2. Supply network strategy The concept of supply networks Vertical integration Partnerships Market trading Supply network relationships Supply network behavior The network perspective Network management Network dynamics Co-ordination Differentiation Reconfiguration Quantitative Qualitative Supply network issues

3. Competitors Focal Company C omplementors Suppliers Customers The value net

4. Materials manufacturer Packaging manufacturer Food manufacturer Warehouse Retail store Inventories Operations processes Multi echelon inventory chain

5. 1 2 3 4 5 6 7 8 9 9 8 7 6 5 4 3 2 1 LOW IMPORTANCE HIGH BAD PERFORMANCE GOOD 1 2 3 4 5 6 7 8 9 9 8 7 6 5 4 3 2 1 LOW IMPORTANCE HIGH BAD PERFORMANCE GOOD 1 2 3 4 5 6 7 8 9 9 8 7 6 5 4 3 2 1 LOW IMPORTANCE HIGH BAD PERFORMANCE GOOD Trading the priority of objectives

6. Supply chain dynamics “ Hard” supply dynamics Look for the causes of overreaction to volume changes

7. 6 5 4 3 2 1 Third-tier supplier Second-tier supplier First-tier supplier Original equipment manufacturer DEMAND PERIOD 100 100 100 100 100 100 100 100 100 100 100 100 100 95 95 95 95 95 3 2 1 OEM MARKET Note - A ll operations keep one period’s inventory 20 6 0 8 0 9 0 100 6 0 100 8 0 100 9 0 100 95 1 8 0 1 2 0 100 95 60 1 2 0 80 100 9 0 95 95 95 6 0 9 0 95 1 2 0 9 0 100 95 100 95 9 0 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 95 Orders Orders Orders Orders Items Items Items Items Fluctuations of production levels along supply chain in response to small change in end-customer demand Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock

8. 6 5 4 3 2 1 Third-tier supplier Second-tier supplier First-tier supplier Original equipment manufacturer DEMAND PERIOD 100 100 100 100 100 100 100 100 100 100 100 100 100 95 3 2 1 OEM MARKET 100 Orders Orders Orders Orders Items Items Items Items All operations hold one periods stock 9 5 95 9 5 95 Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock

9. 6 5 4 3 2 1 Third-tier supplier Second-tier supplier First-tier supplier Original equipment manufacturer DEMAND PERIOD 100 100 100 100 100 100 100 100 100 100 100 100 100 95 3 2 1 OEM MARKET 100 Orders Orders Orders Orders Items Items Items Items All operations hold one periods stock 10 5 95 10 5 95 Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock

10. Supply chain dynamics “ Soft” supply dynamics Look for the perception gaps

11. Operation A Operation C Supplier selection strategy Supplier development strategy Operation B Operations performance What B thinks C wants Market requirements What C thinks it wants Gap? How B thinks it is perform ing How C thinks B is perform ing Gap? Gap? Gap? Gap? Gap? Gap? What A thinks B wants What B thinks it wants Gap? How A thinks it is perform ing How B thinks A is perform ing Linked ? Linked ?

12. Orders 0 10 Time Manufacturer’s orders to its suppliers Orders 0 10 Time Sales from store Manufacturer Wholesaler Retail Store Orders 0 10 Time Wholesaler’s orders to manufacturer Orders 0 10 Time Store’s orders to wholesaler Consumers Typical supply chain dynamics

13. Supply chain dynamics Supply chains with different end objectives need to be managed in different ways

14. Products Information Supplier Manufacturer Depot Outlets Depot Supplier Manufacturer Depot Outlets Depot Efficient fast throughput supply Customer responsive supply Products Information Two types of supply chain organisation

15. Predictable Few changes Low variety Price stable Long lead time Low margin Unpredictable Many changes High variety Price mark downs Short lead time High margin FUNCTIONAL INNOVATIVE Mismatch Match Match Mismatch MARKET REQUIREMENTS OPERATIONS RESOURCES Low cost High utilization Min. inventory Low cost suppliers Fast response Low T/P time Deployed inventory Flexible suppliers EFFICIENT PROCESSES RESPONSIVE PROCESSES Matching the operations resources in the supply chain with market requirements (after Fisher)

16. Customer 8 Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Plant 1 Plant 2 Plant 3 Ordering complex Routing complex Customer contact complex Plants have 8 contact Network has 24 routes Customers have 3 contacts (a)

17. Warehouse 1 Ordering simple Routing simple Warehouse complex Customer contact simple Warehouse 2 Plants have 2 contact Network still has 24 routes but simplified Customers have 1 contact (b) Customer 8 Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Plant 1 Plant 2 Plant 3

18. Customer 8 Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Customer 6 Customer 7 Plant 1 Plant 2 Plant 3 Ordering simple Routing simple Customer contact complex Plants have 3 or 2 contacts but make all products Network has 8 routes Customers have 1 contacts (c) Manufacturing complex

19. A B C Y X Z Merging operations reduces response time Merging operations reduces complexity Generic supply network structure

20. Producer Recording studio Engineer Songwriter Singer Instrumental - ists Disc/tape manufacturer Physical distribution Retailer Consumer Consumer Artist(s) Via the I nternet Technology can change the music business supply network

21. How A thinks it is performing How B perceives A’s performance Schweabstens Cloth manufacturers A Lopez Industries Garment manufacturers B Zentrill Fashion retailers C What A thinks B wants What B wants What B thinks C wants What C wants How B thinks it is performing How C perceives B’s performance Market requirements Quality and innovation Innovation High quality Flexible delivery Use only very high quality fashion cloth suppliers Good quality Flexibility during season Wide capabilities Good quality Fast availability Flexibility during season Wide capabilities Operations performance Doesn’t know (or care?) Great quality Innovation Very inflexible Too small to influence supplier? Great quality, wide capabilities but inflexible within season Great quality, wide capabilities but slow and inflexible within season