供应链管理课后答案

CHAPTERONE

UnderstandingtheSupplyChain

1Considerthepurchaseofacanofsodaataconveniencestore.Describethevariousstagesinthesupplychainandthedifferentflowsinvolved.

Whenacustomerpurchasesacanofsodaataconveniencestore,hispurchaserepresentstheendofasupplychain'sdeliveryofanitemandthebeginningofinformationregardinghis

purchaseflowingintheoppositedirection.

Thesupplychainstagesincludecustomers,retailers,wholesalers/distributors,manufacturers,andcomponent/rawmaterialsuppliers.Acustomer'spurchasemovesproducttowardsthe

customeranddollarsandinformationtowardstheretailer.

Theretailerplacesanorderfromthewholesaler/distributortoreplenishstock,therebymovinginformationbackupthesupplychainwhilemovingproductdownthesupplychain.Asthe

orderisfilled,theretailerwillmovedollarsbackupthesupplychain.

Thewholesaler/distributortransmitsinformationanddollarstothemanufacturerwhoproducesproductandshipsitdownthesupplychaintothewholesaler.

Finally(orinitially,dependingonyourperspective)themanufacturermovesorders

(information)anddollarstowardssuppliersinexchangeformaterialflowintotheirproductionprocesses,

2WhyshouldafirmlikeDelltakeintoaccounttotalsupplychainprofitabilitywhenmakingdecisions?

Dellrealizesthattheirultimatesuccesslieswiththesuccessoftheirsupplychainanditsabilitytogeneratesupplychainsurplus.IfDellwastoviewsupplychainoperationsasazerosum

game,theywouldlosetheircompetitiveedgeastheirsuppliers'businessesstruggled.Dell'sprofitgainedattheexpenseoftheirsupplychainpartnerswouldbeshortlived.Justasa

physicalchainisonlyasstrongasitsweakestlink,thesupplychaincanbesuccessfulonlyifallmemberscooperateandfocusonaglobaloptimumratherthanmanylocaloptima.

3WhataresomestrategicplanningandoperationaldecisionsthatmustbemadebyanapparelretailerlikeTheGap?

AsTheGapplanssupplychainstrategyitmustfirstconsiderthemarketingfunction'spricingplansinordertostructureasupplychainconsonantwiththeseplans.Strategicconsiderationssuchasthecapacityofeachsupplierandassemblyoperations,sourcingdecisionsandhow

logisticsaretobehandledareallpartofthedesign.Thesupplychainmustalsosettleoncommunicationchannelsandfrequencies.

Supplychainplanningtakesthestrategicdecisionsasagivenandseekstoexploitefficienciesinthechaintomaximizesupplychainsurplus.Theentirechainshouldcollaboratein

forecastingandplanningproductionastoachieveaglobaloptimum.Theforecastsshouldtakeintoaccountplannedpromotionsandknownseasonalfluctuationsindemand.

Theoperationaldecisiontaketheplansasagivenandmakeday-to-daydecisionstoprocesscustomerorders,allocateresourcestocertaincustomers,triggerordersfromsupplychain

members,anddeliverproduct.

4Considerthesupplychaininvolvedwhenacustomerpurchasesabookatabookstore.Identify

cyclesinthissupplychainandthelocationofthepush/pullboundary.

Allsupplychainprocessescanbebrokendownintofourprocesscyclesthatconnectthefive

stagesofthesupplychain;thecustomerordercycle,thereplenishmentcycle,themanufacturingcycle,andtheprocurementcycle.

Thecustomerordercycleconnectsthecustomerwiththeretailer;thisconnectionismadeasthebook,perhapsSupplyChainManagementbyChopraandMeindl,isselectedandpaidforbythecustomer.

Thereplenishmentcycleconnectstheretailerandthedistributorandistriggeredbytheretailer'sneedtofilltheemptyshelfspacewithanothercopyofthistome.

Themanufacturingcycleconnectsthedistributorandthemanufacturer.Asdemandforthebook

isrealizedanddistributorsemptytheirwarehouses,theysignalthemanufacturertoprintanothermillioncopiestofilltheiremptywarehouses.

Finally,theprocurementcycleconnectsthemanufacturerandthesupplier.Themanufacturerrequiresrawmaterialinputsofpaper,ink,etc.,tobegintheassemblyprocessforanotherbatchofSupplyChainManagement.

Thepush/pullboundaryexistswheredemandswitchesfromreactive(pull)tospeculative(push)production.Formostbookstoresupplychainsthepush/pullboundaryisbetweenthecustomerordercycleandthereplenishmentcycle.Thecustomerorderpullsthebookfromthebookstoreshelfbuttheinitialproductionofthebookwastriggeredbyabuildorderthatmovedmaterialsalongthesupplychaintotheretailoutlet.

5ConsiderthesupplychaininvolvedwhenacustomerordersabookfromAmazon.Identifythe

push/pullboundaryandtwoprocesseseachinthepushandpullphases.

InAmazon'soriginaloperationsdesignthepush/pullboundaryexistedbetwixttheretailer

(Amazon)andtheirdistributor.Amazonorderedproductfromthedistributorandthecustomerorderarrived.Today,Amazonhassixwarchouseswhereitstocksaninventoryofitemsitis

confidentthatwillsell.Inthisscenario,thepush/pullboundaryexistsbetweenthecustomerandtheretailer.

Processesinthepullphasearetheorderfulfillment,shipping,customerreturns,andcustomerbilling.Processesinthepushphaseareproduction,stockreplenishments,shipping,and

payment.

6InwhatwaydosupplychainflowsaffectthesuccessorfailureofafirmlikeAmazon?Listtwosupplychaindecisionsthathaveasignificantimpactonsupplychainprofitability.

ThesuccessorfailureofacompanylikeAmazonisdecidedbytheeffectivefunctionofits

supplychain.Theflowofproductsfrompublisherstodistributorstocustomersmustberapidandreliableinordertosatisfycustomers.Theflowofinformationbackthroughthesupply

chainallowsallmemberstocoordinateefforts.Theflowofmoneyallowsallsupplychainmemberstomaintainoperations.Supplychainprofitabilityisinfluencedbysourcing,

promotion,andfulfillmentdecisions.

CHAPTERTWO

SupplyChainPerformance:AchievingStrategicFitandScope

1.Howwouldyoucharacterizethecompetitivestrategyofahigh-enddepartmentstorechainsuchasNordstrom?WhatarethekeycustomerneedsthatNordstromaimstofill?

TheNordstromwebsitestatesthefollowing.Overtheyears,theNordstromfamilyof

employeesbuiltathrivingbusinessontheprinciplesofquality,value,selection,andservice.Today,Nordstromisoneofthenation'sleadingfashionretailers,offeringawidevarietyof

high-qualityapparel,shoes,andaccessoriesformen,women,andchildrenatstoresacrossthecountry.Weremaincommittedtothesimpleideaourcompanywasfoundedon,earningthetrustofourcustomersoneatatime.

Nordstromfillscustomerneedsforhighqualityfashionmerchandiseandoutstandinglevelsofcustomerservice.PriceisnoobjectforthetypicalNordstromshopper.

2.WherewouldyouplacethedemandfacedbyNordstromontheimplieddemanduncertaintyspectrum?Why?

Implieddemanduncertaintyisdemanduncertaintyduetotheportionofdemandthatthesupplychainistargeting,nottheentiredemand.Ahigh-enddepartmentstorechainsuchasNordstromfallsonthehighendoftheimplieddemanduncertaintyscale.ThefashionitemsthatNordstrom

stockshaveextremelyhighproductmargin,highforecasterrorsandstockoutrates,andoncetheseasonisover,theseitemsaresoldatdeepdiscountsattheirNordstromRackoutletstores.

3.WhatlevelofresponsivenesswouldbemostappropriateforNordstrom'ssupplychain?Whatshouldthesupplychainbeabletodoparticularlywell?

Supplychainresponsivenesstakesmanyforms,includingtheabilitytorespondtoawiderangeofquantities,meetshortleadtimes,handlealargevarietyofproducts,buildinnovative

products,meetahighservicelevel,andhandlesupplyuncertainty.TheNordstromsupplychainmustbehighlyresponsiveintheareasofhandlinghighlyinnovativefashionproducts,customerresponse,andservicelevel;theyareeffectiveinsupplyingwell-heeledcustomerswith

merchandiseandtheirreturnpolicyislegendaryinthePacificNorthwest.

4.HowcanNordstromexpandthescopeofthestrategicfitacrossthesupplychain?

Scopeofstrategicfitreferstothefunctionswithinthefirmandstagesacrossthesupplychainthatdeviseanintegratedstrategywithasharedobjective.Byadoptinganintercompany

interfunctionalscopestrategy,Nordstromwillmaximizesupplychainsurplus.Nordstromcanmoveinthisdirectionbyworkingwiththeirsuppliersasiftheyareactuallyownedby

Nordstrom.Ratherthanviewingthesupplychainasazero-sumgameofinventorycost

minimizationandprofitmaximization,Nordstrommustrecognizethatspreadingthewealthandoccasionallytakingonmoreinventorythanisoptimalforthemwillresultinimprovedcustomerservice.Theintercompanyinterfunctionalscopeofstrategicfitrequiresmoreeffortthanthe

otherapproachespresentedinthissection;Nordstrommustevaluateallaspectsoftheirsupplyweb.

5.ReconsiderthepreviousfourquestionsforothercompaniessuchasAmazon,asupermarketchain,andautomanufacturer,andadiscountretailersuchasWal-Mart.

Amazonfocusesoncostandflexibilitybyprovidingbooks,musicandahostofother

householdproductsatlowprices.Customersplaceordersonlineandexpecttoreceive

purchasesinanumberofdays.Customerordersareprocessedatcentralwarehousesorare

dropshippedfromsuppliersbymailorcommoncarrier.Forthemostpart,theimplieddemanduncertaintyforAmazonislowastheycastsuchawidenet.Amazon'ssupplychainmustbe

responsiveintermsofflexibility;theyhandleanincrediblydiverserangeofproducts.

Amazonssupplychainshouldbeabletoprovidelowpriceswidevarietyandreasonable

deliveryschedulesforitscustomers.Ineverylinkofthesupplychain,Amazonmustfunctiononthecost-responsivenessefficientfrontierinordertosupportitscompetitivestrategy.

Asupermarketchainfocusesoncostandquality,withsomespecialtychainsaddingflexibilitybycarryingabroaderrangeofproductsthatmaybetargetedtowardscustomersinterestedin

organicproductsorethniccuisine.Implieddemanduncertaintyforasupermarketchaintendsto

below;shoppersaretypicallyrepeatcustomersandhaveaconstantdemandlevel.The

supermarketsupplychainmustberesponsivebyreceivingproducequicklytoensurefreshnessandhaveahighservicelevel.Supermarketsupplychainstendtobewell-establishedandcan

improvestrategicfitbyemphasizingspeedtomaintainfreshness,henceperceivedquality.

Automanufacturershaveextremelycomplicatedsupplychainsthatareincreasinglyfocusedonflexibilityandleanoperations.Implieddemanduncertaintyforautomanufacturersvaries

considerablybytargetmarketandmanufacturer.AutomotivesupplychainsamongthebigthreeintheUnitedStateshavemadegreatprogressinthelastdecadeandrecognizethattheymustberesponsivefromatimeandflexibilitystandpoint.

Wal-Mart'ssupplychainisobsessedwithcostandisfacilitatedbyalowimplieddemand

uncertainty,theirimpressivelogisticssystemandtheirmanagementinformationsystems.TheirsupplychainisabletorespondquicklytofillawidevarietyofproductstokeepmerchandiseonWal-Mart'sshelves.Wal-Mart'slevelofcoordinationalongthesupplychainisexcellent;it

wouldbedifficulttopointoutareaswheretrueintercompanyinterfunctionalscopeofstrategic

fithasnotbeenachieved.Thesolesupplychaincriticismthatsurfacesisanoccasionalreportthatsuppliersfeelasifsupplychainsurplusisnotsharedequitably.

6.GiveargumentstosupportthestatementthatWal-Marthasachievedverygoodstrategicfitbetweenitscompetitiveandsupplychainstrategies.

ThebestargumenttosupportthestatementthatWal-Marthasachievedverygoodstrategicfitistheirsuccessasacompany.Competitiontodayissupplychainversussupplychain,not

companyversuscompany,soacompany'spartnersinthesupplychainoftendeterminethecompany'ssuccess.

Wal-Mart'sstrategicfocusoncostisevidentintheircompetitive,productdevelopment,supplychain,andmarketingstrategy.Theirmarketingstrategyofadvertisingeverydaylowprices

appealstoconsumersanddoesnotdisruptthesupplychainbycausingsurgesindemand.

Visitingoneoftheirbigboxstoresrevealslow-pricedmerchandise,bothnationalandstorebrands,stackedfromfloortoceilingwithoutelaboratedisplaysordecoration.Wal-Mart'slogisticsandinformationsystemsarefamousforcoordinatingtheirentiresupplychainandallowingittomeetcustomerneedsatminimalcost.

CHAPTERTHREE

SupplyChainDriversandMetrics

1.Howcouldagrocerystoreuseinventorytoincreasetheresponsivenessofthecompany'ssupplychain?

Thelogisticaldriverofinventoryencompassesallrawmaterials,workinprocess,andfinished

goodswithinasupplychain.Agrocerystorecanbemoreresponsiveintheeyesofits

customersifitoffersabroadervarietyofSKUsand/ormaintainsagreaterquantityofeach

SKU.AgreaterquantityofeachSKUisproblematicforhighlyperishableitemslikeproduce,

meat,fish,ete.Fortheseitems,agrocerystoresupplychainshouldbesetuptopermitfrequentorderssothatfreshnessisensuredandastockoutsituationwon'texistforasignificantlengthoftime.Agrocerystoresupplychainshouldusehistoricaldemandpatternsforseasonalitemsto

relievestressonallmembersandprovidecustomerswithproductduringpeakdemandperiods.

2.Howcouldanautomanufacturerusetransportationtoincreasetheefficiencyofitssupplychain?

Transportation,alogisticaldriver,entailsmovinginventoryfrompointtopointinthesupplychain.Thetrade-offintransportationisbetweenthecostoftransportationandthespeedat

whichproductistransported.Slowermodesoftransportationreducecost,butcouldbea

reasonableapproachifsuppliersareco-locatedwiththeassemblyoperations.Ifthesupply

chainisdesignedinsuchaway,andassemblyoperationsarelocatedwithproximitytomarkets,thenthesupplychaincanberuncheaplywithoutholdingtoomuchinventoryintransit.

3.Howcouldbicyclemanufacturerincreaseresponsivenessthroughitsfacilities?

Facilities,anotherlogisticaldriver,aretheactualphysicallocationsinthesupplychainnetwork

whereproductisstored,assembled,orfabricated.Afacilitythatisdesignedtobeflexiblecanrespondquicklytomarketdemandsbyretoolingtoproducedifferentmodelsorproducts,

whereasadedicatedfacilitycannot.Locatingafacilityclosetothemarketwillincrease

responsivenessatthecostofdecreasedeconomiesofscalethatmightbeachievedwitha

centralizedlocation.Afacilitythatisundercapacitywillbelessresponsivethanafacilitythatisappropriatelysizedorhasexcesscapacity.

4.Howcouldindustrialsuppliesdistributoruseinformationtoincreaseitsresponsiveness?

Informationisacross-functionaldriverandconsistsofdataandanalysisconcerningfacilities,inventory,transportation,costs,prices,andcustomersthroughoutthesupplychain.Informationservesasaconnectionamongallmembersofthesupplychainandoperateswithineach

membertofacilitateinternaloperations.Accurateinformationcanimproveresponsivenessby

helpinganindustrialsupplierbettermatchsupplyanddemand.Informationthatisgathered

fartherdownthesupplychaincanbetransmittedinstantaneouslyandaccuratelytothesuppliesdistributor.InsteadofwaitingforahumantocallorFAXanorder,thedistributorcanreplenishinventorytothenecessarylevelsorprovidewhatisneededtofilltheorderasitisrealized.

5.Motorolahasgonefrommanufacturingallitscellphonesin-housetoalmostcompletelyoutsourcingthemanufacturing.Whataretheprosandconsofthetwoapproaches?

Sourcingisthesetofbusinessprocessesrequiredtopurchasefoodsandservices.These

decisionsarecrucialbecausetheyaffectthelevelofefficiencyandresponsivenessthat

Motorolacanachieve.TheMotorolaproductionsystemfortheirlineofpagerswashailedasabreakthroughinmasscustomization,soitwassomewhatsurprisingwhenMotorolaoutsourcedcellphones..Sourcingdecisionsshouldbemadebasedonthetotalsupplychainsurplus;ifa

thirdpartycanhelpthechainachievegreatersurplus,thenthefunctionisaprimecandidateforoutsourcing.Motorolawaswillingtogiveupsomecontrolandpossiblysomeofitsdesign

talentandassemblyexpertisebecauseitfeltthatthesuppliercouldprovideproductofan

appropriatelevelofqualitywiththeresponsivenessnecessary.Productsandservicesthatareoutsourcedarerarelybroughtbackin-houseandshouldneverbetiedtoocloselytothe

outsourcingparty'scorecompetency.

6.HowcanahomedeliverycompanylikePeapodusepricingofitsdeliveryservicestoimproveitsprofitability?

Pricingistheprocessbywhichafirmdecideshowmuchtochargecustomersforitsgoodsandservices.Pricingaffectsthecustomersegmentsthatchoosetobuytheproductaswellasthe

customer'sexpectations.Peapodcanuseeverydaylowpricingofitsproductstoensurestabilityinthesupplychain,butcaninfluencedemandbyvaryingthedeliverycharges.Forexample,byestablishingaminimumorderamountof$50andcharging$10todeliveranorderunder$75,

Peapodprovidesanincentiveforacustomertopileonadditionalitemstosaveonperunit

shipping.Anorderover$100incursadeliveryfeeof$7,whichisthelowestdeliverychargeforaresidentialcustomer.

Peapodalsovariesdeliverychargesbytimeofday;eveningdeliverytimesonweekdaysandmorningdeliveriesonSundaywithinnarrowwindowscostanextradollar,widerdelivery

windowsare$Iless.ThedeliverylatitudeallowsPeapod'sdeliverydriverstoschedulemoreefficientlytherebyincreasingprofitability.

7.Howhasglobalizationmadestrategicfitevenmoreimportanttoacompany'ssuccess?

Thekeytoachievingstrategicfitisacompany'sabilitytofindabalancebetween

responsivenessandefficiencythatbestmatchestheneedsofitstargetmarket.Supplychains

todayaremorelikelythanevertobeglobal,whichincreasesthedifficultyofcoordinationbutopensupamuchbroaderselectionofpotentialsupplychainmembers.Thisglobalizationalsoresultsinincreasedcompetitionfromothersupplychainsthatwerenotaconcernadecadeago.Thisincreasedcompetitionamongsupplychainsbenefitsconsumers,butincreasesthepressureoneachsupplychaintocarefullyselectmembersthatbestfittheoverallstrategy.

8.Whataresomeindustriesinwhichproductshaveproliferatedandlifecycleshaveshortened?Howhavethesupplychainsintheseindustriesadapted?

Theauthorscitetheexampleofrunningshoesincreasingfromfivestylesintheearly70stoalmost300bythelate90s.Otherproductsthathaveseenanexplosioninvarietyinclude

personalelectronics,beverages,snackandpreparedfoods,entertainment,tires,andpersonalservices.

Supplychainshaveleveragedinformationsystems,recognizedtheneedtocollaborateon

productandprocessdesign,andsupplychainexecution.Thesupplychainstancehasshiftedtowardsapartnershiporientationfromafocusonpricenegotiations.

9.Howcanthefullsetoflogisticalandcross-functionaldriversbeusedtocreatestrategicfitforaPCmanufacturertargetingbothtimesensitiveandpriceconsciouscustomers?

Thelogisticaldrivers,facilities,inventory,andtransportation,andthecross-functionaldrivers,information,sourcing,andpricing,mustbeusedinconcerttoachievetheappropriatebalanceofefficiencyandresponsivenessforthesupplychaintobesuccessful.APCmanufacturerthatwantstodeliverproductbothquicklyandefficientlycanmakecostandtimetrade-offsamongthesedriverstoachievetheirgoals.Thesetradeoffsacrossdriversaffordmoreflexibilitybut

requireconstantvigilanceasthetrade-offswithineachdriverchange.Inaddition,somedriversmaybealteredmoreeasily,e.g.,orderquantityandtransportationmedia,thanotherdrivers,

e.g.,locationandsourcing.

Thetrade-offswithineachdriveraresummarizedinthetable:

Driver

MoreResponsive

MoreEfficient

Facilities

MultiplePlants

FlexiblePlants

SinglePlant

DedicatedPlant

Inventory

HigherInventory

LowerInventory

Transportation

HigherSpeed

LowerSpeed

Information

Accurate

RealTimeTransmission

LessAccurate

BatchedTransmission

Sourcing

Responsivesupplier

Efficientsupplier

Pricing

DifferentialPricing

EverydayLowPricing

CHAPTERFOUR

DesigningDistributionNetworksandApplicationstoOnlineSales

1.Whatdifferencesintheretailenvironmentmayjustifythefactthatthefast-movingconsumergoodssupplychaininIndiahasfarmoredistributorsthanintheUnitedStates?

Indiaisalandofshopkeeperssellingtooverabillionconsumers.Indiaisbecomingly

increasinglyWesternized,butitwillbequiteawhile(ifnotforever)beforeshopkeepersare

supplantedbylargeretailers.Thesheervolumeofsmallstoreownersrequiresalargenumber

ofdistributorstoservicethem.TheyoungergenerationinIndia,particularlytheITrichareasofBangaloreandChennai,havefarhigherdisposableincomethantheoldergenerationandthe

restofthecountry.Theseyoungworkershaveverydifferentretailhabitsandarecausing

changesinIndia'sshoppingandsupplychainneeds.Poorinfrastructure,althoughnotentirelyaretailconcern,isanotherreasonwhyIndiamayneedfarmoredistributorsthanintheU.S.

2.AspecialtychemicalcompanyisconsideringexpandingitsoperationsintoBrazil,wherefivecompaniesdominatetheconsumptionofspecialtychemicals.Whatsortofdistributionnetworkshouldthiscompanyutilize?

IftheexpansionintoBrazilismerelyasalesoperation,thendistributorstoragewithlastmile

deliveryisthebestnetworkdesign.Iftheexpandedoperationsincludemanufacturing

capabilities,thenmanufacturerstoragewithdirectshippingisastrongpossibility.Giventhe

natureoftheproduct,packagecarrierdeliveryisnotanoptionandretailstoragewithcustomerpickupisoutofthequestionsincethisisaB2Bscenario.In-transitmergewouldbeanoptiononlyifthemanufacturerestablishedanetworkofplantsinBrazil,perhapsfocusedfactories

relativelyclosetoeachcustomer.

Thechemicalcompanyhasonlyfivecustomerstoserve;itwouldnotrequiretoolargean

investmentinlogisticalinfrastructuretoeffectivelyserveallfivewithoutinterventionbyadistributor.TheirshortsupplychainwouldbeeasiertocoordinateduetothestabledemandsandinformationsharingthatispossibleinaB2Bscenario.

3.Adistributorhasheardthatoneofthemajormanufacturersfromwhichitbuysisconsideringgoingdirecttotheconsumer.Whatcanthedistributordoaboutthis?Whatadvantagescanitofferthemanufacturerthatthemanufacturerisunlikelytobeabletoreproduce?

Thetwosupplynetworkdesignsthatthedistributorcanproposetocounterthemanufacturer'sproposalarethedistributorstoragewithpackagecarrierdeliveryandthedistributorstorage

withlastmiledelivery.Bothofthesecounter-proposalsofferhigherordervisibilityforthe

customerwhilehavingsimplerinformationinfrastructurethanwithmanufacturerstorage.Theresponsetimeforbothisexcellent,andthecustomerexperienceisalsosuperiortothedirect

model.Ifthemanufactureristryingtoprovideexcellentcustomerservice,theincreasedcostsintransportationandpotentiallyhigherlevelsofinventorymaybeacceptabletradeoffs.

4.Whattypesofdistributionnetworksaretypicallybestsuitedforcommodityitems?

Commodityitemsareavailablefrommanysourcesandcustomersexpectthemtobedeliveredquickly;ifasupplychaincan'tberesponsive,thecustomerswillmoveontothenextsource.Adistributionnetworkdesignedforretailstoragewithcustomerpickupachievesquickresponseforhighdemand,lowvarietyproducts.Othercommodityproductscanbeeffectivelydistributedusingdistributorstoragewithlast-miledelivery,whichisalsosuitedforhighdemand,quick

responseproducts.

5.Whattypeofnetworksarebestsuitedtohighlydifferentiatedproducts?

Thenetworksthatarebestsuitedtohighlydifferentiatedproductsarethemanufacturerstoragewithdirectshippingandthemanufacturerstoragewithin-transitmerge.Bothapproacheshavetheabilitytoaggregateinventoriesandpostponeproductcustomization,whichwouldhelp

supportawidervarietyofproducts.

6.Inthefuture,doyouseethevalueaddedbydistributorsdecreasing,increasing,orstayingaboutthesame?

Itisdoubtfulthatvalueaddedbydistributorswilldecreaseovertime;thenatureofcompetitioninallareaswouldsuggestthatdistributorsthataddlessvaluewouldbewinnowedout.Itis

morelikelythatdistributorswillbeaskedtodomoreormayvolunteertodosoasameansofdifferentiatingthemselvesfromthecompetition.

7.Whyhase-businessbeenmoresuccessfulinthePCindustrycomparedtothegroceryindustry?Inthefuture,howvaluableise-businesslikelytobeinthePCindustry?

ThePCindustryissellingahighlycustomizedproductthatispurchasedonaper-household

basis,lessroutinelythanthecommodityproductsthatmakeupgroceries.AcompanylikeDellcanleveragetheInternetasamarketinganddistributiontooltoadvertisenewcapabilitiesandoptionsbeforebricksandmortarretailerscan.Dellalsoremoveswhateverintimidation(or

frustration)factormightbeexperiencedbyconversingwithin-storesalesrepresentatives.

Computershaveaveryhighvaluetoshippingcostratio,sotheincreasedshippingcostswhencomparedtoatraditionalstorearenegligible.Grocerieshaveamuchlowerratio;althoughin-

storeshoppersareincurringcoststopickuptheirgroceries,thosecostsarehiddenincomparisontothedeliverychargeonanitemizedbillfromPeapod.

E-businesswillcontinuetobeavaluabletoolinthePCindustry;noneoftheadvantagescurrentlybeingenjoyedbyDellandGatewayarelikelytochangesignificantly.

8.Ise-businesslikelytobemorebeneficialintheearlypartorthematurepartofaproduct'slifecycle?Why?

E-businessismorelikelytobemorebeneficialintheearlypartofaproduct'slifecycle.E-

businessstrengthsincludeflexiblepricing,promotions,andproductportfoliosandgreaterspeedindisseminatingproductinformation.Laterinthelifecycle,aproductislikelytobea

commodity,whichdoesn'tplaytothestrengthsofthischannel.

9.ConsiderthesaleofhomeimprovementproductsatHomeDepotor