These are your strategic supply chain partners or

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online