Note on How to Approach POM Cases Harvard Case Solution & Analysis

Try to figure out whether the following problem statement makes sense or not?

”In the last decades, there was an evitable trend towards customization and product line extensions. In these circumstances, companies want to respond to these trends with the same supply chain format. Therefore, lead times and inventories grow. ”

Can you explain this statement based on what you heard during the sessions and anything you might have found elsewhere?

Now days, consumers are looking for various ways of personalization in each and everything they buy. As of now, the consumers want changes according to their needs and desire, whether they are purchasing a bottle of drinking water or a laptop for personal use.  In addition to personalization, there is an inevitable trend towards the product line extension as well.

Product line extension can be defined as selling a product with relatively needed and added features to make it different within the company's current product line. The concept is completely opposite of brand extension as the later one involves launching a complete new product with no connection with a previous product. However, the main issue that arises in mass customization is of lead time. The companies are finding ways to reduce lead time in their overall supply chain management.

As the trend is increasing towards customization, customers are more likely to demand products based on their choices that lead to high customization. Because of customization, companies often need more time to produce products that lead to long manufacturing time. When a product takes longer time than the standard product, it will eventually result in higher lead-time.

Lead-time can be define as the time that passes between the start of the manufacturing process to the point when manufacturing is completed. Lead time is the most important in manufacturing and the overall supply chain of a company is closely connected with customization and product line as well.  Most of the companies are always taking measures to reduce its lead time because they want to get its products delivered as soon as possible. However, because of the customization factor, lead times are increasing and so does the inventories.

Because of customization, companies do not make its products in advance because they have to manufacture it according to the requirements and specification described by the customers. Because of this, the company needs to hold excess inventory that is often known as safety stock. The manufacturing starts only after the order has been placed that in turn increase the overall lead time of the company.

Because of the fact that the customization and product line extensions are resulting towards an increase in inventories and lead times. Companies are now focusing more on trends with supply chain formats. By having same supply chain formats, companies can go to various cost reduction techniques. However, companies need to go for a supply chain, according to the product requirements to bring effectiveness and efficiency in the overall supply chain procedure.

To a very large extent,, the statement makes sense that the trend of customization is increasing, but in these circumstances, the same supply chain for every product would not be a recommended option. However, customization leads to large inventories and lead times as well.

2.    To a great extent, the three operational buffers: safety inventory, safety time and safety capacity can be exchanged. Work out three own examples, one from industry, one from services  and one from your practical life where this phenomenon can be observed.

Safety inventory can be defined as a stock that is used as a buffer in the manufacturing process against a wrong prediction and mismatch in between actual and forecasted demand or even consumption. It also acts as a buffer in between predicted and actual lead time in manufacturing.

Safety time in inventory management as a time that the company used as a buffer in the overall manufacturing process to cover up any problems in the delivery of raw materials by a vendor.

Safety capacity, often termed as capacity cushion can be defined as the amount of excess inventory or time that can cope up with extra or additional demand of a product. It can be helpful for a company in a circumstance when there is improbability about the demand of a certain product.

These three operational buffers often interchange according to the type of industry and process of manufacturing. For example, safety stock buffer often used in industries and safety time, often used in the service industries. In industries........................

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The overall approach to the diagnosis and solution of problems in management, especially in work situations with ambiguous problems. "Hide
by Roger E. Bohn 2 pages. Publication Date: February 12, 1985. Prod. #: 685061-PDF-ENG

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