Buying Market Share WITH SUPPLY CHAIN

In an effort to meet customer demands and gain greater market share, companies offer non-monetary benefits in supply chain services as a replacement for price rebates. These often take the form of high delivery frequencies, small order multiples, direct-to-store deliveries and customised shipping conditions. Such dynamic is usually understood by Cost-To-Serve approach, an application of Activity Based Costing. Authors Richard Markoff and Ralf W. Seifert discuss such supply chain idea that is rarely applied sustainably despite being so intuitive and having clear benefits.

Every supply chain executive has had the frustrating experience of witnessing inefficient practices in their fulfillment operations. One of ours was during a tour of a consumer product manufacturers’ distribution centre. Workers were carefully taking products that were shrink-wrapped by three, cutting off the plastic film, putting two units in a box and returning the third unit to storage. The Distribution Centre manager, when asked about this seemingly slightly-dangerous and low-added value task, explained that their biggest customer had requested an order minimum of two units for this