Matching Product and Supply Chain Characteristics Essay Example

determinants of the supply chain design. They argue that the supply chain design should reflect the strategic decisions, such as the choice of a particular generic strategy as introduced by Porter (1980). Chow et al. (1995), Narasimhan and Kim (2002) and Yusuf and Adeleye (2002) support the research stream that the environmental uncertainty is a key determinant of the supply chain design.

The third research stream follows the product and its characteristics as the key determinants for the supply chain design. Fisher (1997), Huang et al. (2002), Selldin and Olhanger (2007) and Qi (2009) are strong supporter of this particular research stream. This literature review focuses on the research stream arguing that a product and its characteristics are the key determinants for the supply chain design. Since the arrival of the Toyota Production System (TPS) in the “Western World” (Western Europe and North America) in the 1970s and 1980s the main focus in supply chain design has been on cost reduction. New concepts such as lean manufacturing, make-to-stock (Pull) production, Kanban systems and quick response offer ideas and models for applying the new technology to improve the firm’s performance, by reducing costs.

Nonetheless, the performance of many supply chains has never been worse (Fisher, 1997). By having such a strong focus on cost reductions and efficiency gains, many corporations do not consider their final product, which the supply chain is ultimately supposed to produce later, when designing the supply chain. The key problem is that many corporations believe that they have to reduce the costs under all circumstances in order to be able to compete with products and production from and in low

cost countries (Fine, 2000).

Using this approach the corporations are not sustainable competitive. In order to achieve sustained competitiveness and improved 1 performance, a corporations has to identify the most suitable processes and supply chains for their products (Selldin and Olhager, 2007).Hayes and Wheelwright (1979a, b, 1984) have been investigating the relationship between the product’s characteristics and the process choice, which resulted in the introduction of the product-process matrix. This model is widely accepted in the manufacturing strategy arena and has been extensively tested empirically [i.e., Spencer and Cox (1995); Safizadeh et al. (1996); Mcdermott et al. (1997); Ahmad and Schroeder (2002)] (Selldin and Olhager, 2007).

Just as the product-process matrix provides a simple model to match product characteristics and processes, the individual manufacturing corporation needs a model to match its supply chain characteristics to its product’s characteristics, to achieve a continued positive performance. Fisher (1997) introduces his model, Fisher’s Framework, exactly to provide such a simple model that allows matching supply chain characteristics to product characteristics. The model helps managers to understand the nature of the demand and the market expectations for their products and devise the supply chain that can best satisfy the demand (Fisher, 1997).Similar perspectives on how to match supply chains and products are found in Ramdas and Spekman (2000), Childerhouse et al. (2002), Huang et al. (2002) and Lee (2002), which are all based on the basic idea and construct introduced by Fisher (1997). In the text below first the core terminology will be defined to assure a common understanding.

After having stated the boundaries of this literature review, the text will continue by looking at the three

basic models [Fisher’s Framework (Fisher, 1997), DWV^3 (Childerhouse et al., 2002), Product-Life-Cycle Model (Aitken, 2003)], which are the most widely accepted when it comes to matching supply chain and product characteristics. After having compared the different models the text looks at the effects the cumulative findings have on the use of distinct coordination mechanisms, thereby illustrating their correlation. The text will conclude with the implications of this review for the theory, practitioners and future research.

For many terms in the field of factory physics [Hopp and Spearman (2000)], manufacturing technology and supply chain management a clear uniform definition is missing. To assure the common understanding of the key terminology used it is necessary to 2 have a shared definition of the key terminology. This literature review uses the terminology according to the definitions stated below. Supply Chain: The supply chain of a firm consists of all activities performed by the firm internally.

It therefore typically includes activities such as purchasing, manufacturing, warehousing and transportation [George (2002); Hopp (2003)]. Product Life Cycle: The product life cycle is a cycle theory of strategies experienced by every product which begins with a product’s introduction, sometimes referred to as research and development, followed by the phases sales growth, then maturity and finally market saturation and decline [Childerhouse et al. (2002); Aitken et al. (2003); Christiansen et al. (2010)]. Technological Clock Speed: The technological clock speed is a central driver of change. It describes the speed by which an existing technology is challenged or replaced by a new technology or another feature providing superior benefits.

A high technological clock speed is negatively correlated to the product life cycle

length, i.e. high technological clock speed typically pairs with a short product life cycle [Fisher (1997); Fine (1998)]. Push Production: A push system is a production system that schedules releases of work based on demand. Processes and movements are trigged by a signal originating from outside the system, i.e. customer order (Make-to-Order). Such a system releases a process without considering the current state of the system [Hopp and Spearman (2000); George (2002); Hopp and Spearman (2004)].