Managing Supply-Demand Risk In Global Production: Creating Cost-Effective Flexible Networks Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Home >> Economics Case Solutions >> Managing Supply-Demand Risk In Global Production: Creating Cost-Effective Flexible Networks

Supply chains have become hyper-efficient because of increasing globalization all over the world. Although, the globalization accounts for high uncertainties, and these evolved supply chains could not tackle the issue of the unpredictability of demand and supply. The difference between the supply and demand caused a major risk for many industries, including automobiles, engineer products, semiconductors, pharmaceuticals, aerospace and defense, and chemicals due to the high cost of capacities. A potential approach to mitigate the threats of such risks is a Mix Flexibility, where a plant has the tendency to manufacture more than one product. The article determines the most appropriate and worse approaches to incorporate a mix flexibility. To start this, the management of the company needs to evaluate two major issues: What are the effective ways to develop flexible plants? And how to develop a cost-effective flexible network from the flexible plants? Same flexibility strategies could not be suitable to incorporate in the entire operations: successful firms would adopt the Four Ps – Product design, Process design, Production technology, and people—in order to meet the characteristics of each tier in their production chains. They will not prioritize the flexibility on cost: through utilizing the partially flexible networks in such a way that it can produce the same outcomes of entirely flexible networks and ultimately they will develop cost effective flexible networks.