Overview

The focus for the traditional competitive comparative advantage was the physical product, i.e. functionality, reliability, quality, price and lead time. The focus of supply chain management operating in today's global buyers' market is on providing a total value package that is inclusive of the physical product. However, this does not detract from the importance of the physical product. In today's buyers' market the physical product is a core element of the evolving total value package.

Business necessity must stimulate demand decisions. Understanding customer needs and facilitating moving expectations, together with differentiating the total value package strategies, require a greater frequency of 'reinvention' in relative time today than it did yesterday. Therefore, management of the supply chain must incorporate into its business planning, shorter product life cycles, quickest time to market for new products and continually meet or exceed customers' expectations.

The Product and Manufacturing Sector

The importance of the product in terms of competitive differentiation of the total value package will depend on the commodity marketplace and the performance drivers. That means that a differentiating feature that is deemed important to the customer will depend on the application of the product. This incorporates the application, marketplace differentiation and the designed for manufacturing perspective.

Their are four major manufacturing sectors, illustrated by the Puttick grid (named after its originator, John Puttick) in Figure 4.1.

1. Commodities comprises simple nuts and bolts. The product design is probably simple. Volumes are high and the goods are widely available. For this type of...