- Research Feature
- Read Time: 25 min
Contrary to a widely held assumption, companies can integrate a variety of techniques to substantially reduce costs, not just in the design phase but throughout the product life cycle.
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By understanding the variety and interconnectedness of supply-chain risks, managers can tailor balanced, effective risk-reduction strategies. The authors show how smart companies use “stress testing” to identify parts of the supply chain that might break in the event of a natural disaster, terrorist strike or other upheaval. They then explain a variety of ways that supply-chain partners can collaboratively prepare for and effectively manage risk.
Few organizations understand the benefits of having tactical planners, who use computer models to optimize the supply chain, in close communication with the senior managers who formulate strategy. The author outlines a planning approach that ensures that critical supply-chain details inform a company’s business strategy and that supply-chain management aligns with the strategic direction.
The idea that e-commerce would lead to disintermediation has turned out to be largely wrong. The Web transforms but does not eliminate the advantages of the middleman‘s central lookout position. The authors show how new kinds of intermediaries are helping smart companies realize the promise of the Web. They offer nine ways that intermediaries traditionally add value and explain that three will change, three will survive in a new form, and three present growth opportunities.
Organizations today must quickly and continually assess which parts of their value chain are vulnerable, which parts are defensible, which alliances make strategic sense, and which threats are deadly.
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.
In almost every business-to-business industry, companies are facing increasingly powerful intermediaries in their distribution channel. Industry consolidation is replacing a multitude of small “mom and pop” distributors with a handful of national, professionally managed, publicly traded corporations.
Trade promotions permit manufacturers to influence retail price, retail sales, and total channel profit by rewarding resellers for lower prices and subsidizing their selling effort.
Increased global competition means that industry and government must work together to ensure that manufacturers have support networks of transportation, telecommunications, services, and knowledge centers.
Companies frequently mismanage their dealings with suppliers and miss many opportunities to reduce costs. Perhaps it’s time to reexamine purchasing, reestablish some tension in buyer-supplier relationships, and leverage the free market.
Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies: excessive inventory investment, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedules. How do exaggerated order swings occur? What can companies do to mitigate them?
In a global supply chain, managers must plan for longer lead times, expensive air freight, higher inventory levels, poor sales-forecasting accuracy, and significant delays in resolving technical problems. However, the reduction of defects and engineering change orders associated with lean production can stabilize the supply chain.
The persistent U.S. trade imbalance may have two causes: a declining manufacturing base and the shift of the U.S. economy toward services. Correcting the imbalance will require a substantial commitment to expand America’s manufacturing base.
ALTHOUGH RETURNS POLICIES HAVE BEEN WIDELY USED FOR MANY YEARS, THEY CONTINUE TO BE A SOURCE OF CONTROVERSY. THE AUTHORS present a framework that explains when and how to adopt returns policies. They analyze the benefits and costs of accepting returns from distributors, and also compare returns policies to alternative ways of coordinating the distribution channel.
JAPAN’S DISTRIBUTION SYSTEMS, LONG THE TARGET OF CRITICISM, ARE CHANGING. DEREGULATION, NEW MANUFACTURING IMPERATIVES, consumer behavior, and the economy have interacted to reshape Japanese distribution. The trends have important implications for global business, since the system now offers areas of opportunity for Western manufacturers and retailers.
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