Lecture week 1 Chapter 1&2
Supply Chain Strategy
What is supply chain – the whole set of companies that are needed for a final product to arrive at the
customer.
Supply chain management is a set of approaches utilized...to efficiently integrate suppliers,
manufacturers, warehouses, and stores....so that merchandise is produced and distributed at the
right quantities, to the right locations, and at the right time...in order to minimize system wide costs
while satisfying service level requirements.
Challenge a) coordination among partners to b) match supply with demand
Many firms offer a combination of goods and services
- Products are supported by services such as warranties and training
- Services are enhanced through the inclusion of products (bijv internet with internet router)
Every facility that impacts costs need to be considered
- Suppliers’ suppliers
- Customers’ customers
Efficiency and cost-effectiveness throughout the system is required
- Increased pressure for sustainability
- Increased risks/disruptions require agility and resilience
Multiple levels of activities
- Strategic – higher impact in the longer term. 2 categories 1) SC network design e.g. where do
I place factories, where do I locate DC’s, where are my suppliers located? 2) Procurement e.g.
do I do inhouse or outsourcing? What are criteria’s to select suppliers. Do I have 1 or multiple
suppliers.
1
, - Tactical – what is my demand, how do I manage and plan inventory, how often do I replenish
inventory, when do I start production to meet orders
- Operational – (daily weekly), how do I process my orders, what transport methods do I use.
We will focus on strategic and tactical decisions.
In the past:
- Fewer channel intermediaries
- Limited interactions and transactions
Today’s supply chains
- Fragmented supply chains
- SKU proliferation – big variety of products offered to customers
Challenges of matching supply and demand:
Supply chains are difficult to manage even without disruptions such as corona virus.
Dealing with uncertainty
- Matching supply and demand is difficult. lead times transportation times
- Forecasting doesn’t solve the problem. Natural disasters
- Multiple, inter-related sources of uncertainty. Supplier bankruptcy
Assessing risk
- Supply chain risk is the likelihood of a disruption that would impact the ability of a company
to continuously supply products or services
Supply chain coordination risks are associated with the day-to-day management of the
supply chain
Disruption risks are caused by natural or manmade disasters
- Risk Management Framework
1. Identify the sources of potential disruptions
2. Assess the potential impact of the risk
3. Develop plans to mitigate the risk
- Contingency planning, insurance, redundancy (e.g., multiple suppliers)
Trends and Developments:
Main goal of supply chain management:
Depending on the industry it depends how the balance is.
Sustainable operations
Sustainability is getting more important these days. Sustainability;
the ability to meet current resource needs without compromising
the ability of future generations to meet their needs
Online sales are forecasted to keep growing at double
digits! The majority of online sales are in
clothing/footwear, books, home electronics etc.
Some developments:
2
, - Delivery charges a key parameter to select an online supplier
- Order fulfillment glitches detrimental for consumer loyalty
- Multi-channel and alternative delivery options are growing
- Click and collect
- Fast delivery and many options (place, timeslot)
- Integration of technologies (e.g. texting consumers)
- Omni-channel order fulfillment strategies – e.g. order online but pick up in the store
- Anticipatory shipping – using predictive analytics in
order to anticipate where the demand will occur
before the customer has placed an order! Based on
things such as, previous order, what customers put in
their basket, comments on social media.
Amazon lockers / vending machine (with electronics)
A new stage in the evolution of scm: digital supply chains?
3
, Lecture week 2 Chapter 6&6A
Manufacturing Processes and Break-Even Analysis
Production process based on 2 main parts; 1) customers’ requirements 2) the organization goal
Production process used to manufacture items.
1) Source the parts needed
2) Make the product
3) Deliver the product
Customer order decoupling point (codp) -> the point more to the left lower inventory, customer can
make customized demand. Customer has to wait longer for delivery. The more to the left the
inventory investment is lower compared to the right, you need less stock.
Make-to-stock ready in the store to buy and leave (high inventory investment), the codp is closer
to the customer. Customer is served on-demand from finished goods inventory. Example: televisions,
clothing, packaged food products.
- Essential issue in satisfying customers is to balance the level of inventory against the level of
customer service. Easy with unlimited inventory, but inventory costs money.
- Trade off between the costs of inventory and level of customer service must be made
- Trade off can be improved by:
Better knowledge of customer demand
Faster transportation
Faster production
Flexible manufacturing
4
Supply Chain Strategy
What is supply chain – the whole set of companies that are needed for a final product to arrive at the
customer.
Supply chain management is a set of approaches utilized...to efficiently integrate suppliers,
manufacturers, warehouses, and stores....so that merchandise is produced and distributed at the
right quantities, to the right locations, and at the right time...in order to minimize system wide costs
while satisfying service level requirements.
Challenge a) coordination among partners to b) match supply with demand
Many firms offer a combination of goods and services
- Products are supported by services such as warranties and training
- Services are enhanced through the inclusion of products (bijv internet with internet router)
Every facility that impacts costs need to be considered
- Suppliers’ suppliers
- Customers’ customers
Efficiency and cost-effectiveness throughout the system is required
- Increased pressure for sustainability
- Increased risks/disruptions require agility and resilience
Multiple levels of activities
- Strategic – higher impact in the longer term. 2 categories 1) SC network design e.g. where do
I place factories, where do I locate DC’s, where are my suppliers located? 2) Procurement e.g.
do I do inhouse or outsourcing? What are criteria’s to select suppliers. Do I have 1 or multiple
suppliers.
1
, - Tactical – what is my demand, how do I manage and plan inventory, how often do I replenish
inventory, when do I start production to meet orders
- Operational – (daily weekly), how do I process my orders, what transport methods do I use.
We will focus on strategic and tactical decisions.
In the past:
- Fewer channel intermediaries
- Limited interactions and transactions
Today’s supply chains
- Fragmented supply chains
- SKU proliferation – big variety of products offered to customers
Challenges of matching supply and demand:
Supply chains are difficult to manage even without disruptions such as corona virus.
Dealing with uncertainty
- Matching supply and demand is difficult. lead times transportation times
- Forecasting doesn’t solve the problem. Natural disasters
- Multiple, inter-related sources of uncertainty. Supplier bankruptcy
Assessing risk
- Supply chain risk is the likelihood of a disruption that would impact the ability of a company
to continuously supply products or services
Supply chain coordination risks are associated with the day-to-day management of the
supply chain
Disruption risks are caused by natural or manmade disasters
- Risk Management Framework
1. Identify the sources of potential disruptions
2. Assess the potential impact of the risk
3. Develop plans to mitigate the risk
- Contingency planning, insurance, redundancy (e.g., multiple suppliers)
Trends and Developments:
Main goal of supply chain management:
Depending on the industry it depends how the balance is.
Sustainable operations
Sustainability is getting more important these days. Sustainability;
the ability to meet current resource needs without compromising
the ability of future generations to meet their needs
Online sales are forecasted to keep growing at double
digits! The majority of online sales are in
clothing/footwear, books, home electronics etc.
Some developments:
2
, - Delivery charges a key parameter to select an online supplier
- Order fulfillment glitches detrimental for consumer loyalty
- Multi-channel and alternative delivery options are growing
- Click and collect
- Fast delivery and many options (place, timeslot)
- Integration of technologies (e.g. texting consumers)
- Omni-channel order fulfillment strategies – e.g. order online but pick up in the store
- Anticipatory shipping – using predictive analytics in
order to anticipate where the demand will occur
before the customer has placed an order! Based on
things such as, previous order, what customers put in
their basket, comments on social media.
Amazon lockers / vending machine (with electronics)
A new stage in the evolution of scm: digital supply chains?
3
, Lecture week 2 Chapter 6&6A
Manufacturing Processes and Break-Even Analysis
Production process based on 2 main parts; 1) customers’ requirements 2) the organization goal
Production process used to manufacture items.
1) Source the parts needed
2) Make the product
3) Deliver the product
Customer order decoupling point (codp) -> the point more to the left lower inventory, customer can
make customized demand. Customer has to wait longer for delivery. The more to the left the
inventory investment is lower compared to the right, you need less stock.
Make-to-stock ready in the store to buy and leave (high inventory investment), the codp is closer
to the customer. Customer is served on-demand from finished goods inventory. Example: televisions,
clothing, packaged food products.
- Essential issue in satisfying customers is to balance the level of inventory against the level of
customer service. Easy with unlimited inventory, but inventory costs money.
- Trade off between the costs of inventory and level of customer service must be made
- Trade off can be improved by:
Better knowledge of customer demand
Faster transportation
Faster production
Flexible manufacturing
4
