We have seen what strategies make supply chain effective and now we
shall spend some time on those things that put obstacles on the path of supply
chain in its initiatives to achieve effectiveness in management, to ensure
success to the business enterprise.
First obstacle is said to be increasing variety of products. The
answer to the logical question that must come to the mind here is ‘Where is the
need for increasing variety of products?’ can be put in brief with attendant
implications: Changing Business Environment.
Ever expanding business and its corollary marketing efforts will sooner
or later drive one to the necessity of increasing variety of products. You want
to be in the business and more than that, you want to be somebody in the
business and increasing the number of products you offer to the market is one
primary way to reach the fulfillment of your want.
To remain Supply Chain Fit even for one product itself is to face a
challenging scenario and naturally multiply the attention you have to give to
your business by the number of products you propose to offer to the market, to
your clients. Beginning from acquiring
raw materials for your product in right time and quantity with specified
quality to the delivery of the finished product to the end-user, your valued
customer through effective manufacturing and efficient distribution, every
phase of the business activity is crowded with potential lapses that will
certainly affect your performance in the market. The potential lapses do multiply by the
number of increasing variety of products.
The challenge you have to face while making your supply chain fit
gains in complexity when we know that variety of products involves two basic
costs: production costs and marketing costs.
Production costs include, among other regular things, additional
investments necessary for the production of the product variants. Some variants
may need more investments and some may need possibly less investments. Less or
more, every investment is an additional commitment by the company.
We will begin with
market mediation costs in our next session.