The supply chain which focuses on the flow of physical products from suppliers through manufacturing and distribution all the way to retail outlets and customers, and
The development chain which focuses on new product introduction and involves product architecture, make/buy decisions, earlier supplier involvement, strategic partnering, supplier footprint and supply contracts.
slow technology clock speed, low product variety, and typically low profit margins
Innovative products characterized by:
fast technology clock speed and short product life cycle, high product variety, and relatively high margins.
What Is the Appropriate Supply Chain Strategy and Product Design Strategy for Each Product Type?
Each requires a different supply chain strategy
Development chain has to deal with the differing level of demand uncertainty
Framework for Matching Product Design and Supply Chain Strategies The impact of demand uncertainty and product introduction frequency on product design and supply chain strategy
Physically Efficient vs. Market-Responsive Physically Efficient Process Market-Responsive Process Primary purpose Supply predictable demand efficiently at the lowest possible cost Respond quickly to unpredictable demand to minimize stockouts, forced markdowns, and obsolete inventory Manufacturing focus Maintain high average utilization rate Deploy excess buffer capacity for flexibility Inventory strategy Generate high turns & lower inventory cost Deploy significant buffer stock of all stock items Lead-time focus Shorten lead time at low cost Invest in ways to reduce lead time Approach to choosing suppliers Select primarily for cost and quality Select primarily for speed, flexibility, and quality Product-design strategy Maximize performance at minimum product cost Use modular design to postpone product differentiation
Efficiency-Responsiveness Framework of Supply Chain Functional Product Innovative Products Efficient Supply Chain Responsive Supply Chain Match Mismatch Mismatch Match