Efficiency-Responsiveness Framework of Supply Chain

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Efficiency-Responsiveness Framework of Supply
Chain
Functional Product
Innovative Products
Match Mismatch
Mismatch Match
EfficientSupply Chain
Responsive Supply Chain
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Zone of strategic fit in supply chain
Responsive Supply Chain
Responsiveness Spectrum
Zone of Strategic Fit
Efficient Supply Chain
Implied Uncertainty Spectrum
Uncertain Demand
Certain Demand
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Dells Direct Business Model
Suppliers
Customers
Distribution Channels
Manufacturer
Dominant Model A value-chain with arm-length
transactions from one layer to the next
Suppliers
Customers
Manufacturer
Direct Business Model Leverage relationships
with both suppliers and customers by eliminating
time and cost of third-party distribution
Suppliers Manufacturer
Customers
Virtual Integration Stitching together a
business with partners and customers treated as
if they are inside the company sharing
information real-time
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Direct Model Focus
Vertical Integration vs. Virtual
Integration Engineering-centric vs.
customer-centric Supplier exchange vs. supplier
relationship we have developed everything vs.
we need to add value to customers
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Key Factors of the Direct Model

• Customer Focus
• Supplier Partnership
• Mass Customization
• Just-in-Time Manufacturing

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Direct Model Customer Focus

• Segment Customers
• Communicate closely with customers to forecast
  needs and keep inventory low
• Create most value for customers
• Use technology to free customer to focus on their
  business

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Supplier Partnership

• Have as few suppliers as possible keep them as
  long as they are technological and quality
  leaders
• Communicate your inventory levels and
  replenishment needs with suppliers real-time
• Order from suppliers only when you receive demand
  from customers

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Direct Model - Innovation

• Technology is enabling coordination across
  company boundaries to achieve new levels of
  efficiency, speed, and flexibility as well as
  extraordinary returns to investors

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Li Fung Success

• Innovation
• Flexibility
• Speed
• Through
• dispersed manufacturing
• smokeless factory

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Dispersed Manufacturing (Li Fung)

• Detaches critical links in the supply chain
• Finds best solutions for each link from a
  world-wide network of independent suppliers
• Weave a strong and flexible network of
  specialized suppliers, manufacturing, and
  distributors
• Chips away time and cost from the production and
  delivery cycle (planning close to market)

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Dispersed (Borderless) Manufacturing
Order of 10,000 European Garment
Pick Yarn from Korea
Send Yarn to Taiwan for Weaving
Make the Garment in Thailand
Buy Japanese Zippers from China
Order Delivered To Customer all Looking Alike
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Organizing Around Customers Li Fung

• Li Fung organizes itself to create a unique
  value chain for each customer
• Basic operating unit is entrepreneurial divisions
  serving just one large customer or several
  smaller customers
• Uniqueness remains entrepreneurial despite it
  growing size and scope by structuring around
  customer-focused divisions
• Create a customized value chain for each customer