Design for Supply Chain and Nine Cutting-edge
Strategies
The product design is one
of important factors for a company to excel in today’s competitive market in
the world. The readings for this week cover product design for operational
effectiveness and the supply and demand in the supply chain. I was deeply
touched after having read the article “How IKEA Designs Its
Sexy Price Tags”. The article provides the insight of the whole process of
product design and its impact on price for IKEA products. This drives my desire
to explore more on the Design for Supply Chain (DfSC) and understand more on this
part. I
accessed the article written by Domin and Wisner titled “Nine cutting-edge strategies
that will change the way your company designs new products and transform your
supply chain”.
In the Domin and Wisner’s
article, the Design for Supply Chain (DfSC) is defined as the process of
optimizing the fit between supply chain capabilities and product designs. It is
the means of creating product configurations that address infrastructure
limitations and use supply chain capabilities as they evolve throughout the
life of the product. The organization and companies strive to dominate today’s
competitive market environment through use of the supply chain as a competitive
weapon to minimize cost but it is not the only way to raise the company to the top
of market competition.
The supply chain that can
offer the highest performance at the lowest overall cost is rapidly becoming a
far more valuable and sustainable differentiator and therefore enables the
company to win the competition and provides larger market shares as compared to
its rivals. This is comparable to IKEA using the DfSC to design its unique sexy
price tags that contribute in the growth of its sales as well as expand its
businesses worldwide.
Additionally, Domin and
Wisner’s article pointed out that DfSC can be the answer to the question, “How
do we stay competitive in an increasingly commoditized market?” and it can also
be the next big step in product development at this juncture where the Product
Development Team (PDT) are often already overwhelmed with product design
considerations. It is pointed out that the examination of the nine key
strategies behind DfSC and answering the basic what, where, when, why and how
of DfSC, it will enable PDT and ourselves on how to design our products for
supply chain efficiency. The nine key strategies are as summarized herewith:
1. Optimize Levels of
Product Integration: PDTs should determine the optimal level of
integration, or parts, that have been pre-assembled at an upstream supplier.
2. Leverage Industry Standards: Use industry standard
parts unless proprietary parts are justified to create a competitive advantage
3. Minimize Premium Freight: Premium freight and
resources to expedite supply can often compose a large portion of supply chain
costs.
4. Design for Life Cycle: Product should be
designed to be supply chain friendly to potential component or infrastructure
changes through its lifecycle.
5. Configure the selected Supply Chain: The role of a
cross-functional product development team should include selecting and
configuring the supply chain, but not creating one.
6. Design for Demand & Supply Planning: Designs that leverage
DfSC techniques include commonality, modular design, universal function and
postponement "pool demand" requirements.
7. Minimize Inventory Costs: The two key inventory
costs to consider are carrying costs and obsolescence risk.
8. Optimize Order Management: Product design should
consider the facilitation of order management and customer fulfillment.
9. Minimize Warranty/Service Costs: Warranty costs are
minimized by a reliable, high quality product with easy to diagnose faults and
customer replaceable parts that have a high warranty redemption value.
Furthermore, I explored
on a study of design process by Design Council of United Kingdom. The Design
Council researched on the whole supply design process in eleven world-leading
companies: Alessi; BSkyB;
BT; LEGO; Microsoft; Sony; Starbucks; Virgin Atlantic Airways; Whirlpool; Xerox;
and Yahoo! The scope of the study covered a wide-area of supply chain
design. I was particularly interested on the study on the use of design as a
competitive weapon.
The
study on the use of design for supply chain a competitive weapon addressed why
some world-leading companies think it is worthwhile to invest so much of their
resources and efforts managing and optimizing their design process. The responses
from these companies show that the design can be used as tool to improve many
product characteristics and the other aspects of the business. The design has
helped many of these eleven companies respond better to common business
challenges:
I.
Good design makes products more
competitive. It keeps production costs down but allows higher prices in the
shops;
II.
Good design keeps users happy, making them
come back again and encouraging them to recommend things to their friends;
III.
Design applies the power of the brand. A
strong brand identity encourages customers to trust existing products and to
try new ones.
Conclusion
The
design for supply chain plays a paramount role fundamental role in the triumph
of most world-leading companies. The important thing to note is how the company
effectively uses the supply chain as a tool that brings to the company the
flexibility in providing the best products and services at the lowest cost and
distinguishes itself against the competitors in the same industry.
REFERENCES
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.