What changes the supply string management today? Hitachi Consulting found six key styles causing significant impact and change to provide string design and performance based on their experience with leading key companies in the food and beverage, consumer products, hi-tech, and industrial manufacturing. Demand planning is normally the first step to the whole process of sales and operations planning. With all resources pooled together (sales, marketing, finance, product development, and offer chain), the ongoing company will have stronger planning result.
However, planning will not come from air; it is produced from the given information about customers, and other relevant parties. Thus shared information among different players shall be crucial for the look which creates the supply-string network. The globalization is impacting the world significantly as said in the book World is Flat including the way business is managed and transacted.
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The success of financial cluster such as Silicon Valley and Hollywood has recommended the potency of the cluster. In the cluster, everyone had a need to support the creation of their masterpieces. Particularly, logistics clusters are broadly thought as geographically concentrated pieces of logistics- related business activities – the warehouses, companies, terminals, 3PLs, forwarders, brokers, and so on had a need to get goods to market. The primary advantage of the logistics cluster is the distinct operational advantage in terms of size and scope because of the breadth and depth of the supporting infrastructure. Companies benefit from being close to each other.
The virtuous routine is established of the logistic-cluster system. As more parties get into the logistic cluster, they contribute resources to it. With an increase of resources, the cluster becomes more efficient and creates more value for the parties. As the cluster being better, it attracts more companies to enter the cluster. With the enlarged cluster, the expense of transport fallen and the service become better.
Nevertheless, logistics clusters drive financial growth and create job opportunities. The need for the logistics cluster could keep growing because of globalization and will provide globalization better because better transportation. In the globalized environment, competition becomes more intense. Company with product innovation and brand equity cannot put a price too high just.
To offset this tendency, companies may make an effort to reduce cost using quality control practice such as Lean Principle to stay cost competitive. They could also create value-added services to get customer demands. Apple is a great example of this price pressure. After Amazon release the product Kindle Fire, Apple face great stresses of the reduced-price competition. From then on, Apple’s reaction was not only creating Ipad mini but also attempting to boost its source chain.
The cost conserving plan may align with the provider romantic relationship, where companies not just need to examine its own supply string but help using its suppliers as well. This is exactly what Wal-Mart does for its supply-chain system to remain cost competitive on the market. On the other hand, suppliers may provide Vendor Managed Inventory (VMI), RFID, packaging and labeling, drop shipping, and cooperation services to the firms to remain competitive on the market. When examining the business core competencies, some may realize that outsourcing certain supply chain. Before they outsource the supply chain, they may conduct a cost-benefit analysis rather than just doing it because others are doing it.
Since Zappo’s primary competence is their commitment business model and romantic relationship marketing, they want to do their best in preserving customer relationship. That is why they will not outsource their call service. To maintain a healthy outsourcing practice, companies need to be able to control and monitor the outsourced services.
In addition, information needs to be shared and up to date with vendors to ensure the quality of the source chain regularly. Even if an organization happens to be outsourcing its supply chain, it doesn’t mean they need to continue doing the same thing. Due to the increasing income in the offshore locations such as China and India, offshoring might not be as cost benefit or attractive as before.
Companies may rethink their offshoring procedures and try to check out near-shoring opportunities. Given the shortened and more complex product life cycles, companies have to have a relatively high responsiveness while preserving its cost. The product lifecycle management is vital to meet the market demand. People centric approach may be used to develop the process.