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Customization of a Supply Network Operations Strategy

The supply network operations strategies employed by a firm in any sector are likely to contain certain components that are combined with particular emphases; it is likely that this act of combination or blending will confer strategic status. If, for example, supply management, time-based competition, and sourcing are of particular strategic importance. An organization will accord operations strategy status to that combination of components.

Product Group Demand Behavior

This category includes product attributes, demand patterns, and customer/consumer behavior.

Product attributes

Product attributes are such things as durability of the product, price levels, shelf life (intrinsic, such as physical characteristics, and extrinsic, such as customer taste changes), product complexity (number and variety of Stock Keeping Units making up a product line), and product line dynamics (characteristics of slowmoving versus rapid-turnover goods).

Supply Network Behavior

Product stream value flows

Product stream value flows are highly complex and dynamic. Any understanding of them requires the appreciation of supply system architecture and the intricacy of that architecture (length of pipeline, stages, firm sizes, product complexity and dynamism, information availability, consumer demands, etc.), the power of the participants (strengths/sizes/financial capabilities of the entities in the pipeline will have a marked impact on the way it operates), and the integration of the supply system.

Importance of supply network relationships

Supply network relationships are both a driving force shaping the strategy and an important component of it. As was seen earlier, the type of relationship, its purpose, degree of integration and commitment, power balance, strategic importance, strengths and weaknesses, cultural expectations, and so forth, will all exert certain pressures on the shape of the operations strategy.

Supply Network Performance Metrics

Research has now demonstrated that in practice, the building blocks are composed of certain elements. The types of building blocks applied and the degree of significance each receives will be dictated by certain performance factors across the whole supply network. First, each of the individual elements contained within the building blocks can be assessed and weighted in terms of its contribution to competitive advantage (negative, low, medium, and high). Second, the individual building blocks themselves can be evaluated as to performance impact. Here, the measures will be particular to the sector or supply network. Previous studies have, however, included impact on profit, turnover, quality, and customer service levels.

The exercise to apply a weighting to these various building blocks and their elements can be conducted at the supply network level; this will include the input of key suppliers and customers as part of a relationship. The supply network operations strategy profiles subsequently created will reflect the differing degree of importance placed on each component with the resulting strategy, thus, becoming customized. Any subsequent supply network operations strategy will incorporate high-scoring elements giving a unique blend and emphases. This exercise can also be conducted by a particular product group and/or customer.

CONCLUSIONS

They form an important part of an operations strategy. Such strategies are increasingly adopted to respond to the complex and dynamic trading environment. The began with a review of this domain and a discussion of demand complexity and the need for an organization to offer a flexible response.

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