Designing the Perfect Supply Chain

Designing the Perfect Supply Chain

In today’s markets companies need a practically perfect supply chain in order to gain a competitive advantage. There are many elements that go into designing a successful supply chain; however, companies will come close to that perfect supply chain as they attempt to successfully forecast demand uncertainties. Implementing a supply chain with a modular design and effectively communicating will help as companies face these demand uncertainties.

Modular Design

According to “Mass Customization” today’s customers are demanding customized products and expect speedily deliveries. This poses a concern for companies and their current supply chains. In order to adapt to today’s markets, companies need to be able to increase product customization while reducing costs. In “Mass Customization” Hewlett-Packard (HP) demonstrated successfully designing an efficient supply chain through producing a product with a modular design.

A modular design enables a supply chain to be flexible enough to customize a product quickly at a low cost. The key for a modular designed supply chain producing mass-customization is to postpone differentiating the product for the specific customer’s order until the last possible point in the supply chain.

HP implemented standardization into its LaserJet printer they sold in Europe and North America. A universal power supply was built into the printer which allowed HP to ship the printer from Europe to North America when an imbalance of supply and demand existed. This standardization strategy reduced HP’s cost of manufacturing, stocking, and delivering the finished product to the customer by 5 percent per year; however, HP decided to take a different approach at customizing its printers for the European and Asian markets. Instead of standardizing the power supply they used the postponement strategy. Each printer was designed with a country-specific external power supply. The power supply was postponed to the...