Supply Chain Design

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Lady pushing a shopping cart in the supermarket.

A Fresh Take on Supply Chain Innovation

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  • Read Time: 5 min 

For PepsiCo, entering the natural beverage markets of coconut water and smoothies meant developing new risk-management practices. In the coconut water business, “lead times are longer and supply is more variable than in PepsiCo’s traditional beverage supply chain,” write Tim Rowell of PepsiCo and James B. Rice Jr. of the MIT Center for Transportation & Logistics. “The company has had to build enough inventory to minimize stock outs — without causing excessive losses through obsolescence.”

Image courtesy of Amazon.com

Your Next Supply Chain

How have strategies for supply chain design changed in recent years? What are the forces most profoundly shaping them now? What kinds of models have emerged for companies to consider, choose among or learn from? MIT professor and entrepreneur David Simchi-Levi and MIT professor Charles Fine — two of the world’s leading thinkers on supply chain and value chain design — offer answers to those questions and others.

Image courtesy of Wal-mart.

Outcome-Driven Supply Chains

When properly designed and operated, the traditional supply chain has offered customers three primary benefits—reduced cost, faster delivery and improved quality. But managers are increasingly recognizing that these advantages, while necessary, are not always sufficient in the modern business world. The supply chain should be designed and managed to deliver one or more of six basic outcomes: cost, responsiveness, security, sustainability, resilience and innovation.

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Back to the Future: Benetton Transforms Its Global Network

During the 1980s, Benetton was known as the archetypal network organization. But it decided to take a new direction representing a major discontinuity with its past and a divergence from industry practices. Without giving up the strongest aspects of its networked model, it integrated and centralized, exerting greater control over its supply chain even as it diversified its operations and product lines. The authors offer a detailed case study of this dramatic transformation.

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