Supply chain management
Les 1: Introduction and strategic fit
1. Supply chain management
Operations management – Transformation model
• Internal operations should be considered within a broader supply chain context.
• An organization does not operate in isolation but is responsible for dedicated activities
within one or more supply networks.
Supply Chain management
1
,Supply network
• Chain (or network) of organizations that transforms raw materials into end products or
services and delivers these to the end customer.
• Supply chain mapping = Process of documenting information across all organizations
involved in a given supply chain to create a global map of the network.
Flows through the Supply network
Upstream and downstream tiers
2
,Logistics vs. supply chain management
• Logistics refers to the movement, storage, and flow of goods, services and information
within the overall supply chain.
• Supply chain management is an overarching concept.
o It can be seen as a way to link major business processes within and across
companies into a high-performance business model that drives competitive
advantage.
o More oriented towards strategy development and managerial considerations.
o As such it creates the operational framework within which logistics can take place.
2. Supply chain strategy
Examples of strategic goals:
• Reduce the system-wide cost.
• Provide high quality products.
• Be responsive to changes in the market (agility).
• Increase the sustainability of the system.
Developing a supply chain strategy
• Skinner’s strategic trade-oGs model (1969).
o You cannot be good at everything.
3
, o The way you setup and run your firm / supply chain should be in line with what you
would like to achieve.
• Fisher’s model (1997).
o Relationship between the nature of the demand for a company’s product and the
supply chain that can best satisfy that demand.
o Functional products vs. innovative products.
• Chopra’s model (2001).
o Introduces the concepts implied uncertainty and strategic fit.
o Implied uncertainty = The uncertainty that a supply chain faces due to the portion
of demand that the supply chain itself has to handle.
Strategic fit
• Alignment between competitive strategy and supply chain strategy.
• Consistency between the customer priorities that the supply chain hopes to satisfy and
the supply chain capabilities that the supply chain strategy aims to build.
• Should be shared by all entities in the supply chain.
Developing a supply chain strategy with strategic fit
STEP 1. Understanding the Customer and Supply Uncertainty.
• Identify the needs and related uncertainties of the customer segment being served.
o Customer segmentation. The process of dividing customers into groups based
on specific criteria such as demand patterns, service needs, product
preferences, geographical locations, and profitability.
4
Les 1: Introduction and strategic fit
1. Supply chain management
Operations management – Transformation model
• Internal operations should be considered within a broader supply chain context.
• An organization does not operate in isolation but is responsible for dedicated activities
within one or more supply networks.
Supply Chain management
1
,Supply network
• Chain (or network) of organizations that transforms raw materials into end products or
services and delivers these to the end customer.
• Supply chain mapping = Process of documenting information across all organizations
involved in a given supply chain to create a global map of the network.
Flows through the Supply network
Upstream and downstream tiers
2
,Logistics vs. supply chain management
• Logistics refers to the movement, storage, and flow of goods, services and information
within the overall supply chain.
• Supply chain management is an overarching concept.
o It can be seen as a way to link major business processes within and across
companies into a high-performance business model that drives competitive
advantage.
o More oriented towards strategy development and managerial considerations.
o As such it creates the operational framework within which logistics can take place.
2. Supply chain strategy
Examples of strategic goals:
• Reduce the system-wide cost.
• Provide high quality products.
• Be responsive to changes in the market (agility).
• Increase the sustainability of the system.
Developing a supply chain strategy
• Skinner’s strategic trade-oGs model (1969).
o You cannot be good at everything.
3
, o The way you setup and run your firm / supply chain should be in line with what you
would like to achieve.
• Fisher’s model (1997).
o Relationship between the nature of the demand for a company’s product and the
supply chain that can best satisfy that demand.
o Functional products vs. innovative products.
• Chopra’s model (2001).
o Introduces the concepts implied uncertainty and strategic fit.
o Implied uncertainty = The uncertainty that a supply chain faces due to the portion
of demand that the supply chain itself has to handle.
Strategic fit
• Alignment between competitive strategy and supply chain strategy.
• Consistency between the customer priorities that the supply chain hopes to satisfy and
the supply chain capabilities that the supply chain strategy aims to build.
• Should be shared by all entities in the supply chain.
Developing a supply chain strategy with strategic fit
STEP 1. Understanding the Customer and Supply Uncertainty.
• Identify the needs and related uncertainties of the customer segment being served.
o Customer segmentation. The process of dividing customers into groups based
on specific criteria such as demand patterns, service needs, product
preferences, geographical locations, and profitability.
4
