3 Successful Supply Chain Strategies In Subcontract Manufacturing

Posted in Subcontract Manufacturing Trends on March 27, 2013

supply-chain-strategies | Photo Courtesy of Srikanth@Flickr http://www.flickr.com/photos/srikanthsangeeta/6937491817/sizes/q/

Strong manufacturers focus on strengthening their supply chain. Still, many executives don’t recognize the importance of supply chains.

What’s your execution strategy? That’s a question that an article on the Supply Chain Movement blog asks manufacturers. It cites three successful business strategies based on the findings of scientists Michael Treacy and Fred Wiersema, the authors of “The Discipline of Market Leaders.”

  1. Product leadership:Product leaders don’t focus their supply chain setup on low logistics costs. Instead, they want quality levels.Look at the success of a great product leader such as Apple. Apple focuses on producing quality products and sourcing materials for those products from the best supplier available using subcontract manufacturing. Product design leads the way. For example, when Apple was developing the first iPhone, it shipped the glass for the screen over to China to be installed in the phone. That’s not the most efficient way to do that, but Apple wanted only the best components.

    Also, look at the way Apple’s stores are designed. They’re sleek, stylish, but not optimized the best way to keep the most products in the store. They’re also some of the most high-priced products on the market. However, customers buy into the fact that while they might be paying a bit more, they’re getting more in terms of product quality, operability and functionality.

  2. Operational excellence: Take the example of Wal-Mart, which has exceeded at best total costs. Wal-Mart puts the responsibility of product delivery on suppliers. It doesn’t want products sitting around in a warehouse. From an operational standpoint, the onus is on the suppliers to make sure that their products are well-stocked at stores.
  3. Customer intimacy: Office Depot is the champion of customer intimacy, with its best total solution for customer service.

Combine all three of these strategies and manufacturers “manage to deliver ‘on time in full’ more often while also optimizing their working capital,” the Supply Chain Movement blog post summarizes.

Source: Supply Chain Movement, February 2013

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