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Supply Chain Management Principles

Principles of effective Supply Chain Management

Customer Segmentation: The first principle of any successful supply chain is to fully understand customers and their needs. Customers must be segmented based on service needs rather than the industry. The services must then be tailored according to the respective segments.

Logistics Network Customization: Tailor the logistics network and concentrate intently on the service needs and on the productivity of the identified customer segments.

Planning: Understand the market demand and plan consequently. Planning must cover the entire supply chain to trace signals of varying demand.

Product Differentiation: Differentiate product closer to the customer. Companies cannot hold inventory (safety or buffer stock) to account for poor demand forecasting

Strategic Supply Management: By working closely with key component suppliers the supply sources can be managed strategically, thereby reducing the overall costs of owning materials and services.

Supply chain wide IT strategy: To provide a clear view of the product, service and information flow an IT strategy that spans the entire supply chain and facilitates decision making at various levels must be formed.

Performance Management metrics: Implement performance evaluation metrics that are relevant to every link in the supply chain and measure true profitability at every stage.

By adopting a mixture of these best principles along with information technology, a company can gain integrated forecasting, planning, and execution capabilities with complete supply chain visibility. With such supply chain capabilities, a company can combine its orders and study the material requirements instantly.

Case Study Quotes

"Pretty much, Apple and Dell are the only ones in this industry making money. They make it by being Wal-Mart. We make it by innovation". - Steve Jobs, Apple