Developing a Resource Chain and Circulation Channel

Most producers use intermediaries to bring their products to market. They make an effort to develop a syndication channel marketing channel to do this. A distribution route is a set of interdependent organizations that help make a product designed for use or usage by the consumer or business end user. Route intermediaries are companies or individuals such as wholesalers, agencies, brokers, or vendors who help move a product from the manufacturer to the buyer or business user.

A company's channel decisions directly have an effect on every other marketing decision. Place decisions, for example, affect prices. Marketers that distribute products through mass merchandisers such as Wal-Mart will have different charges objectives and strategies than will those that sell to specialty stores. Distribution decisions will often give a product a definite position on the market. The choice of sellers and other intermediaries is firmly tied to the merchandise itself. Manufacturers select mass merchandisers to market mid-price-range products while they disperse top-of-the-line products through high-end team and area of expertise stores. The firm's sales force and marketing communications decisions rely upon how much persuasion, training, inspiration, and support its route lovers need. Whether a company produces or acquires certain new products may be based upon how well those products fit the capacities of its channel members.

Some companies pay inadequate attention to their distribution programs. Others, such as FedEx, Dell Computer, and Charles Schwab have used imaginative distribution systems to gain a competitive advantage.

Functions of Syndication Channels

Distribution programs perform lots of functions that produce possible the move of goods from the manufacturer to the client. These functions must be completed by someone in the channel. Though the kind of organization that executes the various functions may differ from route to channel, the functions themselves can't be eliminated. Channels provide time, place, and possession utility. They make products available when, where, and in the sizes and quantities that customers want. Distribution channels provide a number of logistics or physical distribution functions that raise the efficiency of the flow of goods from producer to customer. Circulation channels create efficiencies by lowering the number of transactions necessary for goods to move from a number of manufacturers to many customers. This occurs in two ways. The first is called breaking large. Wholesalers and vendors purchase large quantities of goods from manufacturers but sell only 1 or a few at a time to many different customers. Second, channel intermediaries reduce the number of trades by creating assortments-providing a number of products in one location-so that customers can conveniently buy a variety of items in one seller at onetime. Channels are effective. The transport and storage of goods is a different type of physical syndication function. Suppliers and other channel members move the products from the production site to other locations where they are simply held until they are really required by customers. Route intermediaries also perform a number of facilitating functions, functions that make the purchase process easier for customers and manufacturers. Intermediaries often provide customer servicessuch as offering credit to purchasers and taking customer results. Customer services are quite often more important in B2B markets in which customers purchase larger quantities of higher-priced products.

Some wholesalers and vendors assist the maker by providing repair and maintenance service for products they handle. Channel associates also perform a risk-taking function. When a retailer buys something from a maker and it generally does not sell, it is "stuck" with that and will lose cash. Last, channel members perform a number of communication and purchase functions. Wholesalers buy products to make them available for merchants and sell products to other route members. Retailers deal with transactions with final consumers. Channel people can offer two-way communication for manufacturers. They could supply the sales team, advertising, and other marketing communications necessary to notify consumers and persuade these to buy. As well as the channel participants can be important sources of information on consumer claims, changing preferences, and new rivals on the market.

The Internet in the Syndication Channel

By utilising the web, even small organizations with limited resources can enjoy a few of the same competitive advantages as their largest competitors in making their products open to customers internationally at low cost. E-commerce can bring about radical changes in circulation strategies. Today most goods are mass-produced, and generally end users do not obtain products directly from manufacturers. With the web, however, the need for intermediaries and much of what has been assumed about the need and advantages of channels changes. In the foreseeable future, route intermediaries that in physical form handle the product may become largely obsolete. Many traditional intermediaries already are being eliminated as companies question the value added by layers in the circulation channel. This removal of intermediaries is termed disintermediation, the removal of some layers of the syndication channel to be able to cut costs and improve the efficiency of the channel.

Distribution Intensity

Distribution intensity identifies the number of intermediaries through which a company distributes its goods. The decision about distribution power should ensure satisfactory market coverage for a product. In general, syndication intensity ranges along a continuum with three standard categories: intensive circulation, selective syndication, and exclusive distribution.

Intensive Distribution

An intensive distribution strategy looks for to distribute a product through all available channels in an area. Usually, a rigorous circulation strategy suits items with extensive appeal across broad groups of consumers, such as convenience goods

Selective Distribution

Selective distribution is circulation of something through only a limited number of channels. This arrangement helps to control price reducing. By limiting the amount of merchants, marketers can reduce total marketing costs while establishing strong working relationships within the channel. Moreover, selected stores often agree to comply with the company's rules for advertising, pricing, and showing its products. Where service is important, the maker usually provides training and assist with dealers it chooses. Cooperative advertising can also be utilized for shared benefit. Selective syndication strategies are ideal for shopping products such as clothing, furniture, home appliances, personal computers, and electric equipment that consumers are inclined to spend time visiting different shops to compare product alternatives. Producers can pick only those wholesalers and sellers that contain a good credit rating, provide good market coverage, provide customers well, and cooperate effectively. Wholesalers and stores like selective distribution because it results higher sales and profits than are possible with intense distribution where sellers have to remain competitive on price.

Exclusive Distribution

Exclusive circulation is distribution of a product through one wholesaler or store in a particular geographical area. The automobile industry provides a good exemplory case of exclusive circulation. Though marketers may sacrifice some market coverage with unique distribution, they often develop and keep maintaining an image of quality and prestige for the merchandise. Furthermore, exclusive distribution boundaries marketing costs since the firm handles a smaller range of accounts. In exclusive circulation, producers and sellers cooperate tightly in decisions regarding advertising and promotion, inventory taken by the suppliers, and prices. Exclusive circulation is typically used with products that are high priced, that have extensive service requirements, so when there are a limited number of buyers in any solitary geographic area. Exclusive distribution allows wholesalers and vendors to recoup the expenses associated with long selling processes for each and every customer and, in some instances, extensive after-sale service. Niche goods are usually good candidates for this kind of syndication intensity.

Types of source chain flexibility

In defining 'types' of supply chain flexibility the writer list a minimum of 71 different kinds, linking each type with the appropriate reference. I believe that a few of these could and really should be aggregated into other styles, thus reducing the overall quantity, but it only would go to show that versatility in one industry differs from flexibility in another industry.

Dimensions of supply chain flexibility

After describing the various types of resource chain flexibility, More & Babu propose three domains of sizes for supply string flexibility

Central flexibility

Global flexibility

Supplemental flexibility

Core flexibility, obviously being the most crucial dimension, is referred to more in detail, the others more cursory. This isn't a glitch, but only natural, because the other measurements essentially are due to core versatility, which relates to

Manufacturing

Sourcing / Procurement / Purchasing

Logistics Distribution

Information and communication (ICT)

Organization

Individuals resources

Market

Global flexibility is essential for attaining spatial and temporal flexibility and sometimes appears as a response to environmental uncertainty. Although not evidently defined in this article, global flexibility includes all elements necessary for stretching a supply chain around the world, from supplier to end customer, specifically related to a network that can change time and space.

Supplemental flexibility looks as a fairly foggy notion and I am not sure what the creators mean, but I guess it is other things related to overall flexibility and not protected above. Or maybe it's flexibility that's not supposed or designed or built in, but just is actually there when needed?

Supply chain overall flexibility for business excellence

This portion of the article deals with supply chain principles and how they relate to or will vary from supply chain flexibility. I will add that while some of these are well referred to and well reviewed, others are only given a far more cursory review.

Supply chain versatility - lean

While trim may work well in a predictable and non-volatile environment, adaptable works better when confronted with disruptive happenings.

Supply chain flexibility - agile

Agility is an extended idea of flexibility, which is achieved when the system is inherently adaptable and in a position to respond to unstable events. A flexible system can be, but isn't always agile; an agile system is always versatile.

Supply chain flexibility - responsive

Responsiveness is the capability to respond to customer requirements or market changes. An inherently flexible system can respond; however, you'll be able to be flexible, but not reactive, while responsiveness will always imply there is an underlying versatile system. A versatile supply chain as time passes (to meet and gratify the changes) as the primary constraint is a responsive supply string.

Supply chain overall flexibility - resilient

Here the writers follow Sheffi in that more versatility equals more resilience, thus enabling constant reconstruction and the ability to jump back after any disruption.

Supply chain flexibility - robust

Interestingly, my very own article on robustness and flexibility, which they reference, makes it into the 'robust' category. I'm uncertain that's where I'd input it, but maybe yes. At that time (2004) my ideas on overall flexibility were still in the molding. However, as More & Babu view it, flexibility is an external principle, robustness is an internal principle, being adaptable is to modify and change, being sturdy is to accommodate and absorb. Faced with a disruption or external event, a solid supply string will continue unchanged, while a versatile supply string will continue modified. Robust is being risk averse and seeking certainty. Flexible is receiving doubt and and the risk that is included with it. I am uncertain that is the way i saw it in 2004, but looking again at my meanings of strong and flexible, yes, that interpretation is justified.

Forces and dynamics of source chain flexibility

This is one of the most interesting parts of the paper, where they look at three (four) new terms: (domains and) stimuli, enablers and inhibitors, all adding to how, or how not, supply chain flexibility may be accomplished. The individual items pertaining to these terms make up an extraordinary list, which is very detailed, attracted from the examined literature.

Stimuli

Stimuli are the elements that compel the resource chain partners to consider activities in response to a changing environment. Listing 16 domains (eg customer, rival, technology, market, product, and 13 more. . . ), the authors look of which stimuli that would bring forth supply chain flexibility. In technology, for illustration, maybe it's rapid improvements in technology, in product it could be shorter and shorter life routine of products, and so forth. Some 70 roughly stimuli are stated.

Enablers

Enablers are tools and techniques that support the execution or realization of supply chain overall flexibility. The authors split the enablers matching to six 'segments' in the source chain, starting with source and procurement, and split into sub-segments, and list some 150-200 enablers (I quit counting).

Inhibitors

Inhibitors are internal and external causes that impede the supply chain. Here we have another 'everything that comes to brain' list, including no less than 62 inhibitors, which range from market constraints to the greater mundane 'low morale'.

The dynamics of three forces

This is where in fact the paper really let us me down, marginally. While the talk itself is excellent, the amount that is meant to demonstrate the three ideas and the conversation leading up to it, is pretty much completely without having of these, at least in the manner it was presented. It is almost as though this is a totally different model, a good model, however, not what I expected.

The verdict

The basic concept I am reading out of this paper is that 'It is all supply chain overall flexibility', whatever we name it, whatever other concepts we generate, it all boils down to one thing: being versatile. I am also impressed with the breadth of the newspaper. This is the upside.

If there is a downside to this paper it must be the distance and the attempt at being exhaustive to the point of including a significant amount of detail. This contributes to an overly prolonged report on items, ie the discussion of stimuli, enablers and inhibitors, which could have fared much better got it been focused on a few aggregated items. As the stimuli, enablers and inhibitors are reported to be attracted form the literature, no particular referrals are created to which is attracted from which literature.

Importance of Efficient distribution

FMCG sector lives and dies on the potency of its supply chain. In market where goods have a limited shelf life and perishables last only a matter of days, its essential that stock motions are timely and accurately tracked. By natural means, suppliers are turning to IT to make their supply chains more attentive to retailer's requirements, whilst training ways to squeeze more costs from the supply string. High amounts and quick turnovers are key characteristics of the FMCG supply chain and keeping track of stock is no easy task. Receiving goods, verifying them in, saving them in the right way and then examining them out again takes time and costs money.

Applying the right strategy

One strategy that the FMCG Company and its logistics partners can choose is to avoid goods ever before coming into the warehouse where possible and this is where network management, cross docking, energetic sourcing and routing is becoming more and more attractive in the FMCG resource chain. By getting goods and shipping and delivery them out the same day, warehouses can dramatically reduce costs. The key, of course, is software that provides presence of the opportunities to mix dock and can then setup and manage every one of the required activities, within the move schedules. Inside a cut-throat market like retail, this effect on the bottom range shouldn't be under-estimated.

The FMCG source string is also particularly suited to RF data capture technology in the warehouse and the lawn, given the high turnover of stock. By monitoring goods both inside the warehouse and en-route to vendors, RF technology can help suppliers have a real-time and appropriate picture of the inventory. This assists avoid write-offs, especially of perishable stock.

Be flexible and responsive

In addition, some vendors are nurturing the bar how responsive an FMCG resource chain needs to be. As goods quickly move off store shelves, retailers are challenging fast replenishment by the FMCG company. By identifying daily or seasonal fast movers and getting the right stock in the right location within the warehouse, the picking process is speeded up and the warehouse optimised through active pick faces. Through the use of historical data and forecasting for peak times, suppliers are more likely to have the ability to fulfil orders and prevent stock-outs at active times.

Stock-outs simply aren't an option for suppliers. Neither are write-offs where stock has been lost or expired within the four wall space of the warehouse. To battle this, many suppliers are moving beyond the original basic principle of first-in, first-out to take into account first-expiration first-out. Again, this is an area where RF can play an important role in locating stock correctly and making certain companies will keep an accurate an eye on inventory.

Retailers may drive the FMCG supply chain, but, they are simply themselves giving an answer to customer centric strategies to win and keep high spending customers and IT is helping them to better provide their customers. A fresh trend is the way the FMCG supply string is being extended immediate to customers with the speedy progress of Internet retail for FMCG goods like food and beauty products. Online retail is associated with low prices and competitive delivery rates but rewarding customer orders takes a slick supply string and managed stock levels.

Whether it's for a web based audience or a normal retail store, responsiveness and flexibility continue to be the hallmarks of an effective FMCG supply string. To make sure the right product is in the right place at the right time, there has to be cooperation across the entire of the supply chain. The only path to achieve this is to deploy truly built-in supply string management systems that don't respect the distribution centre or warehouse as a web link in the string but an important hub in bettering customer support and delivery.

ESTABLISHED Solutions FOR SUPPLY CHAIN DESIGN

As a first approach, Fisher (FISHER 1997, p. 106ff) contrasts different types of goods and their associated demand predictabilities with the respective resource chains. Based on two general product types - practical products with popular predictability and long life-cycles (e. g. diapers) and ground breaking products with low demand predictability and short life-cycles (e. g. cell phones) respectively - he defines two corresponding supply chain types to meet up with the distinct requirements of the product types. For functional products, the primary goal of supply string design is cost reduction regarding predictability and trustworthiness. In contrast, ground breaking products require source chains that can lessen the lead time taken between order and delivery. Relating to Fisher, these requirements cause two unique types of supply chains, which he labels "Efficient Supply String" and "Responsive Source String". Christopher, Twill and Mason-Jones, predicated on Fisher's advice, propose the "Trim Supply Chain", "Agile Supply Chain" and "Leagile Supply String".

Whilethe Lean Supply Chain ocuses on cost reduction for standardized mass-products, the Agile Resource Chain is designed for high option of goods and brief lead times. Both supply chain types act like the ones referred to by Fisher, while the Leagile Supply Chain is an extension of the two past types (MASON-JONES et al. 2000, p. 4061ff). It really is defined as a blend of Trim and Agile Resource Chains by different creators, adding a point-of- decoupling (OLHAGER 2003, p. 319ff) to split up Low fat (upstream) from Agile (downstream) functions. Long by Christopher and Towill from what they call "hybrid strategies", this approach is able to model parallel techniques (Low fat and Agile) in a single supply chain.

All approaches that were introduced to this point are focused on the demand-side of the supply string. They become lengthened to the supply-side by Lee (LEE 2002, p. 93ff), who considers a difference between stable and evolving resource processes. Stable functions are seen as a fully developed systems and making techniques, as well as by a trusted procurement market. On the contrary, an evolving process is not completely developed and becomes at the mercy of everlasting change, its procurement market is limited relating to volume level and experience. Considering the supply-side, Lee yields a "Risk-Hedging" and an "Agile" supply chain in addition to Fisher's Efficient and Responsive source chains. The ex - is capable of pooling and sharing capacities and resources, e. g. different companies save storage area cost by pooling their stocks and options of certain critical goods. The Agile Supply Chain is identified regarding to Christopher's Twill's and Mason-Jones' Leagile Supply Chain, particularly as a blend of the Responsive and the Risk-Hedging type. Corsten and Gabriel (CORSTEN/GABRIEL 2004, p. 245) propose another attempt to extend Fisher's way, without taking Lee's strategy into account. They define four source chain strategies - a lean supply string, a flexible source chain, a fast supply chain and an aligned resource chain. The first three types match the Lean, Leagile and Agile resource chains of Christopher, Twill and Mason-Jones, however the aligned supply string represents a true extension of the idea. Designed for efficiency, the aligned source chain is concentrating on the search engine optimization of internal techniques, unlike the trim supply chain, which tries to further integrate suppliers into the supply chain process

HYBRID Resource CHAINS

Supply string segmentation allows companies to classify their customers and allocate these to the four segments referred to above. The corresponding supply string phenotypes constitute the original point to adapt all supply chain activities. To supply customers according with their respective requirements, it is recommendable for companies to establish four resource chains, if their collection of customers is heterogeneous, or less if a far more uniform kind of portfolio exists. By this process, all customers can be satisfied, while supply chain agility and efficiency are respected. Simultaneous operating of different supply chains, in which customers are being allocated accordantly, is which means next consequential step in supply string management. The mentioned antagonism of any "one size will fit all" approach and its divergent goals can be fixed by introducing the described way which is called "hybrid supply chain".

To meet heterogeneous customer needs, "one size fits all" supply chains grow to be neither effective nor efficient. The pictured antagonism between demand- and supply-side yields significant availableness problems which in turn cause eminent sales loss. This conflict can be resolved by an end-to-end orientation to the client, while diversified requirements and characteristics can best be found by the segmented supply chain.

Any try to utilize such "cross types" source chains for industry will first have to help expand develop the methodology of supply string segmentation to substantiate the supply chain phenotypes. According to the SCOR-model (Source CHAIN COUNCIL 2006, p. 2;

BOLSTORFF/ROSENBAUM 2003, p. 2) one has to allocate source chain management concepts according to the requirements of the high level functions source, make and deliver to be able to attain an in depth reference configuration for every supply string phenotype, .

It is the aim of current research, to build up the supply string segmentation procedure further and also to build a framework for hybrid supply chains, to be able to support professionals in industry in answering the question of number and settings of resource chains and to assist those to overcome the conflict between the market- and production-oriented attributes of the resource chain.

Hybrid resource chains offer an efficient and likewise powerful way to handle growing requirements and increasing dynamics of markets, as well as the individualization of customer needs. The final goal is which means extension of supply string management by including hybrid supply chains.

BUILDING THE RESILIENT Source CHAIN

In today's uncertain and turbulent markets, supply chain vulnerability has become an issue of significance for many companies. As resource chains become more complex therefore of global sourcing and the extended tendency to 'leaning-down', source chain risk boosts. The task to business today is to control and mitigate that risk through creating more resilient resource chains.

Supply chain professionals strive to achieve the ideals of fully included efficient and effective source chains, capable of creating and sustaining competitive gain. To this end they need to balance downward cost pressures and the need for efficiency, with effective means to manage the needs of market-driven service requirements and the known risks of routine supply string failures. Better management and control of internal processes as well as more available information flows within and between organizations can do much to help.

However, in a day and time of lengthening resource chains offering globe-spanning businesses, recent events surrounding the world have provided repeated reminders that we reside in an unpredictable and changing world. Natural disasters, industrial disputes, terrorism, not forgetting the spectra of war in the Middle East, have all resulted in serious disruptions to provide chain activities. In these situations 'business as typical' is often no option.

Modern commercial resource chains are in fact dynamic sites of interconnected organizations and industries. No organization can be an island and even the most carefully manipulated processes are still only as effective as the links and nodes that support them. All are dependent on reliable and reliable vehicles and communication systems, an evident point, but the one that is often forgotten.

These issues will be the subject matter of the Centre for Logistics and offer Chain

The work offered in this newspaper forms part of the wider body of research, funded by the UK's Team for Travel, which directed to increase the resilience of financial activity to all or any manner of potential threats.

This paper information on a few of the findings and recommendations of the second stage of this program. The task is empirically centered and attracts on insights from several important business including food retailing, engine oil and petrochemicals, pharmaceutical, packaging, electronics, transfer services and the circulation of automotive spares. It also includes source from private and public sector organizations involved in the provision of healthcare and in defense. In particular it targets the introduction of a managerial plan for the identification and management of supply string risk, with advice to improve the resilience of source chains.

Supply String Resilience

When working effectively and effectively modern source chains allow goods to be produced and sent in the right quantities, to the right places, at the right amount of time in a cost effective manner. Until recently the word 'supply chain' had not been widely used beyond the confines of academia, specialist industries of industry and the professional management community. Now, in the wake of a number of considerably- reaching resource string disruptions to economical activity it offers crossed over into the day-to-day vocabulary of politicians, general professionals and the wider public.

The term 'supply chain' is itself a relatively new addition to the lexicon of management, first used in the first 1980s when freelance writers coined the term to describe an growing management self-control. This new willpower was a response to changes in prevailing developments running a business strategy, which in turn demanded that interior functional self-interests be placed aside to attain a larger good - a more effective organ isation, creating and delivering less expensive to customers and shareholders. It amounted to a redefinition and amalgamation of proven business activities, notably 'logistics' (integrated move, warehousing, and circulation) and manufacturing-based 'businesses management'.

The latter drew together components of purchasing, order and inventory management, creation planning and control, plus customer support.

In the 1990s - the efficiency influenced age group of 'business process reengineering' - source chain management wanted to rate the stream of goods and services by extending the integration of elements of logistics, operations management and marketing into cross-functional inter organisational operations. Its avowed purpose was to enhance the efficiency of product flows from the development of recycleables all the way through to the marketplace where done goods were delivered to the final consumer. The task was increasingly allowed by rapid innovations in it, which opened just how for further improvements in efficiency and higher awareness of a changing current market and rising customer requirements.

In practice legacies of practical biases within organisations, together with varying

perspectives of specialist organizations mean that the word 'supply chain' continues to imply

different things to different people. It is still commonly used to describe either the

management of included manufacturing and/or logistics activities within a single

firm's manufacturing, transport, distribution or retail network. It is also regularly

applied (especially in the context of buying) to describe the management and

performance monitoring of the organisation's supplier base, through quality

improvement initiatives, involvement in new product introductions, offers and

overall cost decrease.

For the goal of this paper we take up an end-to-end point of view of the moves of

product and accompanying information from the source of recycleables to delivery

to the finish customer and sometimes beyond (i. e. after-sales support and where

3

necessary return). We therefore explain a supply string as

"the network of

organizations that are involved, through upstream and downstream linkages, in the

different procedures and activities that produce value by means of products and

services in the hands of the best consumer"

[7]. The idea of networks is

particularly important and its own relevance to th is analysis will become apparent

throughout this newspaper, but the key point is that modern source chains are not

simply linear chains or operations. They are sophisticated networks. The products and

information flows travel within and between nodes in a number of systems that link

organisations, establishments and economies.

In defining other key terms in this paper we have veered from hotly disputed

academic explanations and sought where possible to align ourselves with appropriate

and broadly accepted dictionary meanings [8]. We have also taken treatment to avoid

some of the pit-falls of synonyms, in parti cular we recognize between 'resilience'

and 'robustness'. Used the two conditions are being used interchangeably, but in the

context of supply chains they can acquire quite different connotations. To aid

clarity in our thinking we've adopted the following dictionary derived meanings.

We have taken 'powerful' to mean

'strong or sturdy in entire body or construction'

.

Here the emphasis is on physical strength. In IT terminology 'robustness' is

'the

ability of your computer system to handle errors during execution'

. A robust

process may be advisable, but will not itself equate to a resilient resource chain.

We are using the term 'resilience' as it pertains to source chains as sites, so

have used a dictionary-based description that is rooted in the technology of eco-

systems. We define resilience as

'the capability of something to return to its original

state or proceed to a new, more desirable express after being disturbed'

. Implicit in this

definition is the idea of flexibility, and considering that the desired status may be

different from the initial, 'adaptability' earns a location in our thinking too.

iii. Design concepts for supply chain resilience

A range of principles have surfaced from our research, which should be

considered when (re) engineering supply chains to improve resilience

Choose supply chain strategies that keep several options open. This may not

be the lowest cost course of action in the short term but may provide an

opportunity to lessen the impact of a disruption if so when it occurs. There

is an analogy here with 'Real Options Theory' in investment planning. Thus a

strategy that is situated around centralisation of syndication facilities may be

the lowest cost option but it could also turn off other available choices and hence

increase vulnerabilities.

Re-examine the 'efficiency vs. redundancy' trade off. Conventionally surplus

capacity and inventory have been seen only as 'waste' and are therefore

undesirable. However, the tactical disposition of additional capacity and/or

inventory at potential 'pinch details' can be extremely beneficial in the

creation of resilience within the resource string. The trade-offs inevitably

involve the judgemental balancing of the cost handicap included in

maintaining slack 'just-in- circumstance', against the likelihood and likely impact of a

negative event. Not a message that challenged corporate executives are

necessarily willing to hear. Nevertheless, if resilience is usually to be taken very seriously,

surplus capacity may be the lesser bad, being more adaptable than

inventory, wh ich may already be committed to its last form or destination.

Both capacity and inventory can provide 'slack' in a supply string to enable

surge effects to be coped with. Inventory, transported in a generic or semi-

configured form, can allow the creation of an 'de-coupling point' which,

together with additional capacity (e. g. production, transfer, people), can

enable demand uncertain ty to be more effectively monitored. Whilst not

advocating a return to the times of buffering every level in the source chain

with protection stock or unwanted capacity, we do claim that the tactical and

selective use of 'slack' may be fundamental to supply string resilience.

16

2. Supply Chain Collaboration

It will be apparent that since supply string vulnerability is by defin ition a network-

wide idea, the management of risk must be network-wide too. A high level of

collaborative working across resource chains can significantly help mitigate risk. The

challenge is to make the conditions in which collaborative working becomes

possible. Traditionally resource chains have been characterized by arms- length, even

adversarial, associations between the different players. There's not been a

history of writing information either with suppliers or customers. More recently

however there have been encouraging signs that a greater willingness to work in

partnership is appearing in many supply chains. Inside the fast moving consumer goods

(fmcg) industry there is now significant cooperation between manufacturers and

retailers in the form of Collaborative Planning, Forecasting and Replenishment

(CPFR) initiatives [16].

The underlying concept of collaborative working in the supply chain is that the

exchange of information can reduce uncertainty. Thus an integral priority for supply

chain risk lowering should be the creation of your supply string community to enable

the exchange of information between users of this community. The aim is to

create a high level of 'supply chain intellect' whereby there is a greater visibility

of upstream and downstream risk information (and changes in those information).

Supply chain intelligence is the phrase we have coined to spell it out the procedure of

using knowledge produced and distributed by associates in the supply chain. The type of

knowledge that can aid the creation of supply chain resilience concerns the

identification of sources of risk and uncertainty at each node and hyperlink in the supply

chain. Supply chain knowledge might also be categorized as Strategic, Tactical and

Operational (see Figu re 3).

Strategic knowledge can be an awareness of developments and emerging issues that may have

an impact on supply string continuity sooner or later in the future. This kind of

17

knowledge can be made through formal 'P. E. S. T. ' type evaluation (Politics,

Economic, Friendly and Technological). Such analyses are intended to enable a

formalized appraisal of the context within which sites and supply chains

operate.

At the tactical level the knowledge required is specific to the evaluation of risk to

current operations; generally demand, supply, process and control risk.

The third degree of knowledge is functional and concerns the day-to-day

management of the business enterprise. The appearing field of Resource Chain Event

Management (SCEM) is probably of great value in this respect [17].

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