SCM QUIZ 2 Harinath/ 812136
During festive season ie: Hari Raya Puasa, Deepavali, Chinese New Year, demand of customer products needs increase, and create uncertainties. How do you overcome this uncertainties that influence supply chain performance and network design? Is price control effective way to overcome uncertainty of price?
Disruptive risks during festive seasons tend to have a domino effect on the supply chain. Such a risk can't be addressed by holding additional parts inventory without a substantial loss in cost efficiency. By contrast, recurrent risks such as demand fluctuations or supply delays tend to be independent. They can normally be covered by good supply chain management practices, such as having the right inventory in the right place.
Managers need to be better at managing global supply chains and mitigating recurrent supply chain risks through improved planning and execution. However, reliance on sole-source suppliers, common parts and centralized inventories has left supply chains more vulnerable to disruptive risks during festive seasons.
To manage this risk, sourcing from or outsourcing to a distant low-cost locations and eliminating excess capacity and redundant suppliers can make supply chains more cost efficient in the short term.
The use of third-party logistics companies also helps make small batch replenishments economical. These companies allow economies of scale that were not feasible in a single supplier-customer relationship. By consolidating loads from multiple suppliers located near each other, a company can realize full truckload economies without the batches coming from the same supplier. Of course, there are additional handlings and administrative costs for such consolidations or multiple pickups, but the savings often outweigh the costs.
The simplest way to control the bullwhip effect caused by forward buying and diversions is to reduce both the frequency and the level of wholesale price discounting. The manufacturer can...