Supply Chain Management – An Intro

• What is a supply chain

– All involved in fulfilling a customer’s request
– A constant flow of information, products or
services and funds between different stages
– Examples 98.4
• Diff between Logistics and SCM
• Diff in Products and Services: Implications
for SCM 98.4 v/s IIPM
 Supply Chain Management – An Intro

• Stages of a Supply Chain (pls fil)

– Customers
–…
–…
–…
–…
– ….
– ….
 Supply Chain Management – An Intro

• Objective of a Supply Chain

– To maximize the overall value generated

– Value = product’s worth to customer-all the
costs supply chain incurs to fulfill customer
request
– US v/s India
– Dell vs Wal Mart (inventory, prices)
 Supply Chain Management – An Intro

• Decision Phases of a Supply Chain

– Design -> Planning -> Operation (frequency &
Timeframe)
• Supply Chain Strategy or Design (long term)
– Chain’s configuration
– Outsource or in-house
– Location and capacity of production & warehousing
– Product mix
– Modes of Transport
– Type of information system
 Supply Chain Management – An Intro

• Decision Phases of a Supply Chain

– Supply Chain Planning

• For a quarter to a year (Forecast)
• Which markets to be serviced from which location
• Manufacturing subcontracting decisions
• Inventory policies
• Timing and size of marketing and price promotions
 Supply Chain Management – An Intro

• Decision Phases of a Supply Chain

– Supply Chain Operation

• Time Horizon is Daily or Weekly
• Decisions regarding individual customer orders
• Set dates of delivery
• Fix shipping mode
• Place replenishment orders
 Supply Chain Management – An Intro

• Process Views of a Supply Chain

– Cycle View
• Series of cycles, each performed at the interface
between two successive stages of a supply chain
 Supply Chain Management – An Intro

• Process Views of a Supply Chain

– Cycle View
• Customer…..(Customer order cycle) – Retailer….
…(Replenishment cycle)-Distributor………………
….(Manufacturing Cycle) – Manufacturer………..
……(Procurement cycle) – Supplier

Uncertainty and scale of order are the differences

between cycles
 Supply Chain Management – An Intro

• Process Views of a Supply Chain

– Push/Pull View (Speculative/Reactive)
• Processes in response to customer orders or in anticipation
of customer orders

• Supply Chain Macro Processes

– CRM customer relationship management
• Marketing, Pricing, Sales, Call center, Order management
– ISCM Internal supply chain mgmt
• Strategic, Demand & Supply planning, Fulfillment & Field Service
– SRM Supplier relationship mgmt
• Source, Negotiate, Buy, Design & supply collaboration
 Supply Chain Strategy
• Competitive (marketing & other value
chain activities) & Supply Chain Strategy

• Aim is to target Strategic Fit between the

two
 Supply Chain Strategy
• Steps to Achieve Strategic Fit
• Step 1
– Understanding the customer and supply chain
uncertainty
• Quantity of the product needed in each lot
• Response time that customers are willing to tolerate
• Variety of products needed
• Service level required
• Price
– Implied demand uncertainty
• High will have high margins, inaccurate forecasts and less
risk and vice versa for low (table salt v/s LCD TVs)
• Fig 2.2, p 34 (Spectrum)
 Supply Chain Strategy
• Steps to Achieve Strategic Fit
• Step 2
– Understanding the Supply Chain Capabilities
• Supply chain responsiveness (cost)
• Supply chain efficiency
• Spectrum will be Highly responsive to
Highly efficient
• Fig 2.4, p 36
 Supply Chain Strategy
• Steps to Achieve Strategic Fit
• Step 3
– Match Demand Uncertainty (DU) with
spectrum of responsive to efficiency
– If DU is low, design more efficient processes
– If DU is high, design more responsive
processes
– Fig 2.5, p 38
• Gateway case study ??