CHAPTER 12
TRANSFORMING YOUR SUPPLY
CHAIN
By
Dr. Swe Swe Zin
Professor/Head
Digitalizing Products and Services
• Digitalization is the process through which the physical
products and services people buy become dependent on
virtual products and services.
• As products and services are digitalized, they create new
opportunities and challenges for a digital supply chain.
• The most extreme examples of digitalization occur when a
physical product or service is replaced by an electronic
version.
• Services can also be digitalized. The supply chain for
education, for example, is being changed by online
learning.
Digitalizing Products and Services
• Other service businesses that are being digitalized
include travel agencies, taxi dispatch, and even
healthcare.
• Technology is transforming the way that these services
are delivered to customers.
• In this transformation process, digital supply chains are
becoming more essential.
Improving Transparency and visibility
• To improve your ability to manage a supply chain, you need to
have visibility — current and accurate data about what’s
happening in as close to real time as possible.
• A powerful way to increase visibility is to build a supply chain
control tower.
• A control tower is a hub that pulls in real-time information from
each of your supply chain information systems.
• A control tower can also pull in data from systems run by your
customers and suppliers, and third party sources such as news
and weather reports.
• A supply chain control tower can be useful for responding to a
disruption, such as a hurricane, or for identifying and fixing
problems as they arise throughout your supply chain.
Deploying Demand Shaping
Following are some methods that can influence demand:
•• You can use promotions such as price discounts to
increase demand.
•• You can use price increases to reduce demand.
•• You can offer to substitute one product for a different
one.
•• You can provide incentives for customers to order
products at different times or to accept different delivery
dates.
Deploying Demand Shaping
• Airlines use demand shaping extensively when selling
tickets.
• One of the results of demand shaping in this case is that
everyone on the airplane is likely to pay a different price
for their seat.
• But in the end, the goal of the airline is to sell the capacity
they have available, and to maximize their profits along the
way, and demand shaping helps them do this successfully.
Performing Postponement
• If your product requires any kind of customization for
your customers, you should look for ways to postpone
that customization for as long as possible.
• This is called postponement or delayed differentiation.
• By delaying the customization, you preserve the flexibility
to change the characteristics of the finished product or
even to sell it to a different customer.
• You also postpone the cost of those customization steps,
which means that you are keeping inventory at a lower
value for a longer time
Renewing Regional Sourcing
• Companies sometimes get quotes from suppliers located
in other countries thinking that global sourcing will provide
huge savings.
• Following are some of the often-overlooked challenges in
global sourcing:
• • Long shipping distances result in higher
transportation costs; greater lead time variability; and
larger, less-frequent shipments.
• • Long lead times reduce supply chain flexibility.
• • Differences in time zones and languages can make
it more difficult to resolve problems and collaborate
effectively.
THANK YOU!