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NEW BUSINESS MODELS

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NEW BUSINESS MODELS

  1. 1. NEW BUSINESS MODELS FOR SUPPLY CHAIN EXCELLENCE  Capture the Right Customers  Scholastic, the world’s leading publisher and distributor of children’s books, is good example that the right channel strategy creates barriers to entry for competitors. Its direct-to-classroom book club business: - treats each teacher as an individual customer - coordinates several offers and products simultaneously - accommodates tight order-fulfillment timeframes, periodic spikes in demand, and multiple SKUs - enhances school-channel loyalty with syllabus support materials, credits for free books, and classroom technology support  Dell’s consumer-direct approach is based on build-to-order manufacturing, effective supplier management to shorten component lead times, eliminating inventory through JIT processes, and using technology to integrate tightly with customers and suppliers. Cornerstones of Dell’s strategy: - Sell what you have: use day-to-day pricing and incentives to shift demand - Minimize stock: less than 4 days inventory - Ensure crisp product lifecycle transitions - Leverage real-time customer feedback and market insights
  2. 2. - Control pricing on a real-time basis  Design a Customer-Responsive Supply Chain  Technology enables mass customization.  On-line connectivity can improve responsiveness regardless of your business model.  Dell has linked its supply chain directly to corporate customer processes and operations via custom-tailored account pages for each customer and various “in-customer” services. This allows Dell to: - Build knowledge of the customer - Be more sensitive to changes in customer processes and technology - Solidify barriers to entry by competitors  Create a Flexible and Cost-Efficient Supply Chain  Minimize investment in finished goods by configuring the final product at fulfillment centers (postponement).  Contain supplier costs and improve service quality through supplier consolidation and segmentation programs.  Achieve flexibility in manufacturing by working with contract manufacturers.  Improve allocation of spare parts and repair items by applying decision support tools to analyze demand, understand service expectations, and calculate relative costs.
  3. 3.  Employ the Right Technologies – the following are just a few of the technology innovations that are changing the way supply chains perform  E-auctioning: best candidates are commodity products (i.e., price driven products), though companies are beginning to use e-auctioning for more strategic materials  Event Management: technology summarizes the information from POS data, manufacturing schedules, vendor stocks, customer inventories, carrier schedules, etc. to recognize and correct exceptions in related supply chain processes - Up to 30% of operations managers’ time and as much as 60% of customer service, manufacturing, and supplier managers’ time is spent detecting problems, notifying stakeholders, answering questions, and expediting action. - Event management implementations are best suited for companies with complex or lengthy supply chains and multiple participants with whom they must work closely and collaboratively.  Private Exchanges: exports processes across corporate borders by electronically synchronizing firm’s supply chain with those of its strategic trading partners to buy, sell, and move goods more efficiently. - Transactional: “channel master” owns data and controls all transactions
  4. 4. - Interactive: company that owns private exchange also owns the data but makes it available to users to send feedback in near real time - Collaborative: multiple parties work together in real-time to make decisions - Used widely in high tech industry because of its acute need for connectivity and demand propagation through a vertically disintegrated supply chain.  Design Collaboration: the first phase of collaborative product commerce (CPC) – the application of decision support across the lifecycle of a product, from introduction to service support to obsolescence - Suppliers become part of design process – helps cut design and production times, improve product quality, and achieve faster time-to-market. - Boeing and General Motors are innovators in design collaboration.  Integrated Fulfillment: makes back-office information visible to customer-facing operations - Connect WMS with front-end order management processes and order-entry systems (e.g., on-line customers can see what is and what isn’t in stock) - Connect WMS with event management and supply chain visibility systems (e.g., validating customer-requested ship dates, telling customers when out-of-stock items will be back in-stock, and notifying customers when stocks are replenished)

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