Article Review- What Is the Right Supply Chain for Your Product?
What is the right supply chain for your product ? is the question asked by Marshall L. Fisher in his article titled, “What is the Right Supply Chain for Your Product ?” published in March-April 1997 issue of the Harvard Business Review. Author raises the question stating the fact that new ideas and technology implemented haven’t lead to improved performance. Performance has not become better but rather in at least some cases, has worsened due to costs rocketing to unprecedented levels.
Based upon his ten years research on supply chain issues in diverse industries such as food, fashion, apparel and automobiles he devises a framework which will help …show more content…
Suppliers are chosen for their low cost and not for their flexibility
On the contrary, for innovative products, market mediation costs are the most important. It is very important for an innovative product to establish market share at the beginning of its life, a fact that leads to the increase of the cost of shortages. Also, the short life cycle increases the risk of obsolesce due to excess supplies. The important flow of information is not only within the chain but it also is from the market to the chain. It is also desirable, for the coordination of the chain, all the partners receive real time information from the market. Finally, suppliers are not chosen for their low cost, but for their agile production and their short lead times which allow them to respond quickly to the market’s unpredictable demand.
Author then elaborates on the Supply Chain Mismatches by stating that companies manufacturing functional products usually realize their need for an efficient supply chain. On the other hand, it is very easy for a company to transform its functional product into innovative through the introduction of any innovation, without realizing that change. All of a sudden, service level drops and inventories of unsold products go up. Despite the efforts to decrease inventories and to restore service level, the number of the problems increases exponentially over time.
According to Mr. Fischer there are two obvious