Supply Chain Management and Logistics: Why Small Ripples Become Tidal Waves
A tour of supply chains, from the bullwhip effect and warehouse picking to route planning, safety stock, supplier choice and resilience.
Try 3 questions
1. Products with short life cycles and unpredictable demand, like fashion, are best served by which kind of supply chain?
- A responsive, fast and flexible one
- A rigid, fully automated one
- An efficient, lowest-cost one
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Answer: A responsive, fast and flexible one
When demand is uncertain, stockouts and markdowns cost more than production, so speed and flexibility beat low unit cost.
2. For a stable, predictable product like toothpaste, what should the supply chain prioritize?
- Maximizing speed with express shipping
- Holding huge buffers near every store
- Minimizing production and transport costs
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Answer: Minimizing production and transport costs
Functional products have steady demand, so forecast errors are small and the winning strategy is physical efficiency.
3. Some fashion retailers produce close to home at higher unit cost instead of in distant low-wage factories. Why can this pay off?
- Fast restocking cuts costly markdowns on unsold stock
- Distant factories cannot make fashion garments
- Nearby factories always have lower labor costs
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Answer: Fast restocking cuts costly markdowns on unsold stock
Short lead times let the retailer make small batches and follow real sales, avoiding big end-of-season discounts.
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