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  • 1. Supply Chain Strategy or Design  Decisions about the structure of the supply chain and what processes each stage will perform  Strategic supply chain decisions Locations and capacities of facilities  Products to be made or stored at various locations  Modes of transportation  Information systems   Supply chain design must support strategic objectives  Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty Xavier institute of Social Service, Ranchi March 28, 2009 1
  • 2. Supply Chain Planning  Definition of a set of policies that govern short-term operations  Fixed by the supply configuration from previous phase  Starts with a forecast of demand in the coming year Xavier institute of Social Service, Ranchi March 28, 2009 2
  • 3. Supply Chain Planning  Planning decisions:  Which markets will be supplied from which locations  Planned buildup of inventories  Subcontracting, backup locations  Inventory policies  Timing and size of market promotions  Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon Xavier institute of Social Service, Ranchi March 28, 2009 3
  • 4. Supply Chain Operation  Time horizon is weekly or daily  Decisions regarding individual User orders  Supply chain configuration is fixed and operating policies are determined  Goal is to implement the operating policies as effectively as possible  Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders  Much less uncertainty (short time horizon) Xavier institute of Social Service, Ranchi March 28, 2009 4
  • 5. Process View of a Supply Chain  Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages  Push/pull view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a User order (pull) or in anticipation of a User order (push) Xavier institute of Social Service, Ranchi March 28, 2009 5
  • 6. Cycle View of Supply Chains User User Order Cycle Retailer Replenishment Cycle Distributor Manufacturing Cycle Manufacturer Procurement Cycle Supplier Xavier institute of Social Service, Ranchi March 28, 2009 6
  • 7. Cycle View of a Supply Chain  Each cycle occurs at the interface between two successive stages User order cycle (User-retailer)  Replenishment cycle (retailer-distributor)  Manufacturing cycle (distributor-manufacturer)  Procurement cycle (manufacturer-supplier)  Figure (see previous power point)  Cycle view clearly defines processes involved and  the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process. Xavier institute of Social Service, Ranchi March 28, 2009 7
  • 8. User Order Cycle  Involves all processes directly involved in receiving and filling the User’s order User arrival  User order entry  User order fulfillment  User order receiving  Xavier institute of Social Service, Ranchi March 28, 2009 8
  • 9. Replenishment Cycle  All processes involved in replenishing retailer inventories (retailer is now the User) Retail order trigger  Retail order entry  Retail order fulfillment  Retail order receiving  Xavier institute of Social Service, Ranchi March 28, 2009 9
  • 10. Manufacturing Cycle  All processes involved in replenishing distributor (or retailer) inventory Order arrival from the distributor, retailer, or User  Production scheduling  Manufacturing and shipping  Receiving at the distributor, retailer, or User  Xavier institute of Social Service, Ranchi March 28, 2009 10
  • 11. Procurement Cycle  All processes necessary to ensure that materials are available for manufacturing to occur according to schedule  Manufacturer orders components from suppliers to replenish component inventories  However, component orders can be determined precisely from production schedules (different from retailer/distributor orders that are based on uncertain User demand)  Important that suppliers be linked to the manufacturer’s production schedule Xavier institute of Social Service, Ranchi March 28, 2009 11
  • 12. Push/Pull View of Supply Chains User Order Procurement, Manufacturing and Cycle Replenishment cycles PUSH PROCESSES PULL PROCESSES User Order Arrives Xavier institute of Social Service, Ranchi March 28, 2009 12
  • 13. Push/Pull View of Supply Chain Processes  Supply chain processes fall into one of two categories depending on the timing of their execution relative to User demand  Pull: execution is initiated in response to a User order (reactive)  Push: execution is initiated in anticipation of User orders (speculative)  Push/pull boundary separates push processes from pull processes Xavier institute of Social Service, Ranchi March 28, 2009 13
  • 14. Push/Pull View of Supply Chain Processes  Useful in considering strategic decisions relating to supply chain design – more global view of how supply chain processes relate to User orders  Can combine the push/pull and cycle views  The relative proportion of push and pull processes can have an impact on supply chain performance Xavier institute of Social Service, Ranchi March 28, 2009 14
  • 15. A Framework for Structuring Drivers C om petitive S tra tegy S u p p ly C h ain S tra teg y E fficien cy R esp o n siven ess S u p p ly ch ain stru ctu re L o gistical D rivers F a cilities In ven to ry T ra n sp o rta tio n In fo rm a tio n S o u rcin g P ricing C ro ss F u n ction al D rivers Xavier institute of Social Service, Ranchi March 28, 2009 15