What are some problems that can arise when each stage of a supply chain focuses solely on its own profits when making decisions? Identify some actions that can help a retailer and a manufacturer work together to expand the scope of strategic fit.
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Answer:
High inventories, poor quality, low customer service, and increased returnsare just four common problems that occur when each stage of a supply chainfocuses solely on its own profits. The trucking company requires full truckloads for delivery forcing the retailer to carry more inventory than wanted orneeded. The supplier offers discounts to their buyers to maximize productionbut forcing the buyers to purchase in larger quantities than desired. Thisconcept was prevalent during the 1950s and 1960s as companies aimed tominimize local costs and maximize their own profits. Today, retailers andmanufacturers have the opportunity to plan promotions jointly, such as Wal-Mart and P&G are doing. They can share sales information to determinecustomer trends. Joint product development opportunities are being exploredthroughout the supply chain among retailers, manufacturers, and raw materialsuppliers.
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