Abstract
Philips is one of the largest electronics companies worldwide and is headquartered in Amsterdam. In 2014, Philips generated an annual sales volume of €21,391 million and a net income of €411 million. However, Philips faced several challenges regarding its supply chain performance in the CL sector. These included: (a) a complex distribution structure; (b) high complexity in its portfolio; (c) low forecast accuracy; and (d) unreliable suppliers. In the following chapter, we provide a concrete example of a successful supply-chain segmentation project that was implemented by Philips. We provide an overview of the company background discuss specific challenges and the initial situation. We elaborate on the segmentation criteria and explain the supply chain strategies for each segment. Finally, we discuss the implementation challenges and key factors for success and summarize the benefits for Phillips.
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Notes
- 1.
This chapter is based on internal sources from Philips.
- 2.
Inventory levels were measured in percent of material sales.
- 3.
The turnover rate indicates the number of times that the inventory is sold per period. Slowly turning inventory has two main negative impacts: inventory holding costs are higher and the company is less responsive to changing customer requirements.
- 4.
The supply chain cost, measured in percent of sales, included import duties, warehousing, transportation, and administrative cost.
- 5.
The service level was measured as “on time in full” (OTIF) delivery. This measure indicates how many orders are delivered on time and without any articles missing.
Bibliography
Philips. (2015a). Annual Report. Innovation for a healthier, more sustainable world. Philips, Koninklijke.
Philips. (2015b). Our heritage. Philips, Koninklijke.
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Roy, S., Alicke, K., Forsting, M. (2017). Philips Segmentation Case Study. In: Protopappa-Sieke, M., Thonemann, U. (eds) Supply Chain Segmentation. Springer, Cham. https://doi.org/10.1007/978-3-319-54133-4_4
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DOI: https://doi.org/10.1007/978-3-319-54133-4_4
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