Designing Effective Supply Chains in Strategic Alignment with Demand Characteristics and Market Requirements

A key challenge in operations management is how to effectively design a supply chain structure that is in alignment with the company’s business model. The supply chain management literature provides a number of techniques and guidelines for developing effective supply chain strategies. Fisher’s (1997) famous article profoundly influenced the literature by suggesting a framework which matches product type (i.e., functional or innovative) with supply chain strategy (i.e., efficient or responsive). This taxonomy initiated a large number of studies in product-driven supply chain strategy. While reviewing the studies, we found that the extent to which they empirically support the framework is very different and contradicting in some cases. Also, there is little modeling work that directly contributes to this area. This monograph describes the state of the literature in supply chain strategy and, in particular, how to best match supply chain strategy with product type. It takes a careful look at Fisher’s (1997) canonical framework and describes the studies that have been done to model and/or validate this framework. Moreover, an analytical exploration of the framework is conducted in two steps. First, we examine what two key existing inventory models, namely the newsvendor model and a continuous review system, say with respect to the framework. Second, we develop a basic inventory model to explore the impact of additional factors, i.e., product life cycle, obsolescence, and lead time, on supply chain strategy decisions. This monograph also describes research on general product-driven strategies, i.e., lean, agile, and leagile supply chains, mass customization, and postponement.