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HOW DO WE DEFINE AN EFFICIENT SUPPLY CHAIN?

How do we define an efficient Supply Chain?

Tuesday, March 02, 2010
By Pieter Nagel

I was once again amazed by the enormity of sales in the retail world around Australia. This is common practice after the Christmas season every year. However, it begs the question about why do we not learn from these things. It has become almost strategic drive to push sales (at discounted prices) and people then wait for these sales.

Just imagine the inefficiencies in these supply chains. Or is it considered to be efficient? Why it is that companies such as Zara, Bennington and a few others have such efficient supply chains?

These various supply chain strategies probably begs the question of how we really define efficient supply chains. What can we not learn from developments internationally?

This remains one of the key issues and challenges in Australian supply chains.

Inefficiencies together with the freight imbalances in our supply chains, tells me that we are paying much more than we should. This may be perception, but still, selling stuff at half price for almost two months in a year, confirms the traditional retail model of choice and variety. The question is whether we need that, or can afford that.

A company like Aldi has products made in Germany, not the “cheapest” labour force around, on their shelves in Australia for less than its competitors which have a local product.

Let’s see whether we c an encourage a debate on these matters. Its worth assessing, as we really have something to “chase” I think!


COMMENTS

3 comment(s) for “How do we define an efficient Supply Chain?”

Gravatar of Allen Roberts Allen Roberts Says:
Good question, clearly there are problems.
A good suppply chain, (and I hate the term supply, value or better still demand describe the pocess better) has 3 measurement dimensions:
1. Agility, how quickly it can respond to short term changes
2. Efficiency, cycle times
3. Adaptability, how adaptable the chain is over the longer term.
measure performnce along these dimensions, and you cannot go far wrong.
Allen
strategyaudit.wordpress.com
Gravatar of The Gnome The Gnome Says:
Why do the half yearly sales indicate an ineffcient supply chain? I think you are discounting the efforts from the retailers to work with their suppliers to provide items "on sale" at these events. Take a look at the Black Friday sales in the US, this isnt so much about clearing aged inventory as it is about grabbing market share and disrupting your competitors
Gravatar of Rich Rich Says:
An efficient Supply Chain (and it's strategy) should firstly be in alignment with company objectives and support defined growth (i.e company goals, mission statement etc). Secondly it needs to balance meeting those goals with practical application and budget. I.e. need to move product A, from point A to point B. Thirdly it should be solutioned and tweeked for Agility, Efficiency and Adaptability. It is no good moving Product A from point A to point B if it does not meet company objectives. Sounds simple but you would be surprised how many times things just get moved for the sake of being moved.
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