University of Missouri, St. Louis IRL @ UMSL Dissertations UMSL Graduate Works 8-4-2014 Selecting the best supply chain strategy: When is a misalignment of product type and strategy appropriate, how do changes in expected demand impact strategies, and should the strategy of a product change over its life-cycle? William Ellegood University of Missouri-St. Louis, [email protected] Follow this and additional works at: https://irl.umsl.edu/dissertation Part of the Business Commons Recommended Citation Ellegood, William, "Selecting the best supply chain strategy: When is a misalignment of product type and strategy appropriate, how do changes in expected demand impact strategies, and should the strategy of a product change over its life-cycle?" (2014). Dissertations. 226. https://irl.umsl.edu/dissertation/226 This Dissertation is brought to you for free and open access by the UMSL Graduate Works at IRL @ UMSL. It has been accepted for inclusion in Dissertations by an authorized administrator of IRL @ UMSL. For more information, please contact [email protected]. Selecting the best supply chain strategy When is a misalignment of product type and strategy appropriate, how do changes in expected demand impact strategies, and should the strategy of a product change over its life-cycle? William Ellegood M.B.A, Ball State University – Muncie, IN, 1999 B.S., Mechanical Engineering, GMI Engineering and Management Institute – Flint, MI, 1994 A Thesis Submitted to The Graduate School at the University of Missouri – St. Louis in partial fulfillment of the requirements for the degree Ph.D. in Business Administration with an emphasis in Logistics and Supply Chain Management Advisory Committee James F. Campbell, Ph.D. Co-Chairperson Donald C. Sweeney II, Ph.D. Co-Chairperson Gerald Y. Gao, Ph.D. Ray Mundy, Ph.D. Revision July 23, 2014 Copyright, William A. Ellegood, 2014 Table of Contents Table of Figures ................................................................................................................. iv Table of Tables ................................................................................................................ viii Abstract ............................................................................................................................... x 1. Introduction ................................................................................................................. 1 1.1 Alignment .................................................................................................................. 2 1.2 Supply chain strategy ................................................................................................ 5 1.3 Product life cycle and supply chain strategy ............................................................. 6 1.4 Methodology ........................................................................................................... 10 1.5 Outline ..................................................................................................................... 12 2. Literature review ........................................................................................................ 14 2.1 Supply chain strategy selection framework ............................................................ 14 2.2 Examining the Fisher Model and supply chain strategy alignment ........................ 23 2.3 Lean/leagile/agile .................................................................................................... 32 2.4 Product life cycle and supply chain strategy ........................................................... 38 2.5 Supply chain strategy selection and improvement .................................................. 42 2.6 Analytical models for supply chain strategy selection ............................................ 47 2.7 Net present value and supply chain management ................................................... 49 2.8 Summary ................................................................................................................. 51 3. Analytical model........................................................................................................ 54 3.1 Notation ................................................................................................................... 54 3.2 Model description .................................................................................................... 56 3.3 Model construction .................................................................................................. 68 3.4 Supply chain strategy model construction .............................................................. 70 3.5 Model analysis framework ...................................................................................... 74 4. Examining the Fisher Model (lean and agile SCS only) ........................................... 78 4.1 Problem description ................................................................................................. 78 4.2 Scenario analysis ..................................................................................................... 89 4.2.1 Low demand forecast error ............................................................................... 92 4.2.2 High demand forecast error .............................................................................. 95 ii Copyright, William A. Ellegood, 2014 Revision July 23, 2014 4.3 Sensitivity analysis .................................................................................................. 99 4.3.1 Total production cost to total order processing cost ......................................... 99 4.3.2 Average daily demand .................................................................................... 105 4.3.3 Supply side lead time ...................................................................................... 110 4.3.4 Agile SCS service level .................................................................................. 115 4.4 Summary ............................................................................................................... 120 5. Supply chain strategy selection ............................................................................... 124 5.1 Problem description ............................................................................................... 124 5.2 Scenario analysis ................................................................................................... 128 5.3 Sensitivity analysis ................................................................................................ 132 5.3.1 Expected demand changes over time .............................................................. 133 5.3.2 Demand forecast error and demand changes with time .................................. 142 5.4 Summary ............................................................................................................... 150 6. Supply chain strategy selection for product life cycle ............................................. 153 6.1 Problem description ............................................................................................... 153 6.2 Scenario analysis ................................................................................................... 164 6.3 Examples ............................................................................................................... 178 6.3.1 Functional product .......................................................................................... 178 6.3.2 Hybrid product ................................................................................................ 184 6.3.3 Innovative product .......................................................................................... 188 6.4 Agile SCS to a lean SCS ....................................................................................... 191 6.4.1 High RMP ....................................................................................................... 192 6.4.2 Medium RMP ................................................................................................. 194 6.4.3 Low RMP ........................................................................................................ 195 6.5 Summary ............................................................................................................... 197 7. Conclusion ............................................................................................................... 199 7.1 Findings ................................................................................................................. 200 7.2 Managerial insights ............................................................................................... 203 7.3 Contributions ......................................................................................................... 205 7.4 Limitations ............................................................................................................ 206 7.5 Opportunities for future research .......................................................................... 207 Revision July 23, 2014 Copyright, William A. Ellegood, 2014 iii Works cited ..................................................................................................................... 208 Table of Figures Figure 1.1: Matching supply chain strategy to product type (Source: Fisher, 1997) .......... 2 Figure 1.2: Classical product life cycle (Source: Rink and