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How do companies manage their high-tech supply chains to mitigate demand and supply uncertainty?

High-tech companies must match the level of demand and supply uncertainty to the appropriate type of supply chain management:

  • High supply and high demand uncertainty:  Use an agile supply chain by working with alternate suppliers on different technologies and sharing these resources with others in the industry, along with flexible mass customization of products for customer needs (a combination of the risk hedging and responsive supply chain strategies below).
  • High supply and low demand uncertainty:  Use a risk-hedging supply chain geared towards pooling and sharing of resources to avoid disruptions; cultivate second sources, maintain extra inventory, and have manufacturing facilities in alternate locations to hedge risks of disruption. Sharing these resources with others in the industry can be efficient. Military supply chains operate largely in this manner.
  • Low supply and high demand uncertainty:  Use a responsive supply chain that is flexible to meet changing customer needs; rely on accurate order information and mass customization to be truly effective. Dell is a master practitioner of the responsive supply chain strategy.
  • Low supply and low demand uncertainty:  Use an efficient supply chain geared towards economies of scale, reduction of non-value-added activities, and optimization of forecasting and inventory by sharing accurate information speedily with suppliers.
 
 
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