Strategies for product configuration optimization
Filed in archive General on November 30, 2008
Today, order based configuration is not only limited to products such as computers or airplanes and many sectors are adopting the practice of postponement in order to reduce inventory of finished products in their supply chain. Below you can see the figure which I have taken from an interesting Whitepaper by Moduslink which describes two generic strategies on product configuration optimization (time and cost based) and their benefits
Now I wanted to see what are your ideas on the capabilities which are required for achieving this:
- Having a more or less modular product structure will certainly help.
- Another one is redesigning the supply chain and put a variant configuration system in the interface of push-pull within the supply chain.
What else, any thoughts?
Tags: scm supply chain management product configuration logistics 2008 supply+chain
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Response from:
Lorcan Sheehan
(12/05/08 3:19am)
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- Think of the manufacturing process as modular whether the product is fully modular or not
- For many products (esp in consumer electronics) the SKU variation may be as simple as packaging, accessories, firmware, external plastics. Even reducing this complexity can yield inventory, time and costs benefits
- The time and the cost based strategies are not mutually exclusive and a well planned supply chain can achieve both
- The priority that you place on time to market versus total cost will influence your ideal strategy
- The optimal optimization strategy may vary by product and will need to be periodically refreshed based on changes in fuel costs, product lifecycle and other inputs
- Need a good understanding of the tradeoffs between manufacturing, logistics, inventory costs by product
- Access to supply chain optimization tools will make this a more reliable and scalable exercise than the spreadsheet equivalent
- Advise from experience to put the effort up front into the supply chain design and keep the execution simple
- Also be careful about chasing very marginal benefits on individual SKUs. Your planning will be based on forecasts and expected input costs. We all know that these can change
To access the whitepaper click http://www.moduslink.com/whitepaper.
We also have some case studies on our site with details of optimized configuration strategies that worked.
Open to other questions or comments.