Question

Define supply chain rationalization. Describe how a proactive rationalization program can improve the supply chain design process and lead to a more competitive supply chain.

Answer 1

supply chain rationalization can be defined as the activity in which the right number of suppliers are selected and only the most suited suppliers are included in the total number of suppliers to be included in the supply chain. Thus supply chain rationalization has a very important strategic consideration in which the company has to monitor and evaluate the supply chain from a tier level viewpoint. A number of tires can be used to differentiate the suppliers and the first tire will facilitate the main element to the company. This activity will allow the organization to operate with a limited number of suppliers for having the delivery of complex products

With the help of a proactive approach toward the Supply chain rationalization process, it will be possible for the firms to have improved supply chain visibility that will provide valuable inputs to the manager about the different consequences resulting from changing the structure of the supply chain. A number of positive changes can be imparted by this process that can involve having the right number of suppliers, the precise location of facilities, improve strategies for the transportation, inventory management, and product mix. All this will result in a better and competitive supply chain as it will help in differentiating between the strategic and wasteful activities in SC configurations