Lecture 3

Question 1

What is Fisher’s supply chain strategy model?

Answer 1

Fisher’s model aligns supply chain strategies with product types:
- Innovative Products: Require responsive (agile) supply chains due to unpredictable demand, high variety, and short product life cycles.
- Functional Products: Benefit from efficient (lean) supply chains due to predictable demand, low variety, and long product life cycles.

Question 2

What are the key characteristics of an agile supply chain?

Answer 2

1. Responsiveness: Quickly adapts to unpredictable demand and high product variety.
2. Flexibility: Supports short product life cycles.
3. Integration and Collaboration: Relies on real-time data sharing.
4. Decoupling Points: Postpones final assembly or customization until customer orders are received.

Question 3

What are the key characteristics of a lean supply chain?

Answer 3

1. Efficiency and Cost Reduction: Focus on minimizing waste, costs, and lead times.
2. Predictability: Handles stable demand and low product variety.
3. Process Optimization: Standardized processes and minimal inventory.

Question 4

What is the hybrid supply chain strategy, and how does it use the 80/20 rule?

Answer 4

The hybrid strategy combines lean and agile principles:
- Lean for high-volume, predictable products (20% of products driving 80% of volume).
- Agile for low-volume, unpredictable products (remaining 80%).

Example: Zara uses lean for staple items and agile for trend-driven products.

Question 5

What is the decoupling point model in supply chain management?

Answer 5

Identifies where the push (forecast-driven) transitions to pull (demand-driven) processes:
- Lean strategy: Inventory is held upstream to reduce downstream lead times.
- Agile strategy: Demand signals flow upstream to enhance responsiveness.

Question 6

What is base/surge separation in supply chains?

Answer 6

Separates base demand (managed with lean strategies) from surge demand (handled with agile strategies).

Example: Zara sources base demand from low-cost regions and fulfills surge demand through local production.

Question 7

What were the findings of Fisher’s (1997) article on supply chain strategy?

Answer 7

Aim: Align supply chain strategy with product type (functional vs. innovative).
Findings:
- Functional Products need lean supply chains.
- Innovative Products Require agile supply chains.

Conclusion: Matching supply chain design to product characteristics ensures optimal performance.

Question 8

What did Christopher (2000) emphasize about agile supply chains?

Answer 8

Agile supply chains thrive in volatile markets.
Techniques like postponement and virtual supply chains enable responsiveness.
Agility integrates lean practices for efficiency.

Question 9

What is the integrated model for designing agile supply chains by Christopher and Towill (2001)?

Answer 9

Combines lean and agile principles using:
- The 80/20 rule.
- Decoupling points.
- Base/surge separation.

Ensures cost efficiency and responsiveness in dynamic environments.

Question 10

How does Zara apply hybrid supply chain strategies?

Answer 10

Zara uses:
1. Lean strategies for staple items with predictable demand.
2. Agile strategies for trend-driven products with unpredictable demand.
3. Base/surge separation to manage both base and surge demand efficiently.

Question 11

What is postponement in supply chains, and why is it important?

Answer 11

Postponement delays product differentiation until customer demand is known.
It reduces inventory risks and increases flexibility.