there are different types of supply
chain
and we have to align this supply chain
structure
our supply chain design to
meet up to match the nature of our
product
the product characteristics let me
explain
a little bit more so the design of a
supply chain sits on the spectrum from
super efficient to super responsive
and this really does have to be chosen
to match to align with the nature of the
end product
now products they can sit on the
spectrum from
functional to innovative
and when we're talking about the
products the nature of the products
it's not just what they physically are
but also the
the characteristics that are most
important
to the customers in their supply chain
be that super short lead times or
where cost really is the the main thing
so what what do i mean by functional
products
these are products that have stable
predictable demand and long life cycles
i'm thinking things like washing powder
and
jars of jam they've been around forever
they're going to be around forever
people know what they want
and really the top priority is
just it must be in stock at low lowest
cost
at the opposite end of the spectrum are
innovative products
these have very unstable very
unpredictable demand they're a new
product
you're bringing a new product to the
market
and again they inevitably have very
short
life cycles and the supply chain
that we need to offer both of these
different types of products to the
market
are very different let's go back to
those
different types of supply chains supply
chains can be
efficient or at the other end of the
spectrum
responsive they cannot be both
what do they mean though well an
efficient supply chain
first of all means low cost low
distribution and low fulfillment costs
and this comes because we have very high
utilization
and high repetition doing the same thing
again and again
and we have the confidence that we're
going to be able to keep supplying the
same goods to the same markets
again and again and with that we've
built up
very high standard operations
at the other end of the spectrum is a
responsive
supply chain here it's all about the
speed
being able to react and start supplying
a new product to a new market in a new
way
very quickly getting a new product to
market
speed is everything and this means cost
is high cost we have to have a lot of
excess capacity to be able to react to
ramp up to the unknown
demand that can come and go very quickly
i think maybe a nice way to think of the
differences is
in transportation of yourself so
an efficient transportation might be
getting on the train
the trains always run there's a
timetable they've
left at nine o'clock every morning for
as long as anyone remembers and
you expect them to keep doing the same
trains are a very very
efficient way of moving people from a to
b
at the other end of the spectrum might
be just you
and your sports car you can whizz around
you can go wherever you want
whenever you want but it's expensive
not only because the car's very
expensive but also because that car has
to be waiting
not being used just waiting for whenever
you want to take it out
and use it and that low utilization is
what gives you the flexibility and the
responsiveness