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Why is Quick Response important to Supply Chains?
Research / 3 June, 2016
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Professor for Supply Chain Management
Prof. Dr. Mirko Kremer is professor for Supply Chain Management at the Frankfurt School of Finance & Management since July 2014. His research focuses on the impact of managerial and customer (mis)behavior on the performance and design of Operations and Supply Chain systems, with a particular emphasis on micro-behavioral foundations of inventory management, sales forecasting, and queuing/service systems.

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Supply Chains are networks of firms that together transform raw materials into finished products that customers see on retail shelves.

Globalization and IT have made it easy to find business partners across the globe. But the resulting supply chains can be long…

…and slow

At the same time, modern markets are getting faster and faster: consumers want new and different products at an increasing pace, resulting in shorter life cycles.

When products simply do not sell year around but only during short seasons a long and slow supply chain faces a problem: the retailer has to order products long before the season starts and take a bet on unpredictable demand.

Will the product be a hit? Or will it be a failure?

Although a crystal ball is rarely available, supply chain speed can help the retailer with her ordering problem:

Because it is easier to predict the success of a product 2 weeks before the selling season, rather than 8 months before the selling season, a fast supply chain would allows the retailer to place more accurate, and thus less risky, orders.

But how to put speed into the supply chain?

The retailer could use
– fast suppliers,
– use fast transportation,
– use local suppliers (close to the market),
– and replenish retail stores multiple times a week, to react to the latest trends.

Speed is expensive, but a fast supply chain is key to being responsive to quickly changing customer needs in highly unpredictable markets.

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