¶ … Nagurney (2006), supply chains are systems or frameworks through which a product or service is moved from the supplier to the final consumer. This framework can include everything from economic entities to resources, from organizations and companies to activities.
Supply chain surplus is calculated as revenue generated from a customer minus the total cost incurred to produce and deliver a certain product (Chopra, Meindl, Kalra, 2010). For the organic veggie line at Whole Foods, we will calculate the total revenue for the vegetable by multiplying the price per unit with the total number of units. The total costs to deliver the respective veggie will be calculated by adding the costs at the different components of the supply chain: production costs, transportation costs, packaging costs etc. The supply chain surplus is the difference between the two. We want to measure this because it shows how efficient the supply chain is and whether we stand to make a profit or not.
Long-term strategy usually involves strategies that the company conceives for several years. In this case, the supply chain strategic decisions need to determine the volume of vegetables that will be sold, over the next five years, in Whole Foods in a certain region. We want to determine, following this evaluation, what farms can contribute to cover this demand, how much each can supply per year etc.
For the intermediate term planning, the period of time is a quarter of a year to a full year. For this, we will look at transportation issues, notably how to move the products from the farms to the shelves, what are other logistical issues involved in the process etc. For the operational decision making, we are looking at decisions that are done weekly or daily. Here, the decisions are those taken in the store, including where to place the vegetables on the shelves, placing new orders if there are no more vegetables for sale, check the vegetables and throw out those that are no longer fresh etc.
As can be seen, decisions about total volume of vegetables, taken on the strategic level, will affect operational decisions, such as to throw away products that are no longer fresh (operational level).
Customer Order Cycle
Arrival, Entry, Fulfillment, Receiving
Production Order Cycle
Order arrival, Production scheduling, Shipping/logistics, receiving
Strategic Fit
In the case of Whole Foods' organic veggie supply chain the factors that should be taken into account in order to formulate the Competitive Strategy refer to the company's positioning on the market (strategies are different for leaders on the market in comparison with followers), the number of competitors and their power (in markets with numerous suppliers these have reduced power of influence, while a small number of suppliers gives them power to negotiate the rules of the game with their customers), pricing levels (in order to be competitive the company must also address price competitiveness), and the customer base.
The Product Development Strategy must take into account the need for certain products, like organic vegetables, the level of market coverage by competitors, the resources that are necessary for producing and marketing these products, and the profit that is expected in return.
The Marketing and Sales Strategy is one of the most important issues that influence Whole Foods' supply chain. Therefore, it should take into account factors like sales volume that is expected, in order to determine the product quantities that must be supplied, and the duration that these products can spend in different supply chain steps.
The Supply Chain Strategy basically ensures that the company has the right quantity of vegetables to supply, and that no extra vegetable supplies charge the supply chain, or that no insufficient vegetable quantities are evaluated.
Although these strategies seem different from a functional point-of-view, they are interdependent and support each other. They each cannot be developed while not taking into account the resources and objectives applied to the rest of strategies. The Competitive Strategy dictates the type of product must be developed by the product Development Strategy in order to reach competitive objectives. The Marketing and Sales Strategy must take into account the possibilities provided by the Supply Chain Strategy in order to determine how much of the product the company can sell in a given period of time. For example, Whole Food must assess the competition level on the organic veggies market in order to determine whether it needs to introduce new products in offer or the existing ones can satisfy demand. The company's Marketing and Sales Strategy determines the quantity of organic veggies that must be sold in order to reach the established profit margins and that must be incorporated within the supply chain.
Supply Chain Uncertainties
Demand uncertainty refers to...
Logistics in the Corporate Environment Logistics provides for a company a flow of goods and services from its beginning point to the point the consumer obtains the product. Without the use of logistics, a company may not be able to identify how their product moves, where their product is in their supply chain, or be able to measure the success of their logistic effectiveness (Princeton.edu, 2011). The way in which a
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