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Part - XI

Competitive Changes over Time

A final dimension to consider when matching supply chain and competitive strategy is changes in competitor behavior. Like product life cycles, competition can change the landscape, thereby requiring changes in a firm's competitive strategy. An example is the growth of mass customization in various industries over the last decade of the 20th century. As competitors flood the marketplace with product variety, Customers are becoming accustomed to having their individual needs satisfied. Thus the competitive focus today is on producing sufficient variety at a reasonable price.

Obstacles in Achieving Strategic Fit

A company's ability to find a balance between responsiveness and efficiency along the responsiveness spectrum that best matches the type of demand it is targeting is the key to achieving strategic fit. In deciding where this balance should be located on the responsiveness spectrum, companies face many obstacles.

Increasing Variety of Products

Product proliferation is rampant today. With customers demanding ever more customized products, manufacturers have responded with mass customization and even segment-of-one views of the market. Products that were formerly quite generic are now custom made for a specific consumer.

Market segments have become increasingly fragmented as customers demand that products by custom-made to their needs. The increase in product variety complicates the supply chain by making forecasting and meeting demand much more difficult. Increased variety tends to raise uncertainty, and uncertainty frequently results in increased cost and decreased responsiveness within the supply chain.

Decreasing Product Life Cycle

In addition to the increasing variety of product types, the life cycle of products has been shrinking. Today, there are products whose life cycle can be measured in months, compared with old standard of years. As products go through their life cycles, the demand characteristics and the needs of the customer segments being served change. High-tech products are particularly prone to these life cycle swings over a very compressed time span. A product goes through life cycle phases from the introductory phase, when only the leading edge customers is interested in it, all the way to the point at which the product becomes a commodity and the market is completely saturated. Thus, if a company is to main strategic fit, its supply chain strategy must evolve as its products enter different phases.

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* Contributed by -
Amit Mishra,
PGP 19188,
Indian Institute Of Management, Lucknow.