Supply Chain Management: A Comprehensive Overview
Supply Chain Flows and Decision Phases
Explain why supply chain flows are important.
Supply chain flows are crucial because the design and management of product, information, and cash flows directly impact a supply chain’s success. Many companies owe their achievements to effective supply chain design and management, while others falter due to their inability to do so.
Explain the 3 decision phases (categories) that must be made in a successful supply chain.
The three decision phases in a supply chain are:
- Supply Chain Strategy (or Design): Determines the chain’s configuration, resource allocation, and processes for each stage, establishing the long-term structure.
- Supply Chain Planning: Covers decisions with a time frame of 3 months to a year, working within the strategy’s constraints. This includes market allocation, subcontracting, inventory policies, and promotion timing.
- Supply Chain Operation: Focuses on weekly or daily decisions concerning individual customer orders.
Cycle and Push/Pull Views of Supply Chain Processes
Describe the cycle view of the processes within a supply chain.
The cycle view divides the supply chain into four cycles:
- Customer Order Cycle: Occurs at the customer/retailer interface, encompassing processes for receiving and fulfilling customer orders.
- Replenishment Cycle: Occurs at the retailer/distributor interface, involving processes for replenishing retailer inventory.
- Manufacturing Cycle: Typically occurs at the distributor/manufacturer (or retailer/manufacturer) interface, including processes for replenishing distributor (or retailer) inventory.
- Procurement Cycle: Occurs at the manufacturer/supplier interface, ensuring material availability for manufacturing.
Explain the push/pull view of the processes within a supply chain.
The push/pull view categorizes processes based on their timing relative to customer orders:
- Pull Processes: Initiated in response to a customer order (reactive).
- Push Processes: Initiated in anticipation of customer orders based on a forecast (speculative).
The push/pull boundary separates these two categories. This view is valuable for strategic supply chain design decisions.
Macro Processes and Push/Pull Differences
Explain the three macro processes within a supply chain.
The three macro processes are:
- Customer Relationship Management (CRM): Focuses on the firm-customer interface (marketing, sales, order management).
- Internal Supply Chain Management (ISCM): Encompasses internal processes (demand/supply planning, inventory management, order fulfillment).
- Supplier Relationship Management (SRM): Focuses on the firm-supplier interface (supplier selection, negotiation, communication).
Discuss the differences of push and pull supply chain processes.
Processes are categorized based on their timing relative to customer demand:
- Pull Processes: Executed in response to a customer order (reactive).
- Push Processes: Executed in anticipation of customer orders based on a forecast (speculative).
The push/pull boundary separates these processes. Push processes operate under uncertainty, while pull processes operate with known demand but are constrained by inventory and capacity decisions made in the push phase.
Value Chain and Keys to Success
Sketch the generic value chain for a company and briefly describe the contributions of each of its elements.
The generic value chain includes:
- New Product Development: Creates product specifications.
- Marketing and Sales: Generate demand and provide customer feedback.
- Operations: Transforms inputs into outputs.
- Distribution: Delivers the product or brings the customer to it.
- Service: Responds to customer requests.
Supporting functions include finance, accounting, IT, and human resources.
Discuss the two keys to the success or failure of a company.
A company’s success depends on:
- Strategic Fit: Aligning competitive and functional strategies.
- Process and Resource Alignment: Structuring processes and resources to execute strategies effectively.
Achieving Strategic Fit and Product Life Cycle Impact
List and explain the three basic steps to achieving strategic fit.
The steps are:
- Understanding Customer Needs and Uncertainty: Defining desired cost and service requirements based on customer needs and supply chain uncertainty.
- Understanding Supply Chain Capabilities: Recognizing the strengths of the current supply chain design.
- Achieving Strategic Fit: Restructuring the supply chain or altering the strategy to align capabilities with customer needs.
Discuss the impact of the product life cycle on strategic fit between implied demand uncertainty and supply chain responsiveness.
As products go through their life cycle, the demand characteristics and the needs of the customer segments being served change. Supply characteristics also change as the product and production technologies mature. High-tech products are particularly prone to these life cycle swings over a very compressed time span. A product goes through life cycle phases from the introductory phase, when only the leading edge of customers is interested in it and supply is uncertain, all the way to the point at which the product becomes a commodity, the market is saturated, and supply is predictable. Thus, if a company is to maintain strategic fit, its supply chain strategy must evolve as its products enter different phases. As products mature, the corresponding supply chain strategy should, in general, move from being responsive to being efficient. The key point here is that demand and supply characteristics change over a product’s life cycle. Because demand and supply characteristics change, the supply chain strategy must also change over the product life cycle if a company is to continue achieving strategic fit. Explain scope of strategic fit. Scope of strategic fit refers to the functions and stages that devise an integrated strategy with a shared objective. It is a key issue relating to strategic fit in terms of supply chain stages, across which the strategic fit applies. At one extreme, every operation within each functional area devises its own independent strategy with the objective of optimizing its individual performance. In this case, the scope of strategic fit is restricted to an operation in a functional area within a stage of the supply chain. At the opposite extreme, all functional areas within all stages of the supply chain devise strategy jointly with a common objective of maximizing supply chain profit. In this case, the scope of strategic fit extends to the entire supply chain. Expanding the scope of strategic fit improves supply chain performance. The scope of strategic fit can be represented on a two-dimensional grid. Horizontally, the scope of strategic fit is considered across different supply chain stages, starting from suppliers and moving all the way along the chain to the customer. Vertically, the scope is applied to the fit achieved across different functional strategies, competitive, product development, supply chain, and marketing.