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Question 475 - CSCP discussion

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Which of the following statements characterizes a supply chain of innovative products as opposed to functional products?

A.
Lead times are longer.
Answers
A.
Lead times are longer.
B.
Product life cycle is longer.
Answers
B.
Product life cycle is longer.
C.
Profit margins are lower.
Answers
C.
Profit margins are lower.
D.
Demand uncertainty is higher.
Answers
D.
Demand uncertainty is higher.
Suggested answer: D

Explanation:

Supply chains for innovative products differ significantly from those for functional products, with higher demand uncertainty being a key characteristic:

Demand Uncertainty: Innovative products often cater to new or rapidly changing markets, making it difficult to predict customer demand accurately.

Short Product Life Cycles: These products typically have shorter life cycles due to rapid innovation and technological advancements.

Higher Profit Margins: Although not directly related to the supply chain, innovative products often command higher profit margins due to their uniqueness and perceived value.

Complex Supply Chains: Managing the supply chain for innovative products requires flexibility and responsiveness to adapt to the volatile market conditions. This contrasts with functional products, which usually have stable demand patterns, longer life cycles, and more predictable supply chain requirements.

Reference:

'Managing Supply Chains for Innovative Products' - MIT Sloan Management Review

'Supply Chain Strategies for High Demand Uncertainty' - Journal of Operations Management

asked 16/09/2024
mohamed mamdouh
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