2 years Gross Margin < 35% Low Product Variety Functional Products Life cycle < 1 year Gross Margin > 35% High Product Variety Innovative Products Responsive Supply Chain Efficient Supply predictable demand efficiently at lowest cost Respond quickly to unpredictable demand to minimize stockouts, markdowns, and obsolete inventory Need to match supply strategy with product type © 2005 Marshall L.
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So as to minimize total of two types of costs Physical Production/Distribution Costs Production Costs Transportation Costs Facility Utilization rates Inventory carrying cost on pipeline and cycle stocks Supply/Demand Mismatch Costs Lost revenue and profit margin when supply is less than demand Product and parts scrapped or sold at a loss when supply exceeds demand Inventory carrying cost on safety stocks Raw  Materials Component Suppliers Manufacturer Retailers  Consumers © 2005 Marshall L.
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Dell reaps benefits from supply chain innovation “Supply chain management is what it’s all about“ Tom Meredith, Chief Financial Officer of Dell Source: Open manufacturing Online, July 28, 1998 Dell © 2005 Marshall L.
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chain costs 0 5000 10000 15000 20000 25000 30000 35000 40000 1990 1991 1992
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This note was uploaded on 10/08/2011 for the course IE 383 taught by Professor Leyla,o during the Spring '08 term at Purdue University-West Lafayette.

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SupplyChainManagementbyFisher(2,18) -...

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