Global Supply Chain

Management
Sreeja Nair -60
Kavita Sharma – 59
Victoria Swamy – 58
Ravi Sekhar – 57
T Saritha - 56
 A Brief Overview
Definition
Usefulness and practicality in today’s world
Advantages, disadvantages, and solutions
Considerations
Introduction to Global Supply Chain Management
An integrated process where several business
entities such as suppliers, manufacturer,
distributers and retailers work together to plan,
coordinate and control parts, material and finished
goods from suppliers to consumers.
The facilities, functions, and activities involved in
producing and delivering a product or service,
from suppliers to customers.
What is Global Supply Chain Management?
Built upon eight key business processes that are both cross-
functional and cross-firm in nature
Each process is managed by a cross-functional team, including
representatives from logistics, production, purchasing, finance,
marketing and research and development
Business Processes Of Supply Chain
SC performs business processes as follows:
The Customer Relationship Management Process
The Supplier Relationship Management Process
The Customer Service Management Process
The Demand Management Process
The Order Fulfillment Process
The Manufacturing Flow Management Process
The Product Development and Commercialization Process
The Returns Management Process
Software Packages

i2 Six: A comprehensive solution suite for spend/

production/ revenue/ logistics/ fulfillment optimization

Solution suites for network design & optimization/

manufacturing planning & scheduling/ global logistics
management/ service & parts management

JD EDWARD: The advanced planning software

to synchronize demand & planning/ network
Optimization/ production & distribution planning
Software Packages

ARIBA Spend Management: It helps

companies driving down enterprise wide spend

mySAP SCM: A complete supply chain

planning solution

iBann: A complete solution suite from demand

collaboration to order management
 Practicality and Usefulness
Help companies compete all over the world
Expand business operations
Offer new services and applications to meet global
customers needs
Give company a competitive advantage
Goal of the Global Supply Chain
Prompt and reliable delivery of high-quality
products and services at the least cost

To effectively meet rising customer

expectations
 Advantages
Diversified business and trading
Lower supply chain costs
Reduced cycle time
Competitive advantage
Untapped markets
Enhance speed and efficiency
Disadvantages
Member nations VS. Non member
nations
Inefficient and undersized
transportation and distribution
systems
Market instability
 Solutions
Duty specialists and trade specialists
Vertically integrating
Banding together
Infrastructure improvements
Flexibility
 Brainstorming Exercise

What are some reasons for

extending your business and
supply chain globally?
 Brainstorming Exercise
 Increase sales
 Satisfy shareholders
 Falling tariffs
 Increase in International Trade
 Increase in internet use throughout
the world.
Considerations when designing a global supply
chain
Strategic plan or Objective
goals
Uncertainty
Communication and information flow
Types and numbers of facilities and location
 Exercise
Make a list of pros and cons for developing a global
supply chain.
What are the different costs your company will
encounter?
Do the benefits or global business outweigh the costs?
 GSCM at Digital Equipment Corp.
HISTORY

1957: Founded by Ken Olsen

1961: Started Construction of first computer PDP-1
1978: Took Over the majority of minicomputer market
1980: Second Largest Computer company in the world
1990: DEC suddenly found its sales faltering
1998: DEC was sold to Compaq
2002: Compaq was taken over by HP
2003: Digital Global Soft is a well respected IT service
company in India. Earlier it was 51% subsidiary of DEC
 GSCM at Digital Equipment Corp.
DEC in Late 80s and Early 90s:

1987:
DEC successfully supported a full range of products for over 20
years with 33 plants in 13 countries including 30 distribution and
repair centers
1989-1990:
A mismatch among capacity, infrastructure, and demands of new
markets
1988 - 1993:
 Digital reengineered the business processes throughout
manufacturing and logistics.
 Corporate Logistics and Manufacturing initiated the development of
GSCM for simultaneously balancing the conflicting attributes of
manufacturing and logistics
 GSCM at Digital Equipment Corp.
 Decision Variables for GSCM
 Number, location and capacity of plants

 What product to build at which plant

Manufacturing
 Significance & location of tax heavens

 Number, location and capacity of DCs

Logistics
 Which DC should serve which customer

 Number and location of repair centers

Spare Parts
 Optimal design of spare parts
 GSCM at Digital Equipment Corp.

 Which supplier to keep

 Which product to buy in a nation Supplier Selection

 Which supplier should supply each

plant

 Location & availability of cheap labor

 Length of material pipeline in time Miscellaneous

 Export regulations, duty rates

 GSCM at Digital Equipment Corp.
 Objective Function for GSCM

 GSCM minimizes a weighted sum of total cost and activity

days
 Total cost includes

1. Production Costs
2. Inventory Costs
3. Material Handling Costs
4. Taxes
5. Facility/Production Line Fixed Costs
6. Transportation Costs
7. Duty Costs
 GSCM at Digital Equipment Corp.
 Constraints for GSCM

 Customer demand is met for each product, in each period, in

each customer region

 Limits on number of facilities making each product

 Limit on number of facilities using each manufacturing style

 Fixed charges for products made by each facility

 Fixed charges for facilities making any product

 Fixed charges for manufacturing style used by each facility

 Limited production capacity, inventory storage, and shipping

volume
 GSCM at Digital Equipment Corp.
 Solution Approach

The problem of realistic size and detail, the GSCM features

constitute a formidable class of large, difficult optimization
problem

Users are invited to advise and assist the solver by specifying

with each constraint just how much it would cost to violate the
constraint

Elastic penalties help solver decide which constraints are hard

and which are soft

The solver uses branch and bound enumeration

 GSCM at Digital Equipment Corp.

 Impact of GSCM on DEC (1990-1994)

 A reduction of $167 million in annual manufacturing cost

 A reduction of $200 million in annual logistics cost

 Number of plants was to be reduced from 33 to 12

 Five times more computers were manufactured

Arntzen, Brown, Harrison, and Trafton “ Global Supply Chain Management at

Digital Equipment Corporation”, Interfaces,1995, pp. 69-93
 Conclusions
 Supply Chain Planning: A critical factor in the
success and profitability of a company

 Short Product Life Cycle: Improper planning can

take the company out of business

 Bad News: Planning is an hard problem to formulate

as well as solve

 Good News: Plethora of Commercially available

software for supply chain planning
Thank you all for listening