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The holy grails of supply chain are high speed and low cost.or are they? Though they are necessary, they are not just enough for sustainable competitive advantage
The best supply chains are not just fast and cost-effective. They are also agile and adaptable, and they ensure that all their companies interests stay aligned
Traditionally
Speed and Cost cutting are the holy grails of Supply Chain When business booms, speed is the focus When business slows down, cost is the focus But statistics show that during 1980 and 2000, markdowns rose to 10% to 30% owing to excess inventory, while customer satisfaction has also decreased
The best practice of FCL shipment to exploit economies of scale becomes the worst practice when demand fluctuates Markdowns are offered, resulting in decreased margin, also erode brand equity
Lucent electronic switching system Centralized inventory in America during 80 When 90 came, business moved to Asia, Lucent was paralyzed, because it could not modify to Asian continents
Agility
Responding to sudden and unexpected changes in markets Agility is critical because in most industries, both demand and supply fluctuate more rapidly and widely Compaq failed to built agility in its design cycle, resulting being sold to HP
By Contrast, Zara, Mango and H&M have become most profitable apparel brands This was achieved by building agile design processes 1999 Taiwan Earthquake and Dells strategy to manage demand
Adaptability
Adjusting supply chains design to meet structural shifts in markets; modify supply network to strategies, products and technologies
Lucents recovery
First to they raise of Asian Manufacturer Second to take advantage of oursourced manufacturer
Alignment
Establish incentives for supply chain partners to improve performance of the entire chain Lack of alignment causes the failure of man supply chain practices