The Internet Encyclopedia (Volume 3)

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CUSTOMIZINGSUPPLYNETWORKRELATIONSHIPS ASPART OF ANOPERATIONSSTRATEGY 409

Operational Management Activities

Product or

Product Group

Demand

Behavior

Supply Network

Behavior Supply Network

Performance

Metrics

Product Group

Product Group

Product Group

Customer

Customer

Customer

OSCM III

OSCM II

OSCM = Operations Strategy

Composition Matrix containing

certain building blocks

Supply Network Operations Strategy Filtration Process

OSCM I

Figure 6: Supply network operations strategy filtration process.

Eventually, the firm adopted three separate operations

strategies. We now turn to the driving forces involved in

Figure 6.

Product Group Demand Behavior

This category includes product attributes, demand pat-

terns, and customer/consumer behavior.

Product attributes.Product attributes are such things as

durability of the product, price levels, shelf life (intrin-

sic, such as physical characteristics, and extrinsic, such

as customer taste changes), product complexity (number

and variety of Stock Keeping Units making up a product

line), and product line dynamics (characteristics of slow-

moving versus rapid-turnover goods).

Demand patterns.Demand periodicity (seasonality,

aseasonality, cultural influences), demand uncertainty,

and the economics of products lines (unit margins) will

all be issues.

Customer/consumer behavior.The different character-

istics of the customer (in the case of another organiza-

tion) and the end consumer (an individual purchaser)

place different demands on the supply pipeline and distort

the pattern of demand. Different ordering processes,

EDI usage, payment methods, logistical needs, promo-

tional requirements, packing and shelving constraints,

and product characteristics (sell-by dates, storage needs,

transit regulations, maintenance, information content,

after-sales support, repeat purchase patterns, etc.) all vary

by customer, product group, and individual product. All

will change the demand pattern as well as the operations

strategy necessary. Add to this the various seasonal ef-

fects, cyclical needs, and fashion sways, and the complex-

ity and influence of individual customer behavior begins

to be seen.

Supply Network Behavior

Product stream value flows.Product stream value

flows are highly complex and dynamic. Any understand-

ing of them requires the appreciation of supply sys-

tem architecture and the intricacy of that architecture

(length of pipeline, stages, firm sizes, product com-

plexity and dynamism, information availability, con-

sumer demands, etc.), the power of the participants

(strengths/sizes/financial capabilities of the entities in

the pipeline will have a marked impact on the way