This document provides an introduction to supply chain management. It discusses key concepts like the objective of a supply chain being to maximize overall value, and defines a supply chain as all stages involved in fulfilling a customer request. It also covers different views of supply chains, including the cycle view which looks at processes between successive stages, and the push/pull view which categorizes processes as either push (anticipatory) or pull (reactive to customer orders). Achieving strategic fit between the supply chain strategy and competitive strategy is also discussed.
The document provides an introduction to supply chain management, including definitions and key concepts. It defines a supply chain as a network of facilities and distribution options that fulfill customer requests. It also defines supply chain management as the management of business processes and activities involving procurement, manufacturing, and distribution to customers. The objectives of supply chain management are also outlined, such as maximizing value, improving quality and reducing costs. Decision phases in supply chain management are discussed, including supply chain strategy, planning and operations.
Supply chain management involves the flow of goods and information from raw materials to the customer. It includes procurement, production, and distribution. Key drivers are production, inventory, location, transportation, and information. The components are plan, develop, make, deliver, and return. Products, information, and funds flow between customers and suppliers. Supply chain management aims to coordinate activities among organizations to trade off costs, service, time, risk, and other metrics across the chain.
Logistics information systems is the combination of two disciplines: logistics and information systems. The manifestation can be two types as a course and a branch of logistics education.
This document provides a summary of key concepts in supply chain management. It discusses supply chains, supply chain management, value chain management, operations management, logistics management, lean supply chains, agile supply chains, and the objectives and decision phases of supply chains. It also covers integrated supply chain management, barriers to supply chain management implementation, attributes affecting implementation like technology and communication, and reasons for many versus few suppliers in a supply chain.
This document provides an overview of supply chain strategy and how it relates to business strategy. It discusses various views on defining supply chain strategy, including:
- Matching supply chain strategy to product characteristics, such as using efficient supply chains for functional products and responsive supply chains for innovative products.
- Considering demand and supply uncertainty, such as using agile supply chains for high supply and demand uncertainty.
- Examining market characteristics and using lean strategies for stable markets with predictable demand, and agile strategies for dynamic markets with unpredictable demand.
- The concept of "leagile", using elements of both lean and agile strategies such as applying lean upstream and agile downstream.
The document serves as an introduction to
1. Supply chain management involves efficiently integrating suppliers, manufacturers, warehouses, and retailers so that products are delivered to customers in the right quantities, locations, and times to minimize costs while meeting service requirements.
2. Key aspects of supply chain management include facilities, inventory, transportation, information sharing, sourcing decisions, and pricing strategies. These factors work together to balance efficiency and responsiveness across the supply chain.
3. An organization's competitive strategy helps determine which supply chain drivers it prioritizes, such as Walmart focusing on low inventory, centralized facilities, and information sharing to support its low-price model.
This document discusses transportation networks and planning. It covers several key topics:
1. The role of transportation in supply chains is to provide critical links between organizations, permitting goods to flow between facilities and promoting supply chain competitiveness.
2. Different transportation modes like trucks, rail, air and water each have their own costs, capacities and issues to consider. Designing transportation networks requires balancing these factors against inventory and responsiveness needs.
3. Transportation network design options include direct shipping, shipping through distribution centers, using milk runs, and tailored networks. Each have their own pros and cons regarding costs, complexity and inventory levels.
1. Supply chain management involves coordinating the flow of materials, information, and finances between suppliers, manufacturers, distributors, retailers, and customers. It aims to optimize the production and distribution of goods and services.
2. Key aspects of supply chain management include purchasing, logistics, and warehousing. Purchasing links an organization to its suppliers, logistics involves transporting materials, and warehousing manages inventory storage and order fulfillment.
3. Developing partnerships with suppliers is important in supply chain management. Strategic supplier relationships can help lower costs, improve quality, and increase flexibility throughout the supply chain.
The document provides an introduction to supply chain management, including definitions and key concepts. It defines a supply chain as a network of facilities and distribution options that fulfill customer requests. It also defines supply chain management as the management of business processes and activities involving procurement, manufacturing, and distribution to customers. The objectives of supply chain management are also outlined, such as maximizing value, improving quality and reducing costs. Decision phases in supply chain management are discussed, including supply chain strategy, planning and operations.
Supply chain management involves the flow of goods and information from raw materials to the customer. It includes procurement, production, and distribution. Key drivers are production, inventory, location, transportation, and information. The components are plan, develop, make, deliver, and return. Products, information, and funds flow between customers and suppliers. Supply chain management aims to coordinate activities among organizations to trade off costs, service, time, risk, and other metrics across the chain.
Logistics information systems is the combination of two disciplines: logistics and information systems. The manifestation can be two types as a course and a branch of logistics education.
This document provides a summary of key concepts in supply chain management. It discusses supply chains, supply chain management, value chain management, operations management, logistics management, lean supply chains, agile supply chains, and the objectives and decision phases of supply chains. It also covers integrated supply chain management, barriers to supply chain management implementation, attributes affecting implementation like technology and communication, and reasons for many versus few suppliers in a supply chain.
This document provides an overview of supply chain strategy and how it relates to business strategy. It discusses various views on defining supply chain strategy, including:
- Matching supply chain strategy to product characteristics, such as using efficient supply chains for functional products and responsive supply chains for innovative products.
- Considering demand and supply uncertainty, such as using agile supply chains for high supply and demand uncertainty.
- Examining market characteristics and using lean strategies for stable markets with predictable demand, and agile strategies for dynamic markets with unpredictable demand.
- The concept of "leagile", using elements of both lean and agile strategies such as applying lean upstream and agile downstream.
The document serves as an introduction to
1. Supply chain management involves efficiently integrating suppliers, manufacturers, warehouses, and retailers so that products are delivered to customers in the right quantities, locations, and times to minimize costs while meeting service requirements.
2. Key aspects of supply chain management include facilities, inventory, transportation, information sharing, sourcing decisions, and pricing strategies. These factors work together to balance efficiency and responsiveness across the supply chain.
3. An organization's competitive strategy helps determine which supply chain drivers it prioritizes, such as Walmart focusing on low inventory, centralized facilities, and information sharing to support its low-price model.
This document discusses transportation networks and planning. It covers several key topics:
1. The role of transportation in supply chains is to provide critical links between organizations, permitting goods to flow between facilities and promoting supply chain competitiveness.
2. Different transportation modes like trucks, rail, air and water each have their own costs, capacities and issues to consider. Designing transportation networks requires balancing these factors against inventory and responsiveness needs.
3. Transportation network design options include direct shipping, shipping through distribution centers, using milk runs, and tailored networks. Each have their own pros and cons regarding costs, complexity and inventory levels.
1. Supply chain management involves coordinating the flow of materials, information, and finances between suppliers, manufacturers, distributors, retailers, and customers. It aims to optimize the production and distribution of goods and services.
2. Key aspects of supply chain management include purchasing, logistics, and warehousing. Purchasing links an organization to its suppliers, logistics involves transporting materials, and warehousing manages inventory storage and order fulfillment.
3. Developing partnerships with suppliers is important in supply chain management. Strategic supplier relationships can help lower costs, improve quality, and increase flexibility throughout the supply chain.
Introduction to Supply Chain Management Qamar Farooq
This document summarizes key concepts from Chapter 1 of a supply chain management textbook. It discusses what a supply chain is, including the flow of products and services from raw materials to end consumers. It also covers types of products, the global nature and complexity of supply chains, uncertainty and risks, and the evolution and objectives of supply chain management. Specific examples are provided to illustrate concepts around complexity, costs, and issues in managing supply chains.
Supply chain management and logistics managementNancyLakhani
Supply chain management involves coordinating all supply chain activities including product development, production, logistics, and information sharing to maximize customer value. Effective supply chain management can increase revenue and decrease costs by creating efficiencies. Key activities include physical distribution, transportation, inventory management, and ensuring the right products reach customers through the appropriate channels at the right time and in the right condition. Coordinating the supply chain is important for meeting customer demands profitably.
A supply chain is the network of organizations involved in producing and delivering a product, from raw materials to the end customer. It includes upstream suppliers, internal production and packaging, and downstream distribution centers and retailers. Effective supply chain management coordinates activities across this network to optimize material, information and financial flows. Key goals are reducing costs and uncertainties while improving customer service. Modern supply chains leverage information technology to facilitate coordination and information sharing among partners.
The document discusses supply chain management in the retail industry. It provides an overview of supply chain management concepts, including the key steps of sourcing, manufacturing, warehousing, distribution, and delivery to customers. It also outlines the need for supply chain management due to increasing complexity, costs, and competition in retailing. Finally, it briefly discusses the evolution of supply chain management approaches over time and some of the issues involved in developing an efficient supply chain framework.
Integrated logistics management involves coordinating the flow of goods from suppliers to customers. It requires cross-functional collaboration within a company and partnerships with external partners. The goal is to rapidly and efficiently fulfill customer needs with minimum inventory, transportation, and production variances. Effective integrated logistics considers customer demands, acquires necessary resources, and optimizes distribution networks.
This document provides information on the organization of a lecture and grading policy for a supply chain management course. It lists the main components of the lecture as lecturing, group exercises, quizzes, case discussions, and case study presentations. The grading policy outlines the different assessments, including assignments, tests, a mini-project, and an end exam. It also specifies the mini-project will involve a presentation on a relevant supply chain topic. The document provides the textbook and reference materials for the course.
A presentation on the Supply Chain Management as per Production and Marketing are concerns, the highly relayed branch of any business house is to concentrate on this particular topic.
The document discusses various options for designing supply chain networks and their characteristics. It describes manufacturer storage with direct shipping, in-transit merging, distributor storage with package carrier delivery, distributor storage with last-mile delivery, manufacturer/distributor storage with customer pickup, retail storage with customer pickup, and local storage at consumer pickup sites. For each option, it summarizes the performance characteristics in terms of cost factors like inventory, transportation, and facilities as well as service factors like response time, product variety, and customer experience.
The document discusses logistics and supply chain management. It defines logistics as planning, implementing, and controlling the efficient flow of goods, services, and information from origin to consumption according to customer needs. Logistics involves functions like procurement, inventory control, warehousing, transportation, and customer service. It also discusses types of logistics like inbound, outbound, third-party, and reverse logistics. The document then summarizes a case study of Ford Motor Company partnering with Penske to centralize its logistics network, resulting in cost savings and efficiency improvements.
(i) Cycle View (ii) Push & Pull View of the Supply Chain, Supply Chain Responsiveness. Strategic Fit between Business Strategy and Supply Chain Strategy, Achievement of Strategic Fit through different steps, Obstacles to achieving Strategic Fit.
The document discusses supply chain management. It defines a supply chain as a global network used to deliver products from raw materials to end users through information flow, physical distribution, and cash flow. Supply chain management involves planning, implementing, and controlling supply chain operations to efficiently satisfy customer requirements. The goals of supply chain management are to drive customer value, utilize assets better, and grow revenue. Benefits include reducing uncertainty, maintaining proper inventory levels, minimizing delays, and providing good customer service. Problems along the supply chain can include delays, lack of coordination, uncertainties, poor demand forecasting, and interference in production. Solutions involve scanning the business environment, enhancing strategic objectives, and improving organizational skills.
The document discusses supply chain best practices and provides an overview of key topics including metrics, inventory velocity, cycle time compression, lean logistics, technology, supplier performance, and segmenting supply chains. It emphasizes that companies should develop multiple, tailored supply chain approaches rather than a one-size-fits-all model in order to improve flexibility, responsiveness, and demand planning. Metrics like inventory turns and reducing cycle times are important for optimizing supply chain performance.
The document provides an overview of supply chain management. It discusses Li & Fung's customized supply chain for a customer order. Key points include that effective supply chain management requires coordinating activities across organizations, considering strategic partnerships, and addressing inventory issues like the bullwhip effect. Strategic partnering approaches like vendor managed inventory can help improve forecasting and inventory levels when firms share information.
This document provides an overview of logistics management. It defines logistics as managing the flow of materials and finished goods from suppliers to customers. This includes transportation, warehousing, inventory management, and information systems. The objectives of an effective logistics system are to ensure the right goods are delivered to customers in the correct quantities, locations, times and at the lowest overall cost while meeting quality standards. Key aspects of logistics discussed include distribution and warehousing management, physical distribution, and reducing supply chain costs.
The document discusses supply chain management (SCM). It defines SCM as the active management of supply chain activities to maximize customer value and achieve a competitive advantage. It describes key aspects of SCM including integrating suppliers, distributors and customers; using information systems to automate information flow; and setting objectives at strategic, tactical and operational levels to manage resources, scheduling and production planning. The document also outlines challenges in SCM like demand uncertainties and the bullwhip effect, and how information systems and software can help address these challenges by facilitating information flow, tracking orders and inventory, and enabling collaborative planning across the supply chain.
LOGISTICS AND SUPPLY CHAIN INFORMATION SYSTEMAshish Hande
This chapter discusses the importance of information systems to logistics and supply chain management. It covers key issues like quality of information, architecture and objectives of information systems, and how technologies are impacting logistics processes. Contemporary issues include customers, productivity and performance as top priorities. Effective information management can help ensure customer needs are met and firms competitively price products. Logistics information systems encompass planning, execution, research/intelligence, knowledge management and reporting to make relevant information available to logistics managers.
Supply chain management involves coordinating all activities involved in sourcing and delivering products, from raw materials to customers. The goal is to match supply and demand profitably by achieving the right product, price, place, promotion, quantity and time for both suppliers and customers. Effective supply chain management can lower costs, increase productivity and profits through improved forecasting, purchasing, inventory management, and information sharing across the entire chain. Current trends include expanding globally, reducing environmental impact, and decreasing supply chain costs through outsourcing, technology, and continuous improvement.
Logistics and Supply Chain Management-OverviewThomas Tanel
Logistics and supply chain management involves planning and controlling the flow of materials and finished goods from suppliers to customers. It includes functions like procurement, manufacturing, warehousing, and transportation. Effective logistics is important for reducing costs, improving customer satisfaction, and optimizing inventory levels. New technologies allow greater visibility into global supply chains and more integrated planning across organizations. Measuring key performance indicators is essential for evaluating supply chain performance and identifying areas for improvement.
Logistics management refers to creating and operating an integrated system that makes products and services available to customers as needed, when needed, in the required quantities and qualities, at the lowest possible cost. The document then traces the evolution of logistics management from the early 20th century to the present, highlighting changes in business focus and functional structures at different periods as logistics became more integrated internally and with external partners.
Business depend on their supply chains to provide necessary products and services. A supply chain consists of all organizations involved in fulfilling customer needs, including manufacturers, suppliers, transporters, warehouses, retailers, and customers. Supply chain management involves coordinating these participants to deliver products to market efficiently and effectively. The goals of supply chain management are to improve customer service, increase internal efficiencies, and boost returns for all members of the supply chain. Key areas of focus include information sharing, production planning, inventory management, facility location selection, and transportation coordination.
The document discusses achieving strategic fit between a company's competitive strategy and supply chain strategy. It describes three key steps: 1) Understanding customer demand uncertainty, 2) Understanding supply chain responsiveness and costs, 3) Ensuring the supply chain capabilities match the customer needs. Expanding strategic scope across functions and partners improves coordination and profitability for all members of the supply chain.
Introduction to Supply Chain Management Qamar Farooq
This document summarizes key concepts from Chapter 1 of a supply chain management textbook. It discusses what a supply chain is, including the flow of products and services from raw materials to end consumers. It also covers types of products, the global nature and complexity of supply chains, uncertainty and risks, and the evolution and objectives of supply chain management. Specific examples are provided to illustrate concepts around complexity, costs, and issues in managing supply chains.
Supply chain management and logistics managementNancyLakhani
Supply chain management involves coordinating all supply chain activities including product development, production, logistics, and information sharing to maximize customer value. Effective supply chain management can increase revenue and decrease costs by creating efficiencies. Key activities include physical distribution, transportation, inventory management, and ensuring the right products reach customers through the appropriate channels at the right time and in the right condition. Coordinating the supply chain is important for meeting customer demands profitably.
A supply chain is the network of organizations involved in producing and delivering a product, from raw materials to the end customer. It includes upstream suppliers, internal production and packaging, and downstream distribution centers and retailers. Effective supply chain management coordinates activities across this network to optimize material, information and financial flows. Key goals are reducing costs and uncertainties while improving customer service. Modern supply chains leverage information technology to facilitate coordination and information sharing among partners.
The document discusses supply chain management in the retail industry. It provides an overview of supply chain management concepts, including the key steps of sourcing, manufacturing, warehousing, distribution, and delivery to customers. It also outlines the need for supply chain management due to increasing complexity, costs, and competition in retailing. Finally, it briefly discusses the evolution of supply chain management approaches over time and some of the issues involved in developing an efficient supply chain framework.
Integrated logistics management involves coordinating the flow of goods from suppliers to customers. It requires cross-functional collaboration within a company and partnerships with external partners. The goal is to rapidly and efficiently fulfill customer needs with minimum inventory, transportation, and production variances. Effective integrated logistics considers customer demands, acquires necessary resources, and optimizes distribution networks.
This document provides information on the organization of a lecture and grading policy for a supply chain management course. It lists the main components of the lecture as lecturing, group exercises, quizzes, case discussions, and case study presentations. The grading policy outlines the different assessments, including assignments, tests, a mini-project, and an end exam. It also specifies the mini-project will involve a presentation on a relevant supply chain topic. The document provides the textbook and reference materials for the course.
A presentation on the Supply Chain Management as per Production and Marketing are concerns, the highly relayed branch of any business house is to concentrate on this particular topic.
The document discusses various options for designing supply chain networks and their characteristics. It describes manufacturer storage with direct shipping, in-transit merging, distributor storage with package carrier delivery, distributor storage with last-mile delivery, manufacturer/distributor storage with customer pickup, retail storage with customer pickup, and local storage at consumer pickup sites. For each option, it summarizes the performance characteristics in terms of cost factors like inventory, transportation, and facilities as well as service factors like response time, product variety, and customer experience.
The document discusses logistics and supply chain management. It defines logistics as planning, implementing, and controlling the efficient flow of goods, services, and information from origin to consumption according to customer needs. Logistics involves functions like procurement, inventory control, warehousing, transportation, and customer service. It also discusses types of logistics like inbound, outbound, third-party, and reverse logistics. The document then summarizes a case study of Ford Motor Company partnering with Penske to centralize its logistics network, resulting in cost savings and efficiency improvements.
(i) Cycle View (ii) Push & Pull View of the Supply Chain, Supply Chain Responsiveness. Strategic Fit between Business Strategy and Supply Chain Strategy, Achievement of Strategic Fit through different steps, Obstacles to achieving Strategic Fit.
The document discusses supply chain management. It defines a supply chain as a global network used to deliver products from raw materials to end users through information flow, physical distribution, and cash flow. Supply chain management involves planning, implementing, and controlling supply chain operations to efficiently satisfy customer requirements. The goals of supply chain management are to drive customer value, utilize assets better, and grow revenue. Benefits include reducing uncertainty, maintaining proper inventory levels, minimizing delays, and providing good customer service. Problems along the supply chain can include delays, lack of coordination, uncertainties, poor demand forecasting, and interference in production. Solutions involve scanning the business environment, enhancing strategic objectives, and improving organizational skills.
The document discusses supply chain best practices and provides an overview of key topics including metrics, inventory velocity, cycle time compression, lean logistics, technology, supplier performance, and segmenting supply chains. It emphasizes that companies should develop multiple, tailored supply chain approaches rather than a one-size-fits-all model in order to improve flexibility, responsiveness, and demand planning. Metrics like inventory turns and reducing cycle times are important for optimizing supply chain performance.
The document provides an overview of supply chain management. It discusses Li & Fung's customized supply chain for a customer order. Key points include that effective supply chain management requires coordinating activities across organizations, considering strategic partnerships, and addressing inventory issues like the bullwhip effect. Strategic partnering approaches like vendor managed inventory can help improve forecasting and inventory levels when firms share information.
This document provides an overview of logistics management. It defines logistics as managing the flow of materials and finished goods from suppliers to customers. This includes transportation, warehousing, inventory management, and information systems. The objectives of an effective logistics system are to ensure the right goods are delivered to customers in the correct quantities, locations, times and at the lowest overall cost while meeting quality standards. Key aspects of logistics discussed include distribution and warehousing management, physical distribution, and reducing supply chain costs.
The document discusses supply chain management (SCM). It defines SCM as the active management of supply chain activities to maximize customer value and achieve a competitive advantage. It describes key aspects of SCM including integrating suppliers, distributors and customers; using information systems to automate information flow; and setting objectives at strategic, tactical and operational levels to manage resources, scheduling and production planning. The document also outlines challenges in SCM like demand uncertainties and the bullwhip effect, and how information systems and software can help address these challenges by facilitating information flow, tracking orders and inventory, and enabling collaborative planning across the supply chain.
LOGISTICS AND SUPPLY CHAIN INFORMATION SYSTEMAshish Hande
This chapter discusses the importance of information systems to logistics and supply chain management. It covers key issues like quality of information, architecture and objectives of information systems, and how technologies are impacting logistics processes. Contemporary issues include customers, productivity and performance as top priorities. Effective information management can help ensure customer needs are met and firms competitively price products. Logistics information systems encompass planning, execution, research/intelligence, knowledge management and reporting to make relevant information available to logistics managers.
Supply chain management involves coordinating all activities involved in sourcing and delivering products, from raw materials to customers. The goal is to match supply and demand profitably by achieving the right product, price, place, promotion, quantity and time for both suppliers and customers. Effective supply chain management can lower costs, increase productivity and profits through improved forecasting, purchasing, inventory management, and information sharing across the entire chain. Current trends include expanding globally, reducing environmental impact, and decreasing supply chain costs through outsourcing, technology, and continuous improvement.
Logistics and Supply Chain Management-OverviewThomas Tanel
Logistics and supply chain management involves planning and controlling the flow of materials and finished goods from suppliers to customers. It includes functions like procurement, manufacturing, warehousing, and transportation. Effective logistics is important for reducing costs, improving customer satisfaction, and optimizing inventory levels. New technologies allow greater visibility into global supply chains and more integrated planning across organizations. Measuring key performance indicators is essential for evaluating supply chain performance and identifying areas for improvement.
Logistics management refers to creating and operating an integrated system that makes products and services available to customers as needed, when needed, in the required quantities and qualities, at the lowest possible cost. The document then traces the evolution of logistics management from the early 20th century to the present, highlighting changes in business focus and functional structures at different periods as logistics became more integrated internally and with external partners.
Business depend on their supply chains to provide necessary products and services. A supply chain consists of all organizations involved in fulfilling customer needs, including manufacturers, suppliers, transporters, warehouses, retailers, and customers. Supply chain management involves coordinating these participants to deliver products to market efficiently and effectively. The goals of supply chain management are to improve customer service, increase internal efficiencies, and boost returns for all members of the supply chain. Key areas of focus include information sharing, production planning, inventory management, facility location selection, and transportation coordination.
The document discusses achieving strategic fit between a company's competitive strategy and supply chain strategy. It describes three key steps: 1) Understanding customer demand uncertainty, 2) Understanding supply chain responsiveness and costs, 3) Ensuring the supply chain capabilities match the customer needs. Expanding strategic scope across functions and partners improves coordination and profitability for all members of the supply chain.
This document discusses factors that influence distribution network design. It explains that distribution networks are evaluated based on customer needs met and costs. The number of facilities impacts response time, inventory costs, transportation costs, and facility costs. Inventory and transportation costs initially decrease then increase with more facilities, while response time improves. Total costs follow a similar pattern. The document then analyzes several distribution network designs and how they perform on various metrics like costs, customer service, and suitability for different product and market characteristics. It also discusses the impact of e-business on distribution networks and factors companies consider when designing their networks.
This document discusses key concepts related to sourcing and pricing decisions in a supply chain. It covers the role of sourcing, key sourcing processes like supplier selection and assessment, benefits of effective sourcing like cost reductions. It also discusses supplier scoring and assessment factors, the decision to source in-house vs outsource. Methods for how third parties can increase supply chain surplus are outlined. Risks of using third parties and types of third and fourth party logistics providers are summarized. The document also discusses supplier selection methods like auctions and negotiations, types of contracts to improve supply chain performance, the importance of design collaboration, and an overview of the procurement process.
Just-in-Time (JIT) manufacturing is a philosophy aimed at eliminating waste and continuously improving productivity by keeping stock levels low and receiving stock just before it is needed in production. JIT was developed in Japan after World War II to make efficient use of limited resources and optimize costs and quality. It involves producing goods only after receiving customer orders to achieve the highest output at the lowest unit cost.
The document discusses supply chain coordination and the bullwhip effect. Lack of coordination can result from conflicting objectives between stages or distorted information sharing. This can cause the bullwhip effect where demand fluctuations increase moving up the supply chain. This reduces profits and coordination. Managerial levers to improve coordination include aligning goals, improving information accuracy through data sharing, reducing lead times, and building strategic partnerships through trust. Collaborative programs like CPFR can further help coordination.
The reorder point is the inventory level that triggers an order to replenish stock. It is calculated as the forecast usage during lead time plus a safety stock amount. The reorder point helps ensure there is enough inventory to meet demand until the replenishment order is received. It does not determine how much to order, only when to order. Factors like demand variability and acceptable stockout risk impact reorder point calculations.
The document outlines the major drivers of supply chain performance as facilities, inventory, transportation, information, sourcing, and pricing. Each driver plays a role in creating strategic fit between supply chain and competitive strategy by balancing efficiency and responsiveness. Some key obstacles to achieving fit are increasing product variety, shorter life cycles, demanding customers, fragmented ownership, and globalization. The course will further explore decision-making for each driver to achieve fit despite these obstacles.
The document discusses the economic order quantity (EOQ) model, which aims to minimize total inventory costs by determining the optimal order quantity. It defines EOQ as the order quantity that balances ordering costs and carrying costs. The key assumptions of the EOQ model are constant demand, lead time, and costs. The document presents the mathematical formula for calculating EOQ and provides an example calculation. It also describes two EOQ models: the 'Q' model with fixed reorder quantities and the 'P' model with periodic reviews and orders.
The document discusses supply chain management. It defines supply chain management as the integration of business processes from original suppliers to end users to add value for customers. A supply chain is a network of facilities that procures materials, transforms them into products, and distributes the products to customers. The essential features of supply chain management include integrated behavior across stakeholders, mutually sharing information and risks/rewards, cooperation, focusing on serving customers, integrating processes, and building long-term relationships. The objectives, components, factors influencing, and functions of supply chain management at the strategic, tactical, and operational levels are described.
Just in time (JIT) is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs. Just in time is a type of operations management approach which originated in Japan in the 1950s. It was adopted by Toyota and other Japanese manufacturing firms, with excellent results: Toyota and other companies that adopted the approach ended up raising productivity (through the elimination of waste) significantly.
TYPES OF PURCHASING SYSTEM
WHAT IS A PURCHASING SYSTEM?
FUNCTIONS OF PURCHASE DEPARTMENT
SUBCONTRACTING
TENDER
BLANKET ORDER
CAPITAL EQUIPMENT PURCHASE
PETTY CASH SYSTEM
IMPORTS
E-PURCHASING
ORDER ON TELEPHONE
RATE CONTRACT METHOD
STOCKLESS PURCHASING
Supply Chain Management - An IntroductionNaveen Dandge
The document discusses supply chain management (SCM), including defining SCM, the need for effective SCM, components of a SCM system, benefits of SCM, integration strategies like push and pull, and reasons for SCM failure. Key points covered include defining SCM as coordinating suppliers, manufacturers, warehouses and stores to minimize costs while meeting demand, listing the five main components of a SCM as plan, procure, make, deliver, and return, and describing push strategies like forecast-based production versus pull strategies driven by customer demand.
Supply chain management (SCM) involves coordinating and integrating the flow of materials, information, and finances between all parties involved in fulfilling a customer request. It includes coordination between a company's internal operations as well as its interactions with suppliers, intermediaries, third-party service providers, and customers. The goal of SCM is to meet customer demands efficiently while reducing costs across the entire supply chain.
JIT/Lean Production systems aim to minimize waste by producing and delivering only what is needed when it is needed. This "pull" approach contrasts with traditional "push" systems involving large batch sizes and high inventory levels. Key aspects of JIT include minimizing inventory, continuous improvement, small lot sizes, and close supplier partnerships. Transitioning to JIT requires management commitment, reducing setup times gradually, and preparing for obstacles like resistance from workers or suppliers accustomed to older ways. Benefits include reduced costs, higher quality, flexibility, and better space utilization.
Understand the relationship between supply chain management (SCM) and organisational business objectives
Explain the importance of effective supply chain management in achieving organisational objectives
Explain the link between supply chain management and business functions in an organisation
Discuss the key drivers for achieving an integrated supply chain strategy in an organisation
Be able to use information technology to optimize supplier relationships in an organisation
Evaluate the effectiveness of strategies used by an organisation to maintain supplier relationships
Task 2.2: Use information technology to create strategies to develop an organisation’s relationship with its suppliers
Develop systems to maintain an organisation’s relationship with its suppliers
Case Study of a maintaining organization’s relationship with suppliers:
Understand the role of information technology in supply chain management
Assess how information technology could assist integration of different parts of the supply chain of an organisation
Task 3.2: Evaluate how information technology has contributed to the management of the supply chain of an organisation
Assess the effectiveness of information technology in managing the supply chain of an organisation
Understand the role of logistics and procurement in supply chain management
Explain the role of logistics in supply chain management in an organisation
This document provides an overview of operations and supply chain management. It discusses how operations managers transform inputs into outputs through physical, locational, exchange, physiological or informational processes. The document then traces the evolution of operations management from craft production to modern concepts like lean production and supply chain management. It also outlines how operations strategy and a balanced scorecard can help deploy corporate strategy throughout an organization.
1. The document discusses supply chain management and defines a supply chain as all stages involved in fulfilling a customer request, including manufacturers, suppliers, transporters, warehouses, retailers, and customers.
2. It explains that the objective of a supply chain is to maximize overall supply chain value created, which is the final product value minus total supply chain costs.
3. The document outlines the different decision phases in a supply chain: supply chain strategy and design, supply chain planning, and supply chain operations. It notes that strategy and design involve long-term strategic decisions while planning and operations have shorter time horizons.
- Supply chain management involves all stages of fulfilling a customer request, including suppliers, manufacturers, distributors, retailers, and customers. It aims to maximize overall value by managing information, product, and funds flows across the supply chain.
- Supply chain decisions can be categorized into strategy/design, planning, and operations. Strategy/design determines the supply chain structure and roles. Planning sets policies for short-term operations based on demand forecasts. Operations implements plans through daily customer order fulfillment.
- Processes can be viewed through cycles at interfaces between stages or through push/pull based on whether they are reactive or speculative to demand. Integration across customer relationship management, internal supply chain management, and supplier relationship management is important
Supply chain management Understanding the Supply ChainOsama Yousaf
This chapter discusses supply chain management. It defines a supply chain as including all parties involved in fulfilling a customer request, from suppliers to customers. A supply chain's objective is to maximize overall value by balancing revenue and costs across stages. Decision-making in a supply chain occurs in three phases: strategy/design, planning, and operations. Processes in a supply chain can be viewed through the lenses of cycles between stages or a push/pull distinction based on whether they are reactive or speculative to customer demand. The chapter provides examples of different supply chain models.
This document provides an introduction and overview of supply chain management. It begins by defining key terms like supply chain, supply chain management, logistics, and related concepts. It then discusses the importance of SCM in reducing costs and increasing profits. The objectives of SCM are outlined as maximizing overall value created across the supply chain and reducing costs. It notes how the focus of SCM has expanded over time to include more tiers of suppliers and customers as well as greater integration through information and communication technologies. The document also covers SCM organizations, decision phases in SCM including strategy, planning and operations, and how effective SCM can provide competitive advantage.
Supply chain management introduction based on BBA curriculamKiranMittal7
This document provides an overview and agenda for a course on supply chain management. It discusses key topics that will be covered, including logistics and SCM concepts, flows within supply chains, the evolution of SCM, supply chain processes and structures, frameworks like SCOR, trends like lean supply chains, SCM functions and goals. It also notes that managing supply chains is challenging due to factors like geographically dispersed networks, conflicting objectives across stages, uncertainties and risks, and information distortion.
Scm 01 structure and decisions in a supply chainshivaniradhu
1) A supply chain consists of all parties involved in fulfilling customer requests, including manufacturers, suppliers, transporters, warehouses, retailers, and customers. It involves functions like new product development, marketing, operations, distribution, finance, and customer service.
2) Supply chains involve the constant flow of information, products, and funds between different stages as items move from suppliers to manufacturers to distributors and finally to customers.
3) The objective of a supply chain is to maximize overall value, which is revenue generated from customers minus the total costs across the entire supply chain.
Understanding The Supply Chain Management SCM pptxBrianStanley53
This document discusses key concepts related to supply chain management. It defines a supply chain as including all entities involved in fulfilling a customer request, including suppliers, manufacturers, distributors, retailers, and customers. The objective of a supply chain is to maximize overall value created by balancing revenue generated from customers and total costs across the supply chain. Supply chain decisions can be categorized into strategy/design, planning, and operations phases. The document also presents different views for analyzing supply chains, such as the cycle, push/pull, and macro process views.
Supply chain management involves coordinating the flow of goods and information between suppliers, manufacturers, distributors, and customers. It includes planning production and inventory, coordinating transportation, and making sourcing and pricing decisions. Key drivers of supply chain performance are facilities, inventory, transportation, information, sourcing, and pricing. Firms must balance efficiency and responsiveness based on their competitive strategy. Demand management and forecasting are critical to align production with customer demand.
This document discusses supply chain management. It defines a supply chain as including suppliers, manufacturers, warehouses, distribution centers, and retail outlets, as well as the materials and products that flow between them. It describes how uncertainty increases as you move further up the supply chain away from customers due to lack of information. It also discusses the bullwhip effect, where small fluctuations in retail demand can cause larger fluctuations in orders as you move up the supply chain. The document emphasizes the importance of reducing uncertainty in the supply chain through improved information sharing and collaboration between partners.
The document discusses supply chain management and key concepts in three main points:
1. It defines the supply chain as the network of facilities and distribution options used to transport raw materials, work-in-process inventory, and finished products from suppliers to customers. It involves various costs and flows of materials between suppliers, manufacturers, warehouses, distribution centers, and customers.
2. It explains that supply chain management (SCM) aims to efficiently integrate these entities to produce and distribute the right products, in the right quantities, to the right locations and at the right time, in order to minimize system-wide costs while meeting service requirements.
3. It discusses the importance of collaboration and information sharing across the supply chain
This document discusses key concepts in logistics, including definitions of logistics, the value added roles of logistics in creating utility, and how logistics interfaces with other business functions like operations and marketing. It also examines techniques for analyzing logistics systems and costs, including how transportation costs, inventory levels, and the number of warehouses impact total logistics costs. Spatial relationships within logistics networks are also addressed.
Unit -1 introduces the key concepts of supply chain management including planning, sourcing, manufacturing, delivery, and returns. Supply chain management involves managing the flow of goods and services from raw materials to final products. It is important for boosting customer service, reducing costs, and gaining a competitive advantage. The functions of supply chain management are purchasing, operations, logistics, resource management, and information workflow. Processes can be viewed through the cycle view or push/pull view. Integrated and autonomous supply chains aim to streamline the end-to-end process.
This document provides an overview of key concepts in supply chain management. It defines a supply chain as consisting of all stages involved in fulfilling a customer request, from suppliers to manufacturers to distributors. The objective of a supply chain is to maximize overall value by balancing customer value and supply chain costs. Supply chain decisions are classified into three phases - strategy, planning, and operations. Effective supply chain management requires integrating processes for customer relationship management, internal supply chain management, and supplier relationship management.
This document provides an introduction to supply chain management. It defines supply chain as a network of facilities and distribution options that procures materials, transforms them into products, and distributes products to customers. Supply chain management (SCM) is defined as the management of business processes involving procurement, manufacturing, and distribution to deliver the right product to the customer at the right time and cost. SCM aims to maximize overall value and looks for sources of revenue and cost reduction. Key decisions in SCM involve supply chain strategy, planning, and operations. The document also discusses push and pull processes in supply chains and how strategic fit is achieved between competitive and supply chain strategies.
This document provides an overview of supply chain concepts and examples. It discusses key topics such as:
- The cycle and push/pull views of analyzing supply chain processes
- Examples of different supply chains like Dell, L.L. Bean, and grocery retailers
- The three main decision phases in supply chain management: strategy, planning, and operations
- How effective supply chain management can maximize overall profitability across all stages.
What is a Supply Chain?
Decision Phases in a Supply Chain
Process View of a Supply Chain
The Importance of Supply Chain Flows
Examples of Supply Chains
This document provides an introduction to supply chain concepts. It defines a supply chain as a set of entities directly involved in upstream and downstream flows from suppliers to customers. Supply chain management (SCM) involves integrating organizational units along the supply chain and coordinating materials, information, and financial flows to meet customer demands. The objective of SCM is to maximize overall value creation across the supply chain by balancing costs and profits. The document also discusses key supply chain processes like production, inventory, transportation, and information management that can be optimized for responsiveness to customers or operational efficiency.
This document discusses supply chain management and outbound logistics. It notes that companies face pressures from globalization and increased focus on supply chain management. The objectives of supply chain management are to be responsive to market needs and changes, and optimize inventory levels across the supply chain. Supply chain management requires managing the flow of information and materials across all entities in the supply chain to meet customer expectations. Improving information flow through use of IT systems is critical to achieving a world-class supply chain.
The document discusses supply chain management and outbound logistics. It notes that companies face pressures from globalization and increased focus on SCM. The operating environment requires mass customization, reducing time to market, and frequent new product introductions. Customer expectations include responsiveness, customized products and services, and unwillingness to bear supplier inefficiencies. This puts pressure on manufacturers to be responsive to changes. SCM aims to optimize inventory levels across the supply chain and ensure on-time order fulfillment. Information flow across the supply chain is critical to reduce uncertainty and meet customer expectations. Channels of distribution help reduce costs but require design considerations based on market objectives, customer service, and product characteristics.
The document provides an overview of supply chain management. It defines key supply chain terms and concepts, describes the functions and goals of supply chain management, and discusses strategies for effective supply chain integration and collaboration. Some of the main points covered include defining the components of a supply chain network and flows, explaining push, pull, and hybrid supply chain strategies, outlining benefits of collaboration and information sharing, and introducing frameworks for measuring and improving supply chain performance like the SCOR model.
1. The document discusses logistics, supply chain management, and related concepts. It defines logistics, supply chain management, and materials management.
2. It describes the components of a supply chain as including suppliers, purchasers, production/processing, distribution, customers, and markets. It also discusses types of supply chain relationships.
3. Reverse supply chain management is discussed, which involves retrieving used products from customers and reusing or disposing of them properly through a backward supply chain process.
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3. SUPPLY CHAIN MANAGEMENT: THE
MAGNITUDE IN THE TRADITIONAL VIEW
• Estimated that the grocery industry could save INR
30Crs. (10% of operating cost) by using effective
logistics and supply chain strategies
• A typical box of cereal spends 104 days from factory to sale
• A typical car spends 15 days from factory to dealership
• Laura Ashley turns its inventory 10 times a year, five
times faster than 3 years ago
February 16, 2015 1-3
4. SUPPLY CHAIN MANAGEMENT:
THE TRUE MAGNITUDE
Compaq estimates it lost $0.5 billion to $1 billion in sales
in 1995 because laptops were not available when and
where needed
When the 1 gig processor was introduced by AMD, the
price of the 800 mb processor dropped by 30%
P&G estimates it saved retail customers $65 million by
collaboration resulting in a better match of supply and
demand
February 16, 2015 1-4
9. SUPPLY CHAIN MANAGEMENT:
HISTORICAL PERSPECTIVE
February 16, 2015
• The three principle streams are:
• Sourcing, procurement, and supply management
• Set of activities, functions, and processes concerned with economic
procurement and efficient control of funds flow.
• Materials management
• Forecasting, inventory management, store management,
warehousing, stock keeping, scheduling, production planning and
production control and order processing. (integrated materials
management)
• Logistics and distribution
• Purchasing, inventory management, production control, inbound
traffic, warehousing, store keeping and quality control.
1-9
10. WHAT IS A SUPPLY CHAIN?
• Introduction
• The objective of a supply chain
February 16, 2015 1-10
11. WHAT IS A SUPPLY CHAIN?
• All stages involved, directly or indirectly, in fulfilling a customer
request
• Includes manufacturers, suppliers, transporters, warehouses,
retailers, and customers
• Within each company, the supply chain includes all functions
involved in fulfilling a customer request (product development,
marketing, operations, distribution, finance, customer service)
• Examples: Fig. Detergent supply chain (Wal-Mart), Dell
February 16, 2015 1-11
13. WHAT IS A SUPPLY CHAIN?
• Customer is an integral part of the supply chain
• Includes movement of products from suppliers to manufacturers to
distributors, but also includes movement of information, funds,
and products in both directions
• Probably more accurate to use the term “supply network” or
“supply web”
• Typical supply chain stages: customers, retailers, distributors,
manufacturers, suppliers
• All stages may not be present in all supply chains
(e.g., no retailer or distributor for Dell)
February 16, 2015 1-13
15. WHAT IS A SUPPLY CHAIN?
Customer wants
detergent and goes
to Jewel
Customer wants
detergent and goes
to Jewel
Jewel
Supermarket
Jewel
Supermarket
Jewel or third
party DC
Jewel or third
party DC
P&G or other
manufacturer
P&G or other
manufacturer
Plastic
Producer
Plastic
Producer
Chemical
manufacturer
(e.g. Oil Company)
Chemical
manufacturer
(e.g. Oil Company)
Tenneco
Packaging
Tenneco
Packaging
Paper
Manufacturer
Paper
Manufacturer
Timber
Industry
Timber
Industry
Chemical
manufacturer
(e.g. Oil Company)
Chemical
manufacturer
(e.g. Oil Company)
February 16, 2015 1-15
17. FLOWS IN A SUPPLY CHAIN
Customers
Information
Products
Funds
February 16, 2015 1-17
18. HP SUPPLY CHAIN INITIATIVE
February 16, 2015
Hewlett Packard was one of the first firms to recognize
the intersection of the development and supply chains. A
case in point is the inkjet printer introduction, where
decisions about product architecture were made by
taking into account not only labor and material cost, but
also total supply chain cost throughout the product life
cycle. More recently, HP has focused on making
decisions such as what design activities to outsource and
the corresponding organizational structures needed to
manage the outsource design process by considering the
characteristics of both the development and the supply
chains.
1-18
19. THE OBJECTIVE OF A SUPPLY CHAIN
• Maximize overall value created
• Supply chain value: difference between what the final
product is worth to the customer and the effort the
supply chain expends in filling the customer’s request
• Value is correlated to supply chain profitability
(difference between revenue generated from the
customer and the overall cost across the supply chain)
February 16, 2015 1-19
20. WHAT IS SUPPLY CHAIN MANAGEMENT?
• Managing supply chain flows and assets, to maximize
supply chain surplus
• What is supply chain surplus?
• Supply chain surplus=Customer Value-Supply chain cost
February 16, 2015 1-20
21. THE OBJECTIVE OF A SUPPLY CHAIN
• Example: Dell receives $2000 from a customer for a computer
(revenue)
• Supply chain incurs costs (information, storage, transportation,
components, assembly, etc.)
• Difference between $2000 and the sum of all of these costs is the
supply chain profit
• Supply chain profitability is total profit to be shared across all
stages of the supply chain
• Supply chain success should be measured by total supply chain
profitability, not profits at an individual stage
February 16, 2015 1-21
22. THE OBJECTIVE OF A SUPPLY CHAIN
• Sources of supply chain revenue: the customer
• Sources of supply chain cost: flows of information,
products, or funds between stages of the supply chain
• Supply chain management is the management
of flows (information, products, funds)
between and among supply chain stages to
maximize total supply chain profitability
February 16, 2015 1-22
23. DECISION PHASES OF A SUPPLY CHAIN
• Supply chain strategy or design
• Supply chain planning
• Supply chain operation
February 16, 2015 1-23
24. 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
February 16, 2015 1-24
25. 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
February 16, 2015 1-25
26. 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
February 16, 2015 1-26
27. SUPPLY CHAIN OPERATION
• Time horizon is weekly or daily
• Decisions regarding individual customer 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)
February 16, 2015 1-27
28. 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 customer order (pull) or
in anticipation of a customer order (push)
February 16, 2015 1-28
29. CYCLE VIEW OF SUPPLY CHAINS
Customer Order
Cycle
Replenishment
Cycle
Manufacturing
Cycle
Procurement
Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
February 16, 2015 1-29
30. SUB PROCESS IN EACH SUPPLY CHAIN
PROCESS
February 16, 2015 1-30
31. CYCLE VIEW OF A SUPPLY CHAIN
• Each cycle occurs at the interface between two
successive stages
• Customer order cycle (customer-retailer)
• Replenishment cycle (retailer-distributor)
• Manufacturing cycle (distributor-manufacturer)
• Procurement cycle (manufacturer-supplier)
• 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.
February 16, 2015 1-31
32. PUSH/PULL VIEW OF SUPPLY CHAINS
Procurement,
Manufacturing
andReplenishment
cycles
Customer Order
Cycle
Customer
Order Arrives
PUSH PROCESSES PULL PROCESSES
February 16, 2015 1-32
33. 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
customer demand
• Pull: execution is initiated in response to a customer
order (reactive)
• Push: execution is initiated in anticipation of customer
orders (speculative)
• Push/pull boundary separates push processes from
pull processes
February 16, 2015 1-33
34. 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 customer orders
• Can combine the push/pull and cycle views
• L.L. Bean
• Dell
• The relative proportion of push and pull processes
can have an impact on supply chain performance
February 16, 2015 1-34
36. SUPPLY CHAIN MACRO PROCESSES IN A
FIRM
• Supply chain processes discussed in the two views
can be classified into :
• Customer Relationship Management (CRM)
• Internal Supply Chain Management (ISCM)
• Supplier Relationship Management (SRM)
• Integration among the above three macro processes
is critical for effective and successful supply chain
management
February 16, 2015 1-36
38. EXAMPLES OF SUPPLY CHAINS
• Gopaljee: Transforming Traditional Supply Chains
• Jaipur rugs company
• Gateway
• McMaster Carr / W.W. Grainger
• Toyota
• Amazon / Borders / Barnes and Noble
What are some key issues in these supply chains?
February 16, 2015 1-38
39. COMPETITIVE AND SUPPLY CHAIN
STRATEGIES
• Competitive strategy: defines the set of customer needs a firm seeks
to satisfy through its products and services
• Product development strategy: specifies the portfolio of new
products that the company will try to develop
• Marketing and sales strategy: specifies how the market will be
segmented and product positioned, priced, and promoted
• Supply chain strategy:
• determines the nature of material procurement, transportation of
materials, manufacture of product or creation of service, distribution of
product
• Consistency and support between supply chain strategy, competitive
strategy, and other functional strategies is important
February 16, 2015 1-39
40. THE VALUE CHAIN: LINKING SUPPLY
CHAIN AND BUSINESS STRATEGY
February 16, 2015 1-40
41. EXAMPLES -
February 16, 2015
1. Cisco’s decision to use contract manufacturers define the broad
structure of their supply chain and a part of their supply chain
strategy.
2. Amazon’s decision to build warehouses to stock some products
and to continue using distributors as a source of other products
are parts of its supply chain strategy.
3. Toyota’s decision to have production facilities in each of its major
markets is part of its supply chain strategy.
1-41
42. ACHIEVING STRATEGIC FIT
• Introduction
• How is strategic fit achieved?
• Other issues affecting strategic fit
February 16, 2015 1-42
43. ACHIEVING STRATEGIC FIT
• Strategic fit:
• Consistency between customer priorities of competitive
strategy and supply chain capabilities specified by the supply
chain strategy
• Competitive and supply chain strategies have the same goals
• A company may fail because of a lack of strategic fit or because
its processes and resources do not provide the capabilities to
execute the desired strategy
February 16, 2015 1-43
44. HOW IS STRATEGIC FIT ACHIEVED?
• Step 1: Understanding the customer and supply chain uncertainty
• Step 2: Understanding the supply chain
• Step 3: Achieving strategic fit
February 16, 2015 1-44
45. STEP 1: UNDERSTANDING THE CUSTOMER
AND SUPPLY CHAIN UNCERTAINTY
• Identify the needs of the customer segment being served
• Quantity of product needed in each lot
• Response time customers will tolerate
• Variety of products needed
• Service level required
• Price of the product
• Desired rate of innovation in the product
February 16, 2015 1-45
46. STEP 1: UNDERSTANDING THE CUSTOMER
AND SUPPLY CHAIN UNCERTAINTY
• Overall attribute of customer demand
• Demand uncertainty: uncertainty of customer demand for a
product
• Implied demand uncertainty: resulting uncertainty for the
supply chain given the portion of the demand the supply chain
must handle and attributes the customer desires
February 16, 2015 1-46
47. STEP 1: UNDERSTANDING THE CUSTOMER
AND SUPPLY CHAIN UNCERTAINTY
• Implied demand uncertainty also related to customer needs and
product attributes
• First step to strategic fit is to understand customers by mapping
their demand on the implied uncertainty spectrum
February 16, 2015 1-47
48. ACHIEVING STRATEGIC FIT
• Understanding the Customer
• Lot size
• Response time
• Service level
• Product variety
• Price
• Innovation
Implied
Demand
Uncertainty
February 16, 2015 1-48
49. IMPACT OF CUSTOMER NEEDS ON IMPLIED
DEMAND UNCERTAINTY
Customer Need
Causes implied demand uncertainty to
increase because …
Range of quantity increases
Wider range of quantity implies greater
variance in demand
Lead time decreases Less time to react to orders
Variety of products required increases
Demand per product becomes more
disaggregated
Number of channels increases
Total customer demand is now
disaggregated over more channels
Rate of innovation increases
New products tend to have more
uncertain demand
Required service level increases
Firm now has to handle unusual surges
in demand February 16, 2015 1-49
51. CORRELATION BETWEEN IMPLIED DEMAND
UNCERTAINTY AND OTHER ATTRIBUTES
Attribute
Low Implied
Uncertainty
High Implied
Uncertainty
Product margin Low High
Avg. forecast error 10% 40%-100%
Avg. stockout rate 1%-2% 10%-40%
Avg. forced season-end
markdown
0% 10%-25%
February 16, 2015 1-51
52. STEP 2: UNDERSTANDING THE SUPPLY
CHAIN
• How does the firm best meet demand?
• Dimension describing the supply chain is supply chain
responsiveness
• Supply chain responsiveness -- ability to
• respond to wide ranges of quantities demanded
• meet short lead times
• handle a large variety of products
• build highly innovative products
• meet a very high service level
February 16, 2015 1-52
53. STEP 2: UNDERSTANDING THE SUPPLY
CHAIN
• There is a cost to achieving responsiveness
• Supply chain efficiency: cost of making and delivering the product
to the customer
• Increasing responsiveness results in higher costs that lower
efficiency
• cost-responsiveness efficient frontier
• supply chain responsiveness spectrum
• Second step to achieving strategic fit is to map the supply chain
on the responsiveness spectrum
February 16, 2015 1-53
54. UNDERSTANDING THE SUPPLY CHAIN:
COST-RESPONSIVENESS EFFICIENT
FRONTIER
High Low
Low
High
Responsiveness
Cost
February 16, 2015 1-54
55. STEP 3: ACHIEVING STRATEGIC FIT
• Step is to ensure that what the supply chain does well
is consistent with target customer’s needs
• Uncertainty/Responsiveness map
• Zone of strategic fit
• Examples: Dell, Barilla
February 16, 2015 1-55
57. ACHIEVING STRATEGIC FIT SHOWN ON THE
UNCERTAINTY/RESPONSIVENESS MAP
Implied
uncertainty
spectrum
Responsive
supply chain
Efficient
supply chain
Certain
demand
Uncertain
demand
Responsiveness
spectrum
Zone of Strategic Fit
February 16, 2015 1-57
58. STEP 3: ACHIEVING STRATEGIC FIT
• All functions in the value chain must support the competitive
strategy to achieve strategic fit
• Two extremes: Efficient supply chains (Barilla) and responsive
supply chains (Dell)
• Two key points
• there is no right supply chain strategy independent of
competitive strategy
• there is a right supply chain strategy for a given competitive
strategy
February 16, 2015 1-58
59. Efficient Responsive
Primary goal Lowest cost Quick response
Product design strategy Min product cost Modularity to allow
postponement
Pricing strategy Lower margins Higher margins
Mfg strategy High utilization Capacity flexibility
Inventory strategy Minimize inventory Buffer inventory
Lead time strategy Reduce but not at
expense of greater cost
Aggressively reduce even
if costs are significant
Supplier selection strategy Cost and low quality Speed, flexibility, quality
Transportation strategy Greater reliance on low
cost modes
Greater reliance on
responsive (fast) modes
COMPARISON OF EFFICIENT AND
RESPONSIVE SUPPLY CHAINS
February 16, 2015 1-59
60. OTHER ISSUES AFFECTING STRATEGIC
FIT
• Multiple products and customer segments
• Product life cycle
• Competitive changes over time
February 16, 2015 1-60
61. MULTIPLE PRODUCTS AND CUSTOMER
SEGMENTS
• Firms sell different products to different customer segments (with
different implied demand uncertainty)
• The supply chain has to be able to balance efficiency and
responsiveness given its portfolio of products and customer
segments
• Two approaches:
• Different supply chains
• Tailor supply chain to best meet the needs
of each product’s demand
February 16, 2015 1-61
62. PRODUCT LIFE CYCLE
• The demand characteristics of a product and the needs of a
customer segment change as a product goes through its life
cycle
• Supply chain strategy must evolve throughout the life cycle
• Early: uncertain demand, high margins (time is important),
product availability is most important, cost is secondary
• Late: predictable demand, lower margins, price is important
February 16, 2015 1-62
63. PRODUCT LIFE CYCLE
• Examples: pharmaceutical firms, Intel
• As the product goes through the life cycle, the supply chain
changes from one emphasizing responsiveness to one
emphasizing efficiency
February 16, 2015 1-63
64. COMPETITIVE CHANGES OVER TIME
• Competitive pressures can change over time
• More competitors may result in an increased emphasis on variety
at a reasonable price
• The Internet makes it easier to offer a wide variety of products
• The supply chain must change to meet these changing
competitive conditions
February 16, 2015 1-64
65. EXPANDING STRATEGIC SCOPE
• Scope of strategic fit
• The functions and stages within a supply chain that devise an
integrated strategy with a shared objective
• One extreme: each function at each stage develops its own
strategy
• Other extreme: all functions in all stages devise a strategy jointly
• Five categories:
• Intracompany intraoperation scope
• Intracompany intrafunctional scope
• Intracompany interfunctional scope
• Intercompany interfunctional scope
• Flexible interfunctional scope
February 16, 2015 1-65
66. DIFFERENT SCOPES OF STRATEGIC FIT
ACROSS A SUPPLY CHAIN
February 16, 2015 1-66
67. OBSTACLES TO ACHIEVING STRATEGIC
FIT
• Increasing variety of products
• Decreasing product life cycles
• Increasingly demanding customers
• Fragmentation of supply chain ownership
• Globalization
• Difficulty executing new strategies
February 16, 2015 1-67
68. THE DELL STRATEGY
February 16, 2015
Dell Computers outperformed the competition by over 3,000 percent
in terms of shareholder growth over the eight-year period from 1988
to 1996. Dell’s success over this period can be attributed to its virtual
integration, a strategy that blurs the traditional boundaries between
suppliers, manufacturers, and end users. Dell’s decision to sell
computers built from components produced by other manufacturers
relieved the firm of the burdens of owning assets, doing research
and development, and managing a large workforce. At the same
time, the Dell model of direct sales to consumers and production to
order virtually eliminated finished goods inventory. These business
decisions allowed Dell to grow much faster than its com- petition and
maintain only eight days of inventory.
1-68
69. DRIVERS OF SUPPLY CHAIN PERFORMANCE
Facilities
places where inventory is stored, assembled, or fabricated
production sites and storage sites
Inventory
raw materials, WIP, finished goods within a supply chain
inventory policies
Transportation
moving inventory from point to point in a supply chain
combinations of transportation modes and routes
Information
data and analysis regarding inventory, transportation, facilities throughout the
supply chain
potentially the biggest driver of supply chain performance
Sourcing
functions a firm performs and functions that are outsourced
Pricing
Price associated with goods and services provided by a firm to the supply chain
February 16, 2015 1-69
71. FACILITIES
• Role in the supply chain
• the “where” of the supply chain
• manufacturing or storage (warehouses)
• Role in the competitive strategy
• economies of scale (efficiency priority)
• larger number of smaller facilities (responsiveness priority)
• Example :Toyota and Honda
• Components of facilities decisions
February 16, 2015 1-71
72. COMPONENTS OF FACILITIES
DECISIONS
• Location
• centralization (efficiency) vs. decentralization (responsiveness)
• other factors to consider (e.g., proximity to customers)
• Capacity (flexibility versus efficiency)
• Manufacturing methodology (product focused versus process focused)
• Warehousing methodology (SKU storage, job lot storage, cross-docking)
• Overall trade-off: Responsiveness versus efficiency
February 16, 2015 1-72
73. INVENTORY
• Role in the supply chain
• Role in the competitive strategy
• Components of inventory decisions
February 16, 2015 1-73
74. INVENTORY: ROLE IN THE SUPPLY CHAIN
• Inventory exists because of a mismatch between supply and demand
• Source of cost and influence on responsiveness
• Impact on
• material flow time: time elapsed between when material enters the
supply chain to when it exits the supply chain
• throughput
• rate at which sales to end consumers occur
• I = RT (Little’s Law)
• I = inventory; R = throughput; T = flow time
• Example
• Inventory and throughput are “synonymous” in a supply chain
February 16, 2015 1-74
75. INVENTORY: ROLE IN COMPETITIVE
STRATEGY
• If responsiveness is a strategic competitive priority, a firm can locate
larger amounts of inventory closer to customers
• If cost is more important, inventory can be reduced to make the firm
more efficient
• Trade-off
• Example – Nordstrom
February 16, 2015 1-75
76. COMPONENTS OF INVENTORY
DECISIONS
• Cycle inventory
• Average amount of inventory used to satisfy demand between shipments
• Depends on lot size
• Safety inventory
• inventory held in case demand exceeds expectations
• costs of carrying too much inventory versus cost of losing sales
• Seasonal inventory
• inventory built up to counter predictable variability in demand
• cost of carrying additional inventory versus cost of flexible production
• Overall trade-off: Responsiveness versus efficiency
• more inventory: greater responsiveness but greater cost
• less inventory: lower cost but lower responsiveness
February 16, 2015 1-76
77. TRANSPORTATION
• Role in the supply chain
• Role in the competitive strategy
• Components of transportation decisions
February 16, 2015 1-77
78. TRANSPORTATION: ROLE IN
THE SUPPLY CHAIN
• Moves the product between stages in the supply chain
• Impact on responsiveness and efficiency
• Faster transportation allows greater responsiveness but lower efficiency
• Also affects inventory and facilities
February 16, 2015 1-78
79. TRANSPORTATION:
ROLE IN THE COMPETITIVE STRATEGY
• If responsiveness is a strategic competitive priority, then faster
transportation modes can provide greater responsiveness to
customers who are willing to pay for it
• Can also use slower transportation modes for customers whose
priority is price (cost)
• Can also consider both inventory and transportation to find the right
balance
• Example: Laura Ashley
February 16, 2015 1-79
80. COMPONENTS OF TRANSPORTATION
DECISIONS
• Mode of transportation:
• air, truck, rail, ship, pipeline, electronic transportation
• vary in cost, speed, size of shipment, flexibility
• Route and network selection
• route: path along which a product is shipped
• network: collection of locations and routes
• In-house or outsource
• Overall trade-off: Responsiveness versus efficiency
February 16, 2015 1-80
81. INFORMATION
• Role in the supply chain
• Role in the competitive strategy
• Components of information decisions
February 16, 2015 1-81
82. INFORMATION: ROLE IN THE SUPPLY CHAIN
• The connection between the various stages in the supply chain –
allows coordination between stages
• Crucial to daily operation of each stage in a supply chain – e.g.,
production scheduling, inventory levels
February 16, 2015 1-82
83. INFORMATION:
ROLE IN THE COMPETITIVE STRATEGY
• Allows supply chain to become more efficient and more responsive
at the same time (reduces the need for a trade-off)
• Information technology
• What information is most valuable?
• Example: Dell
February 16, 2015 1-83
84. COMPONENTS OF INFORMATION
DECISIONS
• Push (MRP) versus pull (demand information transmitted quickly throughout
the supply chain)
• Coordination and information sharing
• Forecasting and aggregate planning
• Enabling technologies
• EDI
• Internet
• ERP systems
• Supply Chain Management software
• Overall trade-off: Responsiveness versus efficiency
February 16, 2015 1-84
85. SOURCING
• Role in the supply chain
• Role in the competitive strategy
• Components of sourcing decisions
February 16, 2015 1-85
86. SOURCING: ROLE IN THE SUPPLY CHAIN
• Set of business processes required to purchase goods and services
in a supply chain
• Supplier selection, single vs. multiple suppliers, contract negotiation
February 16, 2015 1-86
87. COMPONENTS OF SOURCING DECISIONS
• In-house versus outsource decisions
• Supplier evaluation and selection
• Procurement process
• Overall trade-off: Increase the supply chain profits
February 16, 2015 1-87
88. SOURCING:
ROLE IN THE COMPETITIVE STRATEGY
• Sourcing decisions are crucial because they affect the level of
efficiency and responsiveness in a supply chain
• In-house vs. outsource decisions- improving efficiency and
responsiveness
• Example : Cisco
February 16, 2015 1-88
89. SOURCING:
ROLE IN THE COMPETITIVE STRATEGY
• Firms can utilize optimal pricing strategies to improve efficiency and
responsiveness
• Low price and low product availability; vary prices by response times
• Example: Amazon
February 16, 2015 1-89
90. PRICING
• Role in the supply chain
• Role in the competitive strategy
• Components of pricing decisions
February 16, 2015 1-90
91. PRICING: ROLE IN THE SUPPLY CHAIN
• Pricing determines the amount to charge customers in a
supply chain
• Pricing strategies can be used to match demand and
supply
February 16, 2015 1-91
92. COMPONENTS OF PRICING DECISIONS
• Pricing and economies of scale
• Everyday low pricing versus high-low pricing
• Fixed price versus menu pricing
• Overall trade-off: Increase the firm profits
February 16, 2015 1-92
93. ASSIGNMENT…
February 16, 2015
• Why is achieving strategic fit critical to a company’s overall success?
• How does a company achieve strategic fit between its supply chain strategy
and its competitive strategy?
• What is the importance of expanding the scope of strategic fit across the
supply chain?
• What advantages does selling books via the Internet provide? Are there
disadvantages?
• For what products does the e-commerce channel offer the greatest
benefits? What characterizes these products?
1-93
Notes:
Supply chain involves everybody, from the customer all the way to the last supplier.
Key flows in the supply chain are - information, product, and cash. It is through these flows that a supply chain fills a customer order. The management of these flows is key to the success or failure of a firm. Give Dell & Compaq example, Amazon & Borders example to bring out the fact that all supply chain interaction is through these flows.
Notes:
Supply chain surplus refers to what the customer has paid - total cost expended by supply chain in filling order.
The supply chain is a concatenation of cycles with each cycle at the interface of two successive stages in the supply chain. Each cycle involves the customer stage placing an order and receiving it after it has been supplied by the supplier stage.
One difference is in size of order. Second difference is in predictability of orders - orders in the procurement cycle are predictable once manufacturing planning has been done.
This is the predominant view for ERP systems. It is a transaction level view and clearly defines each process and its owner.
In this view processes are divided based on their timing relative to the timing of a customer order. Define push and pull processes.
They key difference is the uncertainty during the two phases.
Give examples at Amazon and Borders to illustrate the two views
Dell has three production sites worldwide and builds to order. Compaq does both. Consider some decisions involved - where to locate facilities? How to size them? Where is the push/pull boundary? What modes of transport to use? How much inventory to carry? In what form? Where to source from?