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
• 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
• 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
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- Fall '14
- Supply Chain Management