Friday, 6 January 2017

Time Compression in a Global Supply Chain

Today we’re going to show how time compression can be used in a global supply chain. There are numerous applications that can be applied across a variety of supply chain principles. We’ll be using two product types as examples. The first is a product that has low margins but a stable demand and the second is fashion, with variable demand but potential for higher margins. A supply chain for the fashion garment needs to be agile and have a focus on mitigation over reducing costs.

End user focus is a supply chain design that can be used as it’s flexible. End user demands are used to work out the logistical requirements using horizontal channels. One of the main aspects of any supply chain demand is the inventory positioning, which depends on variabilities in demand and supply, along with the lead times. The types of inventory can be worked out by using these factors.  An agile channel example could have inventory that is held close to the retailer, but in an unfinished form, so some assembly then takes place at a location with a short lead time.

Vertical boundaries in a supply chain are used when the owners of the supply chain have different legal entities and are under different organisations. The boundaries need to be designed into the channel once the make-buy decision has been made and also after the process design and outsourcing best practice.

The ownership of the inventory is a concern and there needs to be conflict resolution installed in the supply chain, working towards building partnerships. Cooperation and coordination are essential at a generic level. The use of system based exchange of data and information has transformed how supply chains operate.

The inbound supply also needs attention as it sustains manufacturing. The costs are often included in procurement costs so working out the logistical costs can be difficult. Non value adds costs and safety stocks can occur so mapping the inbound supply chain is beneficial from a time, cost and value add perspective.

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