Global Supply Chain Management
Chapter 1: Understanding the Supply Chain
1.1 What is a Supply Chain?
- Supply chain More a supply network/web
o Customers
o Retailers
o Wholesalers/distributors
o Manufacturers
o Component/raw material suppliers
1.2 The objective of a Supply Chain
- Objective to maximize the overall value generated
o Value = supply chain surplus = the difference between what the value of the final
product is to the customer and the costs the entire supply chain incurs in filling the
customer’s request.
Supply chain Surplus = Customer Value – Supply Chain Cost
o Consumer surplus = the difference between the value of the product and its price
remains with the customer.
o Supply chain profitability = the difference between the revenue generated from the
customer and the overall cost across the supply chain = The total profit to be shared
across all supply chain stages and intermediaries.
- Effective supply chain management involves the management of supply chain assets and
product, information, and fund flows to grow the total supply chain surplus.
1.3 The importance of supply chain decisions
- Supply chain design, planning, and operation decisions play a significant role in the success or
failure of a firm. To stay competitive, supply chains must adapt to changing technology and
customer expectations.
1.4 Decision phases in a supply chain
There are three decision making phases:
1. Supply chain strategy or design: During this phase, company decides how to structure the
supply chain over the next several years. It decides what the chain’s configuration will be,
how resources will be allocated, and what processes each stage will perform.
2. Supply chain planning: Time frame a quarter to a year
3. Supply chain operation: Time horizon here is weekly or daily. During this phase, companies
make decisions regarding individual customer orders. The goal of supply chain operations is
to handle incoming customer orders in the best possible manner and to exploit the reduction
of uncertainty and optimize performance.
Supply chain decision phases may be categorized as design, planning, or operational, depending on
the time frame during which the decisions made apply, Design decisions constrain or enable good
planning, which in turn constrains or enables effective operation.
, 1.5 Process views of a supply chain
- Supply chain = a sequence of processes and flows that take place within and between
different stages and combine to fill a customer need for a product. There are two ways to
view the processes performed in a supply chain.
o 1. Cycle view: The processes in a supply chain are divided into a series of cycles, each
performed at the interface between two successive stages of the supply chain.
Customer order cycle
Replenishment cycle
Manufacturing cycle
Procurement cycle
Within each cycle, the goal of the buyer is to ensure product availability and to
achieve economies of scale ordering. A SCOR model describes the chain in such a
way. It is based on a process view of the supply chain using four distinct
management processes: (1) plan; (2) source; (3) make; and (4) deliver. A cycle view of
the supply chain clearly defines the processes involved and the owners of each
process. This view is useful when considering operational decisions because it
specifies the roles and responsibilities of each member of the chain and the desired
outcome for each process.
o 2. Push/pull View: The processes in a supply chain are divided into two categories,
depending on whether they are executed in response to a customer order or in
anticipation of customer orders. Pull/reactive processes are initiated by a customer
order, whereas push/speculative processes are initiated and performed in
anticipation of customer orders. A push/pull view of the supply chain categorizes
processes based on whether they are initiated in response to a customer order (pull)
or in anticipation of a customer order (push). This view is useful when considering
strategic decisions relating to supply chain design.
Push/pull boundary – separates push processes from pull processes (fig.1-5)
Supply chain Macro Processes in a Firm
1. Customer Relationship Management (CRM): All processes at the interface between the firm
and its customers. Market, price, sell, call center, order management.
2. Internal Supply Chain Management (ISCM): All processes that are internal to the firm.
Strategic planning, demand planning, supply planning, fulfilment, field service.
3. Supplier Relationship Management (SRM): All processes at the interface between the firm
and its suppliers. Source, negotiate, buy, design collaboration, supply collaboration.
Within a firm, all supply chain activities belong to one or three macro processes: CRM, ISCM, and
SRM. Integration among the three macro processes is crucial for successful supply chain
management.
Chapter 2 Supply Chain Performance Achieving Strategic Fit and Scope
2.1 Competitive and supply chain strategies
- Competitive strategy = relative to its competitors, the set of customer needs that it seek to
satisfy through its products and services. Based on how the customer prioritizes product
cost, delivery time, variety, and quality. It targets one or more customer segments and aims
to provide products and services that satisfy these customers’ needs.
Chapter 1: Understanding the Supply Chain
1.1 What is a Supply Chain?
- Supply chain More a supply network/web
o Customers
o Retailers
o Wholesalers/distributors
o Manufacturers
o Component/raw material suppliers
1.2 The objective of a Supply Chain
- Objective to maximize the overall value generated
o Value = supply chain surplus = the difference between what the value of the final
product is to the customer and the costs the entire supply chain incurs in filling the
customer’s request.
Supply chain Surplus = Customer Value – Supply Chain Cost
o Consumer surplus = the difference between the value of the product and its price
remains with the customer.
o Supply chain profitability = the difference between the revenue generated from the
customer and the overall cost across the supply chain = The total profit to be shared
across all supply chain stages and intermediaries.
- Effective supply chain management involves the management of supply chain assets and
product, information, and fund flows to grow the total supply chain surplus.
1.3 The importance of supply chain decisions
- Supply chain design, planning, and operation decisions play a significant role in the success or
failure of a firm. To stay competitive, supply chains must adapt to changing technology and
customer expectations.
1.4 Decision phases in a supply chain
There are three decision making phases:
1. Supply chain strategy or design: During this phase, company decides how to structure the
supply chain over the next several years. It decides what the chain’s configuration will be,
how resources will be allocated, and what processes each stage will perform.
2. Supply chain planning: Time frame a quarter to a year
3. Supply chain operation: Time horizon here is weekly or daily. During this phase, companies
make decisions regarding individual customer orders. The goal of supply chain operations is
to handle incoming customer orders in the best possible manner and to exploit the reduction
of uncertainty and optimize performance.
Supply chain decision phases may be categorized as design, planning, or operational, depending on
the time frame during which the decisions made apply, Design decisions constrain or enable good
planning, which in turn constrains or enables effective operation.
, 1.5 Process views of a supply chain
- Supply chain = a sequence of processes and flows that take place within and between
different stages and combine to fill a customer need for a product. There are two ways to
view the processes performed in a supply chain.
o 1. Cycle view: The processes in a supply chain are divided into a series of cycles, each
performed at the interface between two successive stages of the supply chain.
Customer order cycle
Replenishment cycle
Manufacturing cycle
Procurement cycle
Within each cycle, the goal of the buyer is to ensure product availability and to
achieve economies of scale ordering. A SCOR model describes the chain in such a
way. It is based on a process view of the supply chain using four distinct
management processes: (1) plan; (2) source; (3) make; and (4) deliver. A cycle view of
the supply chain clearly defines the processes involved and the owners of each
process. This view is useful when considering operational decisions because it
specifies the roles and responsibilities of each member of the chain and the desired
outcome for each process.
o 2. Push/pull View: The processes in a supply chain are divided into two categories,
depending on whether they are executed in response to a customer order or in
anticipation of customer orders. Pull/reactive processes are initiated by a customer
order, whereas push/speculative processes are initiated and performed in
anticipation of customer orders. A push/pull view of the supply chain categorizes
processes based on whether they are initiated in response to a customer order (pull)
or in anticipation of a customer order (push). This view is useful when considering
strategic decisions relating to supply chain design.
Push/pull boundary – separates push processes from pull processes (fig.1-5)
Supply chain Macro Processes in a Firm
1. Customer Relationship Management (CRM): All processes at the interface between the firm
and its customers. Market, price, sell, call center, order management.
2. Internal Supply Chain Management (ISCM): All processes that are internal to the firm.
Strategic planning, demand planning, supply planning, fulfilment, field service.
3. Supplier Relationship Management (SRM): All processes at the interface between the firm
and its suppliers. Source, negotiate, buy, design collaboration, supply collaboration.
Within a firm, all supply chain activities belong to one or three macro processes: CRM, ISCM, and
SRM. Integration among the three macro processes is crucial for successful supply chain
management.
Chapter 2 Supply Chain Performance Achieving Strategic Fit and Scope
2.1 Competitive and supply chain strategies
- Competitive strategy = relative to its competitors, the set of customer needs that it seek to
satisfy through its products and services. Based on how the customer prioritizes product
cost, delivery time, variety, and quality. It targets one or more customer segments and aims
to provide products and services that satisfy these customers’ needs.
