Abstract
The aim of the study is to better understand the
effectiveness of a fundamental question in supply chain
management is: ‘How should supply chains be managed when
operations compete in different ways in different markets?’
Demand for the former products will be relatively stable and
predictable, but demand for the latter will be far more
uncertain. In addition, the profit margin commanded by the
innovative product will probably be higher than that of the
more functional product. However, the price (and therefore the
margin) of the innovative product may drop rapidly once it has
become unfashionable in the market. The supply chain policies
that are seen to be appropriate for functional products and
innovative products are termed by Fisher efficient supply
chain policies and responsive supply chain policies,
respectively. By contrast, responsive supply chain policy
stresses high service levels and responsive supply to the endcustomer.
The inventory in the network will be deployed as
closely as possible to the customer. In this way, the chain can
still supply even when dramatic changes occur in customer
demand. Fast throughput from the upstream parts of the chain
will still be needed to replenish downstream stocks. However,
those downstream stocks are needed to ensure high levels of
availability to end-customers.