MBD needs to realize that in order to survive amid increasing competition where their competitors are implementing cutting edge supply chain strategies the organization will need to change instead of relying on their old model. The new model will need to be a combination of both pull as well as push strategies to counter both bigger retailers as well as online shops as well. Thus the best fit in such a situation would be to use a push pull strategy. Since MBD is already using forecasting techniques they can use the same to judge the books that will be an easy sell and thus apply a push strategy to this by predicting in advance and building up stock to meet demand. At the same time, there will be orders for books that are relatively unpredictable and in order to remain flexible yet responsive to customer needs, MBD will need to employ pull strategies and go towards the order based distribution which will involve more postponement methods and more time lags, yet will deliver to customers as per their requirements. If this new push pull strategy is used effectively, it can counter the current competition that they are currently feeling.
At the end of the day, for any business, the customer matters, and the bottom lines are adjusted to maximize revenues by keeping the customer satisfaction levels at a premium. These are the central questions that the management needs to ask themselves. How can we maximise output and customer satisfaction and increase our responsiveness at the same time Also, what are the best mix of strategies that will balance the pay offs between efficiency and responsiveness to ensure that a sustainable competitive advantage is built that the customer will learn to trust and thus help in retaining them One must also look at the effects of demand variability, transportation costs, and inventory costs. Keeping this in mind, there is no one best distribution strategy but rather multiple options that can be utilized to serve the different market segments that MBD is operating in, and thus a hybrid of push and pull strategies should be used. As part of the pull strategy, the direct shipment strategy may be used where books with high demand variability and low turnover. However, push strategies will include intermediate inventory storage point strategies so that books with low demand variability and high turnover may be stocked at distribution centres to increase responsiveness and reduce lead time.
Through the pull strategy, MDB will be able to maintain lower inventory and this also applies to direct shipment as well. This will lead to lower inventory costs, facility and handling costs and lower lead times due to the direct shipment strategy. Also, since MBD will be keeping a lower inventory of value added products and a higher inventory of generic products, thus order customization will be catered to properly. The advantage of the push strategy will lower lead times, increases responsiveness and lower transportation costs due to economies of scale.
If MBD is to use less warehouses and more centralized operations, transportation costs will decrease, information sharing will be more accurate with an added reduction in the bullwhip effect, leading to more accurate forecasting and better planning. This will in turn lower response times as well. If MBD is to use more warehouses and a more decentralized approach, transportation costs will be higher, information sharing will decrease, there will be the added threat of bullwhip effect at multiple levels and longer time to market for new products under development. Inventory storage and handling costs will also be higher. However, the flip side would be since the warehouses are more distributed, response times and lead times will decrease.
Situations for a distribution strategy
If a firm already has the internal infrastructure to support its operations and it is also its core strategic strength, than the obvious choice is to use an internal logistics expertise. This is because it will not only reduce cost, but also decrease dependency on other parties as well. Since an organization already knows its own strengths and weaknesses, thus it will also increase efficiency of the process and control on the value chain.
Sometimes another companys location in the supply chain is more congruent with logistical demands. It is at such times that an organization will need to overlook its infrastructural sufficiency and look to acquiring a company with this expertise. The best determinant is a combination of the position in the supply chain, resources and expertise.
This will happen if a company does not have the valid resources to implement what it has planned. This is often the case with smaller companies who may be specialists within their own supply chain segment but still due to a paucity of resources are unable to implement a variety of plans. A strategic alliance of this nature can add value, improve market access, strengthen the operations, aid technological muscle, enhance growth and organizational skills and build financial muscle as well.
Third party logistical support is usually used when another party can perform a range of functions better then the company that needs the job to be done. This will improve the focus on core strengths, as well as increase all sorts of flexibility. However, the loss of control is what one must watch out for.
IBMs private exchange vs. consortia of e-markets
The relatively simple answer to this question would be that IBM being one of the worlds leading distributors in this segment is using both pull and push strategies and information sharing paradigms that will help in both cases. Through the private exchange, IBM uses a pull strategy that presumes postponement of value addition information sharing is stronger and more accurate which helps in better forecasting and hedging against demand variability. On the other hand, the consortia of e-markets have been used to upgrade to answer to a new market segment and new information sharing paradigm.
Decisions based on the size of an electronic company
A smaller company should use a hedging strategy. Being in an electronic industry, the average time to market for products is extremely low thus there is a higher risk of demand variability.
To lessen the impact of demand variability. The essential issue with small scale operations is that they have lesser sources and cannot afford customer losses which may come as big hit. They do not have the luxury of being too flexible or speculative.
Yes it would definitely change
A larger firm will have more resources at its disposal which will allow it to be more flexible and speculative as well. Economies of scale will play a very important part in flexibility, where as stronger planning resources and better information sharing will lead to more accurate speculation as well. These will help prevent demand variability.
Dimensional impacts on supply chain design
A supply chain needs to conform to requirements so that it can deliver what it is designed to do, otherwise it would be without a core purpose and useless. A supply chain manager needs to be clear in the purpose as well as objective so that the designated systems such as inventory storage, transportation modes, and lead times are all designed to a specific requirement to deliver maximum value.
Each product varies on a variety of attributes which may include both physical as well as competitive. Physically, if a product is larger and bulky, the lot size, transportation costs, storage space etc will all change with it. Furthermore, it may depend on the competitive industry that it operates within.
Brand and price will play an important part since each will have a different need. When prices drop, the supply chain will need to be flexible enough to support a spike in demand. Also brands come up with promotions that may increase or decrease variability according to a series of media, and the supply chain must support this every step of the way.
Value added services must also be kept in mind while designing the supply chain. This is because value addition may change to nature of the product or the associated process at any step of the chain.
Relationships remain of paramount importance since any supply chain is like a strong bond of interconnected agreements that need to be kept. Also, stronger relationships may help in controlling bullwhip with better information sharing as well as decreasing demand variability or flexibility to deliver from other locations within the supply chain.
At the end of the day, for any business, the customer matters, and the bottom lines are adjusted to maximize revenues by keeping the customer satisfaction levels at a premium. These are the central questions that the management needs to ask themselves. How can we maximise output and customer satisfaction and increase our responsiveness at the same time Also, what are the best mix of strategies that will balance the pay offs between efficiency and responsiveness to ensure that a sustainable competitive advantage is built that the customer will learn to trust and thus help in retaining them One must also look at the effects of demand variability, transportation costs, and inventory costs. Keeping this in mind, there is no one best distribution strategy but rather multiple options that can be utilized to serve the different market segments that MBD is operating in, and thus a hybrid of push and pull strategies should be used. As part of the pull strategy, the direct shipment strategy may be used where books with high demand variability and low turnover. However, push strategies will include intermediate inventory storage point strategies so that books with low demand variability and high turnover may be stocked at distribution centres to increase responsiveness and reduce lead time.
Through the pull strategy, MDB will be able to maintain lower inventory and this also applies to direct shipment as well. This will lead to lower inventory costs, facility and handling costs and lower lead times due to the direct shipment strategy. Also, since MBD will be keeping a lower inventory of value added products and a higher inventory of generic products, thus order customization will be catered to properly. The advantage of the push strategy will lower lead times, increases responsiveness and lower transportation costs due to economies of scale.
If MBD is to use less warehouses and more centralized operations, transportation costs will decrease, information sharing will be more accurate with an added reduction in the bullwhip effect, leading to more accurate forecasting and better planning. This will in turn lower response times as well. If MBD is to use more warehouses and a more decentralized approach, transportation costs will be higher, information sharing will decrease, there will be the added threat of bullwhip effect at multiple levels and longer time to market for new products under development. Inventory storage and handling costs will also be higher. However, the flip side would be since the warehouses are more distributed, response times and lead times will decrease.
Situations for a distribution strategy
If a firm already has the internal infrastructure to support its operations and it is also its core strategic strength, than the obvious choice is to use an internal logistics expertise. This is because it will not only reduce cost, but also decrease dependency on other parties as well. Since an organization already knows its own strengths and weaknesses, thus it will also increase efficiency of the process and control on the value chain.
Sometimes another companys location in the supply chain is more congruent with logistical demands. It is at such times that an organization will need to overlook its infrastructural sufficiency and look to acquiring a company with this expertise. The best determinant is a combination of the position in the supply chain, resources and expertise.
This will happen if a company does not have the valid resources to implement what it has planned. This is often the case with smaller companies who may be specialists within their own supply chain segment but still due to a paucity of resources are unable to implement a variety of plans. A strategic alliance of this nature can add value, improve market access, strengthen the operations, aid technological muscle, enhance growth and organizational skills and build financial muscle as well.
Third party logistical support is usually used when another party can perform a range of functions better then the company that needs the job to be done. This will improve the focus on core strengths, as well as increase all sorts of flexibility. However, the loss of control is what one must watch out for.
IBMs private exchange vs. consortia of e-markets
The relatively simple answer to this question would be that IBM being one of the worlds leading distributors in this segment is using both pull and push strategies and information sharing paradigms that will help in both cases. Through the private exchange, IBM uses a pull strategy that presumes postponement of value addition information sharing is stronger and more accurate which helps in better forecasting and hedging against demand variability. On the other hand, the consortia of e-markets have been used to upgrade to answer to a new market segment and new information sharing paradigm.
Decisions based on the size of an electronic company
A smaller company should use a hedging strategy. Being in an electronic industry, the average time to market for products is extremely low thus there is a higher risk of demand variability.
To lessen the impact of demand variability. The essential issue with small scale operations is that they have lesser sources and cannot afford customer losses which may come as big hit. They do not have the luxury of being too flexible or speculative.
Yes it would definitely change
A larger firm will have more resources at its disposal which will allow it to be more flexible and speculative as well. Economies of scale will play a very important part in flexibility, where as stronger planning resources and better information sharing will lead to more accurate speculation as well. These will help prevent demand variability.
Dimensional impacts on supply chain design
A supply chain needs to conform to requirements so that it can deliver what it is designed to do, otherwise it would be without a core purpose and useless. A supply chain manager needs to be clear in the purpose as well as objective so that the designated systems such as inventory storage, transportation modes, and lead times are all designed to a specific requirement to deliver maximum value.
Each product varies on a variety of attributes which may include both physical as well as competitive. Physically, if a product is larger and bulky, the lot size, transportation costs, storage space etc will all change with it. Furthermore, it may depend on the competitive industry that it operates within.
Brand and price will play an important part since each will have a different need. When prices drop, the supply chain will need to be flexible enough to support a spike in demand. Also brands come up with promotions that may increase or decrease variability according to a series of media, and the supply chain must support this every step of the way.
Value added services must also be kept in mind while designing the supply chain. This is because value addition may change to nature of the product or the associated process at any step of the chain.
Relationships remain of paramount importance since any supply chain is like a strong bond of interconnected agreements that need to be kept. Also, stronger relationships may help in controlling bullwhip with better information sharing as well as decreasing demand variability or flexibility to deliver from other locations within the supply chain.
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