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Responsive supply of innovative products

6 important questions on Responsive supply of innovative products

What is the primary challenge for innovative products?

Uncertainty about demand is intrinsic to innovative products. As a result, figuring out how to cope with it is the primary challenge in creating a responsive supply process for such products.

What is the first step in moving to a responsive process?

The first step for many companies is simply to accept that uncertainty is inherent in innovative products.

The fact is that risk and return are linked, and the highest profit margins usually go with the highest risk in demand.

What is the second step in moving to a responsive process?

The second step is to employ three coordinated strategies to manage the uncertainty.

What are the three coordinated strategy to manage uncertainty?

1. The company can continue to strive to reduce uncertainty.
2. The company can avoid uncertainty by cutting lead times and increasing the supply chain's flexibility so that it can produce to order or at least manufacture the product at a time closer to when demand materializes and can be accurately forecast.
3. Once uncertainty has been reduced or avoided as must as possible, the company can hedge against the remaining residual uncertainty with buffers of inventory or excess capacity.

What are the challenges for mass customization?

Custom production can require more labor then mass production.

Why is custom production viable now?

Affluent consumers are willing to pay for high-margin, innovative products, and those products require a different, more expensive, but more responsive production process than a functional product could.

The question on the page originate from the summary of the following study material:

What is the right supply chain for your product?

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