Blue Nile is an online retailer of diamonds that has used responsive transportation with FedEx to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Given the high value of diamonds, Blue Nile offers free shipping for overnight delivery. Responsive shipping, however, allows Blue Nile to centralize its inventory of diamonds and eliminate the need for expensive storefronts. In spite of the high transportation costs, Blue Nile has very low costs compared with those of bricks-and-mortar retailers because of the low facility and inventory expenses. Blue Nile is thus able to offer significantly lower prices than its bricksand- mortar competition.

Amazon attempts to provide a wide variety of books (among other products) to its customers. Best-selling books are stocked in many regional warehouses close to customers for high responsiveness. Slower-moving books are stocked at fewer warehouses to lower the cost of inventory at the expense of some responsiveness. Some of the slowest-moving books are not held in inventory but are obtained from the publisher/distributor or printed on demand when requested by a customer. Amazon changes the form, location, and quantity of inventory it holds by the level of sales of a book to provide the right balance of responsiveness and efficiency.

DHL is a logistics and parcel delivery company that operates in more than 140,000 destinations with a presence in more than 200 countries, which involves working in diverse local environments with different languages, cultures, and local knowledge. For DHL, working locally means that its employees and customers have access to accurate tracking information on their packages in their local language. DHL moved from a decentralized information system involving 50 systems to a centralized integrated system to reduce risk and decrease costs while improving customer service. This resulted in a 40 percent reduction in infrastructure costs, coupled with more reliable communications throughout DHL's worldwide operation.

Zara has a sourcing strategy that varies by product type. For basic products such as white T-shirts, Zara aims for efficiency because demand is predictable. These products are sourced from suppliers in low cost countries. For trendy products for which demand is unpredictable, in contrast, Zara sources from company-owned factories in Europe. These factories are not low cost, but they are flexible and responsive to the rapidly evolving needs of the trendy market.

1. Point out the major drivers of supply chain performance for each of the case above. (8 marks)

2. Discuss the role of each driver in creating strategic fit between the supply chain strategy and the competitive strategy. (20 marks)

3. Explain how a company achieves strategic fit between its supply chain strategy and its competitive strategy. (12 marks)

4. Describe theFIVE (5)major challenges faced by organizations to manage a supply chain successfully. (10 marks)