STUDENTS' CORNER - 139

We have seen what strategies make supply chain effective and now we shall spend some time on those things that put obstacles on the path of supply chain in its initiatives to achieve effectiveness in management, to ensure success to the business enterprise.

First obstacle is said to be increasing variety of products. The answer to the logical question that must come to the mind here is ‘Where is the need for increasing variety of products?’ can be put in brief with attendant implications: Changing Business Environment.  Ever expanding business and its corollary marketing efforts will sooner or later drive one to the necessity of increasing variety of products. You want to be in the business and more than that, you want to be somebody in the business and increasing the number of products you offer to the market is one primary way to reach the fulfillment of your want.

To remain Supply Chain Fit even for one product itself is to face a challenging scenario and naturally multiply the attention you have to give to your business by the number of products you propose to offer to the market, to your clients.  Beginning from acquiring raw materials for your product in right time and quantity with specified quality to the delivery of the finished product to the end-user, your valued customer through effective manufacturing and efficient distribution, every phase of the business activity is crowded with potential lapses that will certainly affect your performance in the market.  The potential lapses do multiply by the number of increasing variety of products.

The challenge you have to face while making your supply chain fit gains in complexity when we know that variety of products involves two basic costs: production costs and marketing costs.

Production costs include, among other regular things, additional investments necessary for the production of the product variants. Some variants may need more investments and some may need possibly less investments. Less or more, every investment is an additional commitment by the company.

We will begin with market mediation costs in our next session.