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PowerPoint presentation to accompanyChopra and Meindl Supply Chain Management,5e1-1Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-1Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-1Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-1Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.Understanding the Supply Chain1Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-2Learning Objectives1.Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm.2.Identify the three key supply chain decision phases and explain the significance of each one.3.Describe the cycle and push/pull views of a supply chain.4.Classify the supply chain macro processes in a firm.Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-3What is a Supply Chain?All stages involved,directly or indirectly,in fulfilling a customer requestIncludes manufacturers,suppliers,transporters,warehouses,retailers,and customersWithin each company,the supply chain includes all functions involved in fulfilling a customer request(product development,marketing,operations,distribution,finance,customer service)Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-4What is a Supply Chain?Customer is an integral part of the supply chainIncludes movement of products from suppliers to manufacturers to distributors and information,funds,and products in both directionsMay be more accurate to use the term“supply network”or“supply web”Typical supply chain stages:customers,retailers,distributors,manufacturers,suppliersAll stages may not be present in all supply chains(e.g.,no retailer or distributor for Dell)Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-5What is a Supply Chain?Figure 1-11-6Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.Flows in a Supply ChainFigure 1-2Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-7The Objective of a Supply ChainMaximize overall value createdSupply Chain Surplus=Customer Value Supply Chain CostCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-8The Objective of a Supply ChainExample:a customer purchases something for$60(revenue)Supply chain incurs costs(information,storage,transportation,components,assembly,etc.)Difference between$60 and the sum of all of these costs is the supply chain profitSupply chain profitability is total profit to be shared across all stages of the supply chainSuccess should be measured by total supply chain profitability,not profits at an individual stageCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-9Importance of Supply Chain DecisionsWal-Mart,$1 billion sales in 1980 to$408 billion in 2010Seven-Eleven Japan,1 billion sales in 1974 to 3 trillion in 2009Dell,$56 billion in 2006,adopted new supply chain strategiesCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-10Decision Phases of a Supply ChainSupply chain strategy or design How to structure the supply chain over the next several yearsSupply chain planning Decisions over the next quarter or yearSupply chain operation Daily or weekly operational decisionsCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-11Supply Chain Strategy or DesignDecisions about the structure of the supply chain and what processes each stage will performStrategic supply chain decisions Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systemsSupply chain design must support strategic objectivesSupply chain design decisions are long-term and expensive to reverse must take into account market uncertaintyCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-12Supply Chain PlanningDefinition of a set of policies that govern short-term operationsFixed by the supply configuration from previous phaseStarts with a forecast of demand in the coming yearCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-13Supply Chain PlanningPlanning decisions:Which markets will be supplied from which locations Planned buildup of inventories Subcontracting,backup locations Inventory policies Timing and size of market promotionsMust consider in planning decisions demand uncertainty,exchange rates,competition over the time horizonCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-14Supply Chain OperationTime horizon is weekly or dailyDecisions regarding individual customer ordersSupply chain configuration is fixed and operating policies are determinedGoal is to implement the operating policies as effectively as possibleAllocate 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 ordersMuch less uncertainty(short time horizon)Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-15Process View of a Supply ChainCycle View:processes in a supply chain are divided into a series of cycles,each performed at the interfaces between two successive supply chain stagesPush/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)Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-16Cycle Viewof Supply Chain ProcessesFigure 1-3Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-17Cycle View of Supply Chain ProcessesFigure 1-4Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-18Push/Pull View of Supply ChainsFigure 1-5Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-19Push/Pull View of Supply Chain ProcessesSupply chain processes fall into one of two categories depending on the timing of their execution relative to customer demandPull: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 processesCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-20Push/Pull View of Supply Chain ProcessesUseful in considering strategic decisions relating to supply chain design more global view of how supply chain processes relate to customer ordersCan combine the push/pull and cycle views L.L.Bean DellThe relative proportion of push and pull processes can have an impact on supply chain performanceCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-21Push/Pull View of L.L.BeanFigure 1-6Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-22Push/Pull View DellFigure 1-7Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-23Supply Chain Macro ProcessesSupply 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 managementCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-24Supply Chain Macro Processes Figure 1-8Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-25Examples of Supply ChainsGateway and AppleZaraW.W.Grainger and McMaster-CarrToyotaAmazonCopyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-26Gateway and Apple1.Why did Gateway choose not to carry any finished-product inventory at its retail stores?Why did Apple choose to carry inventory at its stores?2.Should a firm with an investment in retail stores carry any finished-goods inventory?What are the characteristics of products that are most suitable to be carried in finished-goods inventory?What characterizes products that are best manufactured to order?3.How does product variety affect the level of inventory a retail store must carry?4.Is a direct selling supply chain without retail stores always less expensive than a supply chain with retail stores?5.What factors explain the success of Apple retail and the failure of Gateway country stores?Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-27Zara1.What advantage does Zara gain against the competition by having a very responsive supply chain?2.Why has Inditex chosen to have both in-house manufacturing and outsourced manufacturing?Why has Inditex maintained manufacturing capacity in Europe even though manufacturing in Asia is much cheaper?3.Why does Zara source products with uncertain demand from local manufacturers and products with predictable demand from Asian manufacturers?4.What advantage does Zara gain from replenishing its stores multiple times a week compared to a less frequent schedule?How does the frequency of replenishment affect the design of its distribution system?5.Do you think Zaras responsive replenishment infrastructure is better suited for online sales or retail sales?Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-28W.W.Grainger and McMaster-Carr1.How many DCs should be built and where should they be located?2.How should product stocking be managed at the DCs?Should all DCs carry all products?3.What products should be carried in inventory and what products should be left with the supplier to be shipped directly in response to a customer order?4.What products should W.W.Grainger carry at a store?5.How should markets be allocated to DCs in terms of order fulfillment?What should be done if an order cannot be completely filled from a DC?Should there be specified backup locations?How should they be selected?6.How should replenishment of inventory be managed at the various stocking locations?7.How should Web orders be handled relative to the existing business?Is it better to integrate the Web business with the existing business or to set up separate distribution?8.What transportation modes should be used for order fulfillment and stock replenishment?Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-29Toyota1.Where should plants be located,what degree of flexibility should each have,and what capacity should each have?2.Should plants be able to produce for all markets?3.How should markets be allocated to plants?4.What kind of flexibility should be built into the distribution system?5.How should this flexible investment be valued?6.What actions may be taken during product design to facilitate this flexibility?Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-30A1.Why is Amazon building more warehouses as it grows?How many warehouses should it have and where should they be located?2.What advantages does selling books via the Internet provide over a traditional bookstore?Are there any disadvantages to selling via the Internet?3.Should Amazon stock every product it sells?4.What advantage can bricks-and-mortar players derive from setting up an online channel?How should they use the two channels to gain maximum advantage?5.What advantages/disadvantages does the online channel enjoy in the sale of shoes(diapers)relative to a retail store?6.For what products does the online channel offer the greater advantage relative to retail stores?What characterizes these products?Copyright 2013 Pearson Education,Inc.publishing as Prentice Hall.1-31Summary of Learning Objectives1.Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm.2.Identify the three key supply chain decision phases and explain the significance of each one.3.Describe the cycle and push/pull views of a supply chain.4.Classify the supply chain macro processes in a firm.
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