Supply Chain Management: Flows, Decisions, and Strategies
Supply Chain Flows and Decision Phases
Explain why supply chain flows are important.
Supply chain flows are crucial due to the direct link between their design and management (encompassing product, information, and cash flows) and the overall success of a supply chain. A well-designed and managed supply chain is often a key factor in a company’s triumph, while failures can frequently be attributed to an inability to effectively handle these flows.
Explain the 3 decision phases (categories) that must be made in a successful supply chain.
The three critical decision phases in a successful supply chain are:
- Supply Chain Strategy (Design): This phase, spanning several years, focuses on determining the chain’s configuration, resource allocation, and processes for each stage. It lays the foundation for the supply chain’s structure.
- Supply Chain Planning: Covering a timeframe of 3 months to a year, this phase works within the strategic framework. Key decisions include market allocation, subcontracting, inventory policies, and marketing promotions.
- Supply Chain Operation: Operating on a weekly or daily basis, this phase addresses individual customer orders, ensuring smooth order fulfillment and efficient operations.
Cycle View and Push/Pull Perspective
Describe the cycle view of the processes within a supply chain.
The cycle view segments the supply chain into four cycles across five stages:
- Customer Order Cycle: Occurring at the customer/retailer interface, this cycle manages order receipt and fulfillment.
- Replenishment Cycle: At the retailer/distributor interface, this cycle focuses on replenishing retailer inventory.
- Manufacturing Cycle: Typically at the distributor/manufacturer (or retailer/manufacturer) interface, this cycle replenishes distributor (or retailer) inventory.
- Procurement Cycle: Occurring at the manufacturer/supplier interface, this cycle ensures timely 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 trigger:
- Pull Processes: Initiated by customer orders, these are reactive and respond to actual demand.
- Push Processes: Initiated in anticipation of customer orders based on forecasts, these are speculative.
The push/pull boundary demarcates these processes, offering a strategic lens for supply chain design.
Macro Processes and Value Chain
Explain the three macro processes within a supply chain.
The three macro processes within a supply chain are:
- Customer Relationship Management (CRM): Encompasses processes at the firm-customer interface, including marketing, sales, and order management.
- Internal Supply Chain Management (ISCM): Focuses on internal processes like demand/supply planning, inventory management, and order fulfillment.
- Supplier Relationship Management (SRM): Manages the firm-supplier interface, including supplier selection, negotiation, and communication.
Discuss the differences of push and pull supply chain processes.
Push processes, driven by forecasts, operate in uncertainty, while pull processes, triggered by actual demand, operate with known demand but are constrained by prior inventory and capacity decisions.
Sketch the generic value chain for a company and briefly describe the contributions of each of its elements.
The generic value chain comprises:
- New Product Development: Creates product specifications.
- Marketing and Sales: Generate demand and gather customer feedback.
- Operations: Transforms inputs into the final product.
- Distribution: Delivers the product to the customer.
- Service: Provides customer support.
Supporting functions include finance, accounting, IT, and HR.
Keys to Success and Strategic Fit
Discuss the two keys to the success or failure of a company.
A company’s success hinges on:
- Strategic Alignment: Ensuring all functional strategies align with the overall competitive strategy.
- Effective Execution: Structuring processes and resources to effectively execute these strategies.
List and explain the three basic steps to achieving strategic fit.
Achieving strategic fit involves:
- Understanding Customer and Supply Chain Uncertainty: Identifying customer needs and potential supply chain disruptions.
- Understanding Supply Chain Capabilities: Recognizing the strengths and limitations of the existing supply chain.
- Achieving Strategic Fit: Aligning supply chain capabilities with customer needs, potentially requiring restructuring or strategy adjustments.
Discuss the impact of the product life cycle on strategic fit between implied demand uncertainty and supply chain responsiveness.
As products evolve through their life cycle, demand and supply characteristics shift. A responsive supply chain is crucial in the early stages, while efficiency becomes paramount as the product matures. Maintaining strategic fit requires adapting the supply chain strategy to these evolving characteristics.
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.