Re-think your supply chain design as you change your product portfolio

Filed in archive Point of view on June 8, 2006

Here is my tip for today: Re-think your supply chain design as you change your product portfolio. What does it mean? This relates to one of the common mistakes which companies usually make. Let me explain this by an example: Suppose that a company sells commodity products. As the time goes by, it adds some expensive, luxury Items to its portfolio to increase the profitability. Well, it's ok but the problem comes in when the company uses its existing supply chain design for new items as well.

The optimum supply chain design for diet coke is definitely different from high price champagne supply chain, isn't it? But many companies don't look at this fact. The solution is to consider possible effects of changing the product plan on supply chain.

Now, I want to ask you a question, why do you think most of the companies don't see this fact?

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Response from: Erach N. Deboo (06/08/06 6:26am)

I see this all the time where I work. I work for a freight broker, www.eFreightLine.com, and I try to explain the same thing to people who are stuck in a comfort area and are not willing to try new things to save money on shipping costs.

Response from: ehsan (06/08/06 10:51pm)

Well, Dear Erach N. Deboo,

You mentioned a really valid point. One reason for such problems may be that people become used to the traditional way of working. Many of the practices in companies' supply chains have been developed 6 to 10 years ago and people think that they are "one size fits all"...

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