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Supply Chain Management How is Strategic Fit Achieved?. Step 1: Understanding the customer and demand uncertainty Step 2: Understanding the supply chain Step 3: Achieving strategic fit. Step 1: Understanding the Customer and Demand Uncertainty.

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supply chain management how is strategic fit achieved
Supply Chain ManagementHow is Strategic Fit Achieved?
  • Step 1: Understanding the customer and demand uncertainty
  • Step 2: Understanding the supply chain
  • Step 3: Achieving strategic fit
step 1 understanding the customer and demand uncertainty
Step 1: Understanding the Customer and Demand Uncertainty
  • Identify the needs of the customer segment being served
    • Response time customers will tolerate
    • Variety of products needed
    • Service level required
    • Price of the product
    • Desired rate of innovation in the product
  • Demand uncertainty: uncertainty of customer demand for a product
  • Implied demand uncertainty: resulting uncertainty for the supply chain given the portion of the demand the supply chain must handle and attributes the customer desires

The first step to strategic fit is to understand customers by mapping their demand on the implied uncertainty spectrum

impact of customer needs on implied demand uncertainty
Impact of Customer Needs on Implied Demand Uncertainty

In general, customers want more quantity, more variety, more novelty, more availability, they want it now, and they want it everywhere.

levels of implied demand uncertainty
Levels of Implied Demand Uncertainty

Detergent

Long lead time steel

Purely functional products

High Fashion

iPod

Entirely new products

Customer Need

Price

Responsiveness

Low

High

Implied Demand Uncertainty

step 2 understanding the supply chain
Step 2: Understanding the Supply Chain
  • There is a cost to achieving

responsiveness

step 3 achieving strategic fit
Step 3: Achieving Strategic Fit
  • Ensure that what the supply chain is consistent with target customer’s needs

Responsive supply chain

Dell

Zone of Strategic Fit

Responsiveness spectrum

Barilla Pasta

Efficient supply chain

Uncertain demand

Certain demand

Implied uncertainty spectrum

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