Drivers of Supply Chain Performance

DRIVERS OF SUPPLY CHAIN PERFORMANCE Your choices about the five supply chain drivers will determine your supply chain capabilities. Depending on how changing business requirements require, each of these drivers can be built and controlled to stress efficiency or responsiveness. Studying the operation of a supply chain teaches you about the challenges it must meet and the skills it must possess to succeed. As necessary, modify the supply chain drivers to obtain those capabilities. An effective framework for considering supply chain capabilities is offered by the five drivers. The choice made about each driver's mode of operation will define the level of efficiency and responsiveness that a supply chain may reach. The graphic below shows the locations of the five drivers: 1. Production: By creating factories with a lot of extra capacity and employing flexible production techniques to generate a wide range of things, this driver may be made extremely responsive. A business could produce in numerous smaller plants near significant consumer groups to increase responsiveness and shorten delivery times. If a corporation wants to be efficient, it can construct factories with very little extra capacity and design those plants to produce a specific range of goods. Even though delivery times may increase, centralizing production at large central plants can yield better economies of scale and increase efficiency. 2. Inventory: Maintaining a large amount of inventory for a variety of products will help you be responsive. Stocking products in many places can enhance responsiveness by putting them in close proximity to customers and enabling instant access to inventories. Reducing inventory levels of all items, especially of those that don't sell as often, would be necessary for efficient inventory management. Additionally, stocking inventory in a small number of central locations, such as regional distribution centers (DCs), can result in economies of scale and cost reductions. 3. Location: Selecting multiple locations in close proximity to a company's customer base is a location strategy that prioritizes responsiveness. For instance, fast-food franchises use location to open a large number of locations in high-volume regions in order to be particularly responsive to their customers. Operating from a small number of places and centralizing tasks in shared areas are two ways to increase efficiency. The way e-commerce firms service vast geographic markets from a small number of central locations that carry out a variety of tasks is an illustration of this. 4. Transportation: Quick and adaptable modes of transportation, such trucks and airplanes, can help achieve responsiveness. By employing transportation to deliver their goods, frequently in 48 hours or less, many businesses who sell catalogs or online are able to offer great levels of response. Two businesses that are able to offer extremely prompt transportation services are FedEx and UPS. In order to better satisfy consumer demands, Amazon is currently growing and running its own transportation services in high volume areas. Transporting goods in bigger quantities less frequently might highlight efficiency. It is possible to use transportation methods like pipelines, trains, and ships quite effectively. 5. Information : As the technology for gathering and disseminating information becomes more widely available, more affordable, and easier to use, its power increases yearly. Similar to money, information can be directly employed to improve the performance of the other four supply chain drivers, making it a very valuable asset. Enterprises can get optimal responsiveness by gathering and disseminating precise and prompt data produced by the activities of the remaining four drivers. The world's most responsive supply chains are found in the electronics industry, as an illustration of this. Manufacturers, wholesalers, and large retailers are among the businesses in these supply chains that gather and exchange data regarding client demand and output.