February** Dynamic Incentive Program
I mentioned in "From Enterprise Strategy to Chain Execution: Chain Indicator System and Bonus Cent Design Ideas" that at the strategic level, from the perspective of enterprises, in fact, it is notThere is no chain strategy or inventory strategy, and chain management and inventory control are only one part of the implementation of corporate strategy.
However, if you stand alone from the perspective of **chain or inventory management, it seems understandable to call "implementing corporate strategy" as "**chain strategy (or inventory strategy)". Therefore, in the following article, it is still directly referred to as the ** chain strategy (or inventory strategy), and will not be explained and explained.
Fisher model.
Strategy is a boss project, extremely important, sometimes simple, sometimes extremely complex.
There is a classic theory in chain strategy, the product-chain matching theory, or the Fisher model, which was developed by the American scholar Marshall Lfisher) in 1997. Fisher believes that the design of the first chain should be product-centric, and each type of product needs to have a corresponding first chain service system to match. According to Fisher, the first thing to understand is what users want from enterprise products. Product life cycle, demand, product diversity, lead time and service market standards are all important issues that affect the design of the first chain.
Therefore, he divides his products into functional and innovative products. He believes that there are not many varieties and specifications of functional products, and they usually have stable and sustainable needs and a long life cycle, matching the cost-efficient chain; On the contrary, innovative products have a variety of varieties, volatile market demand, weak adaptability, short life cycle, and match a fast-response chain to respond quickly to market demand.
Two matrices.
Based on the Fisher model, there are currently two more common application matrices in the industry, as well as the matching first-chain strategy.
The first is to divide the chain into efficiency, responsive, risk-averse and agile (as shown in the figure above) based on the uncertainty of demand and the uncertainty of the chain.
Efficiency-oriented chain, demand and quality are relatively stable, and the most reasonable inventory is pursued with the best efficiency. For example, the pursuit of economies of scale and the realization of optimal capacity utilization.
Responsive chain, with high uncertainty but relatively stable demand, adopts order-to-order production and optimization of orders, especially customized order processes, to meet the specific requirements of customers.
Risk-averse chain, low demand uncertainty and high uncertainty, sharing demand and inventory information, integrating chain resources, and sharing risks.
The agile chain has high demand and uncertainty, and combines the advantages of "risk aversion" and "responsive" chain, which not only quickly responds to changing and difficult customer needs at the front end, but also minimizes the risk at the back end.
Second, from the two dimensions of the number of product demand and the number of product types, the ** chain is divided into channel ** chain, lean ** chain, flexible ** chain and agile ** chain (as shown in the figure below).
The channel chain, product varieties and demand quantities are large, and the standing safety stock is maintained to ensure stability.
Lean ** chain, less product varieties and more demand, continue to reduce excess inventory, and speed up inventory turnover.
Flexible ** chain, product variety and demand quantity are small, short life cycle, avoid excess inventory, improve response speed and sacrifice a certain efficiency.
Agile ** chain, many product varieties and small demand quantity, modular, assembly according to order.
How to go from strategy to execution?
The above two matrices seem to perfectly solve the problem of ** chain and inventory strategy. But (there must be), how does this strategy undertake the corporate strategy? How do you go from strategy to execution? When I looked closely, I found it complicated, and I really didn't know where to start.
First of all, Fisher's hypothesis (functional products have strong performance and few varieties; Innovative products can be weak and varied), which seems to be a bit reluctant in the VUCA era, and the strategy based on this assumption is naturally difficult to land.
Secondly, the boundary between functional products and innovative products is not obvious, and in the actual operation scenario, the uncertainty of demand and the uncertainty of the first state may also coexist at the same time.
Thirdly, it is difficult to determine the first-chain strategy from the two dimensions of product variety and product demand quantity, which is difficult to operate in actual combat. For example, no matter how many varieties there are, they may be popular and long-tailed coexist, so there are many varieties of products? Or is there a small number of demands?
Finally, I think that the Fisher model, and the two matrices derived from it, are more of a theory, or a kind of knowledge, which can inspire us to formulate strategies in terms of thinking, but should not be used as a method or tool for formulating strategies.
Six positioning.
Fredmond Malik said that the important function of strategy is to make up for the lack of information, so that a company can make the right decisions despite limited information.
Lack of information creates uncertainty. In order to deal with uncertainty and make up for the lack of information, we develop strategies to deal with uncertainty with relative certainty, and to make up for the lack of information with rules that are roughly in the right direction, so that we can still make the right decisions despite limited information. This is the original intention of the strategy, and it is also the main function of the strategy.
Inventory management, which supports corporate strategy, also requires relative certainty and roughly correct rules to deal with uncertainty and make up for the lack of information. That is to say, for inventory management, it is also necessary to formulate an inventory strategy based on the overall strategy of the enterprise, and formulate a series of relatively certain rules and objectives, which is the starting point of inventory management.
So, how do you come up with a relatively certain set of rules and goals? In order to adapt to the status quo of most private enterprises, and in order to make it easier to land, I have simplified the inventory strategy into six positioning of inventory, and each positioning asks two questions:
1. What to do and what not to do?
2. If so, how? If you don't, how to respond (risk or loss).
The six positioning are: market positioning, determining a customized inventory strategy; Business positioning, determine the new product inventory strategy; value proposition, determine the long-tail inventory strategy; Customer positioning, determining different levels of customer service; After-sales positioning, determine the return inventory strategy; Hoarding positioning, determining speculative inventory strategies.
To sum it up.
At the strategic level, there is no such thing as a chain strategy or an inventory strategy, and the inventory strategy is essentially an execution.
The Fisher model and two common application matrices can be used as a reference idea for inventory management (inventory strategy), and should not be used to formulate inventory strategy.
Inventory strategy, which can be subdivided into six strategies (answer what to do and what not to do): custom inventory strategy, new product inventory strategy, long-tail inventory strategy, customer service strategy, return inventory strategy, speculative inventory strategy.
In the next few articles, I will elaborate on these six inventory strategies, six positioning.