A comparison of two computer manufacturers found that by implementing improvements in its supply chain, one company was able to reduce its average supply of key components to only 3-6 days’ supply of inventory, as compared with their competitor, which held an average of 35 days’ supply in inventory during the same time period. Both companies used an assemble-to-order process to manufacture computers from standard vendor-produced components.
Using Hau Lee’s Supply Chain Uncertainty Framework (JC13 textbook, p. 380), identify which type of supply chain strategy is needed to fit the situation described above, and discuss actions that a company could take to improve supply chain performance. Then, provide some specific examples of how a computer company, operating in an industry with frequent technological improvements, would be in a better competitive position with only three days’ supply of components in inventory vs. a competitor with 35 days of components in inventory.