Question

(a) Differentiate value chain characteristics based on physical efficiency and market responsiveness. [10]
(b) Explain the demand-supply uncertainty matrix.

Answer 1

(a) Differentiate value chain characteristics based on physical efficiency and market responsiveness.

Answer:-

Performance is a perennial business term. After all, it describes the best business practices in the group. Efficient production means creating products without wasting time on products, natural resources or human time. Effective facility management means running your business while reducing your energy costs and reducing its carbon footprint. Effective advertising is targeted advertising campaigns that use up most of your marketing dollars.

While performance is a well-worn Tern, the digital age has risen to the importance of a new password: responsiveness. Allows accountable businesses to quickly adapt and implement changes both locally and in the market.

Both are solid properties, but can one be more important than the other? Is it time to put the performance on the back-burner to support the response?

When it comes to the supply chain, the answer is complicated.

Physical Efficiency

Market Responsiveness

Performance saves money and increases profits across your business, but having an efficient supply chain can be especially beneficial to your bottom line. An efficient supply chain gets your products to their locations in the most cost effective way. In today’s global market, this is a must. Your supply chain costs are an important part of your overhead and are expressed in the prices you provide to your customers. If your supply chain adds unnecessary costs to your final product, your ability to compete successfully with other companies offering the same products is effective. It's simple: If your competitors have more efficient supply chains than you, they can offer the same products at a lower price. The hallmarks of an efficient supply chain are: Optimization:- This includes optimal shipping routes, warehouse locations, personnel, and your computer network to get the best and complete use of your existing infrastructure.Half empty trucks, unused warehouses and unnecessary computer systems are a waste of your property. High quality partners:- Your third-party logistics partners should be the best in class. Your 3PL must have sophisticated technologies at their disposal, have a transparency policy, and have proven track record. Inventory management:- There is a high inventory cost to buy, handle, store and monitor. Very few inventories can be expensive. This can mean lost production time, costly last minute orders and even angry customers. An efficient supply chain finds the right balance when it comes to inventory. Customer satisfaction:- Supply chain performance is directly linked to customer satisfaction. It gets your products into the hands of people who need it quickly and at great prices.

A responsive supply chain must do two things: it must respond to your needs, and it must respond to the needs of your customers. Order fill accuracy:- In today's highly competitive market, assurance of fast delivery is a real selling point. If that order comes quickly but is inaccurate or incomplete, you may have wasted time and money and lost a customer. Measured fulfillment:- All businesses experience ups and downs. Sales may be affected by season, weather and economy. A responsive supply chain is a place where sales volume can change. Contact:- When you or your customers have questions, problems or concerns, it is important to have open communication. Customer satisfaction:- People can sometimes throw a monkey wrench into the best supply chain. They order the wrong thing. They change their minds. They need something sooner, not later. This is when a responsive supply chain really shines. It is flexible enough to handle revenue, for example, providing high quality customer service. Customers who feel that their specific needs are being met, are satisfied customers who can help when there is a problem to be solved.

(b) Explain the demand-supply uncertainty matrix.

Demand uncertainty occurs when a business or a business cannot accurately predict the consumer demand for its products or services. This can cause many problems for the business, especially in managing orders and stacking conditions, and the effects are magnified by the supply chain.

Cases:-

The reasons for demand uncertainty can be from the inherent qualities of the business and its customer base or external factors. Seasonal fluctuations, for example, are a kind of inherent uncertainty, although businesses experiencing seasonal fluctuations may use records from past years to anticipate and estimate the current seasonal change. Businesses with the most innovative product or service will face huge demand uncertainty because their uniqueness is that there is no way to make decisions on demand.

However, customer preference can change quickly and without warning, as sometimes a new trend or fashion emerges. Consumer demand may change due to technological advances that make familiar products obsolete; Demand can be diluted by the entry of new competitors into the industry. The state of the economy affects consumer demand, a strong economy leads to demand, and a weak economy undermines it. Examples of external factors that contribute to both demand and supply uncertainty are natural or man-made disasters and periods of political unrest.

Problems:-

When the demand is uncertain, it is difficult to determine the right amount of goods and supplies to order for the next sales cycle. In a business that expects a normal or high level of sales, only to see a decline in demand, the remaining items must be stored, withdrawn or discarded. Each of these scenarios leads to additional costs. However, if demand increases and the company does not have enough goods to sell, the result is that dissatisfied customers may buy from a competitor who has some supply of desired products. Some customers will never return to the original seller, resulting in business loss for the company.

Problems with demand uncertainty are not limited to storing goods. When demand is fluctuating, it is difficult for retail companies, in particular, to find suitable employee positions. Other areas of cost, such as equipment purchase or facility upgrades, may also be affected.

Bull whip effects:-

Demand uncertainty at the retail customer level is one way to reduce the supply chain. When wholesalers notice that the retailers they work with have reduced or increased their orders, wholesalers are more likely to reduce their purchases or increase a higher percentage from manufacturers in order to curb their challenges. Manufacturers can further protect their bets on their orders from suppliers of raw materials. As a result, raw material suppliers can end up with six months or more of backlinks, while retailers in a supply chain are only ordered to supply one additional month. This is called the Pullwip effect, because it is similar to the action of a Pulp when the "tail" moves slightly and the "tail" swings in wide and wide fluctuations.

Industries Affected:-

Some businesses are more susceptible to demand uncertainty than others. A study reported in the Harvard Business Review compares businesses on two levels: demand uncertainty and technology uncertainty. Demand uncertainty is high, while technological uncertainty is low, such as restaurants and hotels, consumer-sized businesses such as health services and retail. However, demand for commodity suppliers such as coal, mining and steel works is still high. Also, some businesses face high demand uncertainty with high technical uncertainty. These industries include transportation, computers, software, medical equipment and pharmaceuticals. The authors of the study suggest that as a means of dealing with demand uncertainty, better communication with the supply chain, and closer monitoring of consumer demand. Businesses that experience high technology and high demand uncertainty should also focus more on innovation management.