The Relationships that Define a Resilient Supply Chain
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Speaker: Alex Mills, Associate Professor, Zicklin School of Business
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The Relationships that Define a Resilient Supply Chain
- 1. Relationships that Define a Supply Chain Alex F. Mills Associate Professor of Management Academic Director, Executive MBA in Healthcare Administration New York NY
- 2. What is a supply chain? Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer All the parties involved in fulfilling a customer’s request.
- 3. Three levels of supply chain analysis Strategy (months to years) • Where to locate? • What product mix to offer? Planning (weeks to months) • Which transportation modes? • What product mix to produce? • Whether to subcontract? Operations (days to weeks) • When to place order? • How much to order? • Work overtime? • How much to charge? Managers evaluate tradeoffs Efficient Responsive
- 5. May 25, 2020 “Swedish truck maker Scania struggled to obtain some components, despite its efforts to maintain backup sources.”
- 6. What are the forces that increase supply chain complexity? Economies of scale.
- 7. Ex: four hospitals order from three suppliers B C A B C A
- 8. Without distributor: short, highly connected Lead time is minimized (responsive) Risk is distributed across the supply chain (resilient) ×Must ship small quantities (expensive) ×Must negotiate separately with each supplier (time consuming) B C A
- 9. With distributor: long, sparsely connected B C A Aggregate transportation (convenient and efficient) Distributor has volume purchasing power (efficient) ×More inventory is needed (expensive) ×High-centrality distribution center creates common point of failure (risky)
- 10. Of course, real supply chains are much more complicated…
- 12. Bill of Materials Specifies all the sub-assemblies and components needed to manufacture a product. P SA SA SA C C C C C C C CC
- 13. PB560 Bill of Materials 617 components and sub-assemblies; 4 levels
- 14. Medtronic PB560 Ventilator Medtronic was squeezed between spiking demand for the product and shortages of key components.
- 15. Of course, real supply chains are much more complicated… But risks can be managed.
- 16. Retailer: increase visibility Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer
- 17. Retailer: increase visibility Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer is known for sophisticated use of information systems to track inventory.
- 18. Wholesaler: ensure supplier diversity Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer
- 19. Wholesaler: ensure supplier diversity Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer is known for supplier diversity and product substitution.
- 20. Manufacturer: shorten links to suppliers Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer
- 21. Manufacturer: shorten links to suppliers Tier 2 Supplier Tier 1 Supplier Manufacturer Wholesaler Retailer is known for co-locating key suppliers near assembly plants
- 22. Key questions to manage supply chain risks • Where is all the inventory located? • How diverse is the supplier network? • How long are the paths in the supply chain?