ch5_scm_3

These are your strategic supply chain partners or

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Unformatted text preview: d sub-contractors who are critical to you. These are your strategic supply chain partners or ‘first tier suppliers’. • A successful supply chain of first tier suppliers is a manageable objective. 43 • Strategic partnerships require substantial supplier management capability. 44 3.6 Postponement and Commonality • Postponement: delay product differentiation as long as possible • Commonality: use of one common component in several products. • To reduce the safety stock levels 45 3.7 Eliminate Order Fluctuations Remove order batching • Allow customers to order an assortment of items in a single truckload. • Or one truckload delivers to multiple customers. • Do not offer volume discounts. • Reduce setup cost Remove price fluctuations • When prices fluctuate, customers buy when prices are low and sell from inventory when prices are high, introducing demand variability. • Reduce frequency and depth of price promotions (e.g. WalMart – “Every Day Low Prices”) 46 3.8 Other SCM Strategies • Distribution centers – To shield the site from the transportation variation. • Risk Pooling – To reduce demand variability: As one aggregates demand across different locations, high demand from one location may be offset by low demand from another. • Lead Time Reduction and Management – Reduce stock levels • Process re-engineering 47 3.8 Other SCM Strategies • Working with fewer suppliers and carriers – To encourage closer working relationships and allow greater use of supplier and carrier expertise. – In construction, suppliers may be specialized • Strong commitment – Buil...
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