What is the right supply chain for the company? Is there a right supply chain in the first place? How do we match the effective supply chain to the right product? – These are just some of the questions that practitioners and academics are trying to answer. Are we missing the whole picture when we start to ask such questions?
Let’s get back to the basics. There is a product life cycle that requires different supply chain response as the product cycle progress from one stage to the next. During the development of the product, there is probably no need to involve much of supply chain except for the development of raw materials. This design stage should include the inputs from the purchasing folks who have the expert knowledge about the market and what is available out there to purchase. If the raw material is a specialty product itself, then the R&D should work with long term suppliers to obtain a tailored raw material that has a specialized usage.
As the new product is launch, this is the stage where growth is expected to be exponential. Therefore it is important that a responsive supply chain is planned ahead of the launch in order to build flexibility to cater to fluctuating demands. This called for trial runs to test market response so as to minimize stockout situation or the ability to store more inventory or the flexibility to switch over components when there is an imbalance in demand & supply.
When the products become matured where there is a lot of competing products coming to the market, the supply chain must adatp to such change by driving cost efficiency. This is one way to protect against margin erosion until a new version of the product comes online. At this stage, we can assume that the demand will become more stable and predictable. Hence the planning process may have to consider fixing a production schedule with long runs.
As the product slowly decline especially those with long tails, the supply chain has to adapt by continuous improving and optimising the cost. As the demand market spreads across countries or regions, the supply chain has to compete with other overseas players. This called for partnering with the right companies who have the resources or distribution expertise to level out the competition in a foreign environment.