Demand and Design of product as Determinants of Supply Chain StrategyIntroductionThe past few decades have seen great advancements in the electronic and technology industries. Due to that many companies have totally revolutionalized their ways of functioning and approach to management. In general terms the electronics industry can be termed as highly competitive and most significantly fast-moving. The changes that have been witnessed in the recent past have boosted productivity by making more efficient, cheaper, faster and capable of producing high quality products (NAM, 2006). Electronic industry can be ranked among the growing industries going by the rapid speed of transitions witnessed in the industry.
There are a number of implications that go with such kind of an industry. For instance there exist many market imperfections such that economic models fail to be reflected in the industry. This is exactly the case when the price trends are studied. Increases in prices of electronic products do not reflect a proportionate change in demand. What the perception is by consumers is that increases in prices represent value of the product in question. Imperfections are reflected in the market liberalization where there a lot of restrictions and regulations by national laws.
Governments are sensitive to dumping of electronic products and companies have to negotiate long and cumbersome procedures before they are allowed to operate in overseas markets. Modern supply and distribution functions are based on the demand perspective rather than the supplier perspective. In this sense the producers have to design their products in regard to what the market wants. This is followed by a supply chain that is devised to efficiently link the producer and the consumer with minimum bureaucracies.
Such strategies require that the design of product and supply chain be incorporated in the initial stage of strategy formulation by management. The report herein will focus on the effect of both demand and design of the products of Apple and Samsung on the choice of the supply chain. The demand levels have been turbulent in the industry with new products generally enjoying high demand in their initial days of introduction. This scenario can be traced back to the desire by consumers to move with fashion. The design of the products also influences the choice of supply chain will the owner of the design trying to protect the original product from counterfeit products or imitations.
Product Demand and Supply ChainThe link between product demand and the supply chain has proved a prudent idea in this time and age. The supply that maximizes revenue is that which is pulled by the consumers rather than that which is pushed by the producers. Every entity produces with an intention to sell and hence distribution should be guided by demand levels.
There are two negative outcomes of supply chain strategy that is not demand oriented. One is the supply of less than wanted demand levels (Fisher 1997). This is where the consumers are left asking for more but the market cannot provide. The entity is likely to lose customer loyalty as they lose confidence in the company’s ability to meet their needs satisfactorily.