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Chapter 13 Supply chain planning and control 401
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Customer relationship management (CRM) is a method of learning more about customers’
needs and behaviours in order to develop stronger relationships with them. It brings together all
information about customers to gain insight into their behaviour and their value to the business.
➤ What is the ‘natural’ pattern of behaviour in supply chains?
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Marshall Fisher distinguishes between functional markets and innovative markets. He argues
that functional markets, which are relatively predictable, require efficient supply chains, whereas
innovative markets, which are less predictable, require ‘responsive’ supply chains.
Supply chains exhibit a dynamic behaviour known as the ‘bullwhip’ effect. This shows how
small changes at the demand end of a supply chain are progressively amplified for operations
further back in the chain.
➤ How can supply chains be improved?
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The Supply Chain Operations Reference model (SCOR) is a highly structured framework for
supply chain improvement that has been developed by the Supply Chain Council (SCC).
The model uses three well-known individual techniques turned into an integrated approach.
These are:
– Business process modelling
– Benchmarking performance
– Best practice analysis.
To reduce the ‘bullwhip’ effect, operations can adopt some mixture of three coordination
strategies:
– information-sharing: the efficient distribution of information throughout the chain can reduce
demand fluctuations along the chain by linking all operations to the source of demand;
– channel alignment: this means adopting the same or similar decision-making processes
throughout the chain to coordinate how and when decisions are made;
– operational efficiency: this means eliminating sources of inefficiency or ineffectiveness in
the chain; of particular importance is ‘time compression’, which attempts to increase the
throughput speed of the operations in the chain.
Increasingly, supply risks are being managed as a countermeasure to their vulnerability.
Case study
Supplying fast fashion 17
Garment retailing has changed. No longer is there a standard
look that all retailers adhere to for a whole season. Fashion
is fast, complex and furious. Different trends overlap and
fashion ideas that are not even on a store’s radar screen
can become ‘must haves’ within six months. Many retail
businesses with their own brands, such as H&M and Zara,
sell up-to-the-minute fashionability at low prices, in stores
that are clearly focused on one particular market. In the
world of fast fashion catwalk designs speed their way into
high-street stores at prices anyone can afford. The quality
of the garment means that it may only last one season, but
fast-fashion customers don’t want yesterday’s trends. As
Newsweek puts it, ‘being a “quicker picker-upper” is what
made fashion retailers H&M and Zara successful. [They]
thrive by practicing the new science of “fast fashion”; compressing
product development cycles as much as six times.’
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