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Shanghai Computers uses a sales forecast to purchase components for desktop and laptop computers. The firm also uses the sales forecast to schedule the production of partially assembled computers that are missing random-access memory (RAM), hard drives, and other components. Shanghai Computers waits until it receives a customer order, then finishes assembling the computers to the configuration ordered by the customer. What supply chain strategy is Shanghai Computers using?
Answer:
No organization can supply without a systematic supply chain. Supply chain gives value to the end users by utilizing the available resources. Therefore, supply chain can be considered to be a set of three or more organization which are directly or indirectly linked to one another either though upstream of products or down stream of products, services and finance that arise from the top source and reaches the end user.
S computers purchase components of laptops and computers based on their sales forecast. It also uses forecast technique to schedule the production of partially assembled computers that are missing RAM, hard drives etc. S computers waits until it receives an order from its customers, and then finishes its assembly.
A supply chain management needs an effective strategy that would help the firm to setup a right network of suppliers and customers to meet the objectives of any organization. Based on the objectives of the organization, there are three types of strategies which have been stated below:
1. Push Strategy: Under this system the organization manufactures goods based on the sales forecast, stores the final goods produced and supplies to the customer, whenever it receives the order. This can be considered as an effective way to provide good customer service to its customers by providing them their demanded goods on time.
2. Pull Strategy: This strategy is best for those customers who prefer customized goods. Under this strategy, goods are manufactured only when the products are ordered by the customers. This method saves cost of storage and prevents the products from being obsolete.
3. Push-Pull Strategy: This is a hybrid strategy under which the initial stages of supply chain works on the basis of push system and the products are completed on the basis of push system. Therefore, under this system, company forecast its sales, stock up its required inventory and hold them until the order is received from its customers.
In the given case, S computers only stocks up the needed components to assemble its laptop and computers. It assembles them only when the customer demands for the final product. Therefore, we can conclude that they are following the hybrid strategy i.e. Push-Pull strategy.