Product and Supply Chin Design Synchronization
Supply chain Management (SCM) is a complex process, which often accounts for the as much as 80% of the total costs of the product. Product design determines the type of the operations, which the company should be able to manage within the supply chain. As such, even a change in the sales channel, which affects the manner in which the finalization of the product is handled already brings numerous challenges to the supply chain. One of the good examples of this change, affecting the companies is the organization, selling the variety of goods through direct marketing channel of independent representatives, shifting its retail operation to online and TV sales.
This demands significant adjustment in upstream SC operations, as the frequency of the orders; production batch and logistics change dramatically. With that in mind, leaving the SC without attention, once evaluating the product design can lead to severe consequences for the company. The above illustrates the way firms can minimize the loss. SCM synchronization with product design, however, can bring significant financial advantages to the company. Benetton postponement mechanism within the Supply Chain is best to illustrate the way, in which alignment of SC and product designs can help reducing the safety stock, reducing shelf lead times and eliminating the “waste” from the operations.
Additionally, many examples in the history and modern business environment illustrate that alignment of SCM with the product design and specifications can help organizations achieve their targets and strategic goals with regards to the “green” practices and sustainable supply chains. Once the SC design for the product, the processes within the SC operations can be adjusted and improved in a way to ensure sustainable and effective practices. This cannot be achieved in the situations, when the product is “fit” the existing supply chain operation.
