Logistics and Supply Chain Management, 6th Edition

Market-driven supply chains

Most traditional supply chains were designed to optimise the internal operations of the supplying company. Thus a manufacturer might be motivated to establish supply and distribution arrangements that would enable production efficiencies to be maximised. Typically this would entail manufacturing in large batches, shipping in large quantities and buffering the factory, both upstream and downstream, with inventory. In this way the goal of becoming a ‘low-cost producer’ could be achieved.

Whilst this approach was fine from the perspective of the manufacturing organisation, it clearly did not come anywhere close to being ‘customer-centric’ in the sense of designing the supply chain around the needs of the customer. With ...