Operating Strategies for a Segmented Supply Chain

Abstract

An operations strategy is a method or plan of action that corporations employ to reach their goals. A good strategy enables a company to operate efficiently and use its resources effectively. The purpose of this capstone project is to formulate optimal supply chain operating strategies for demand, sourcing, and distribution by replenishment stream for a fast-moving consumer goods company (FMCGC). A replenishment stream is how demand from an external customer flows into the sponsor company’s supply chain. The sponsor company has identified four replenishment streams; base demand, promotions, new initiatives and incremental business activities. It seeks to confirm whether there is a benefit in differentiating the supply chain by the four identified streams of some hybrid. An exhaustive literature review and analysis of shipment data provided reveals that there is no one size fits all demand, sourcing, and distribution strategy in consideration of the different replenishment streams. In addition, through a variety of methods including segmentation, calculation of the coefficient of variation, time series analysis, and the generation of forecasts, I conclude that in certain instances there is a benefit to differentiating the supply chain by the 4 identified replenishment streams and in other cases it is advantageous to consolidate them by some hybrid.