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Summary Global Supply Chain Management
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Summary Global Supply Chain Management
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A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customerRequest. the supply chain includes all functions involved in receiving and filling a customer
request. ( product development, marketing, operations, distribution, finance, and customer
service)
A supply chain is dynamic and involves the constant flow of information, product, and
funds among different stages
A typical supply chain may involve a variety of stages
• Customers
• Retailers
• Wholesalers/distributors
• Manufacturers
• Component/raw material suppliers
The objective of every supply chain should be to maximize the overall value generated
(Supply Chain Surplus)
Supply Chain Surplus = Customer Value - Supply Chain Cost
The difference between the value of the product and its price remains with the customer as
consumer surplus (WTP = $40 Price = $30 Surplus = $40-$30= $10)
The difference between the revenue generated from the customer and the overall cost
across the supply chain becomes the supply chain profitability.
*Supply chain success should be measured in terms of supply chain surplus and not in terms of the
profits at an individual stage*
Supply chain management involves the management of supply chain assets and product,
information, and fund flows to grow the total supply chain surplus.
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.
,Decision phases (longest to shortest):
Supply chain strategy or design: During this phase, a 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
Supply chain planning: For decisions made during this phase, the time frame
considered is a quarter to a year. Therefore, the supply chain’s configuration determined in
the strategic phase is fixed. This configuration establishes constraints within which planning
must be done.
Supply chain operation: The time horizon here is weekly or daily. During this phase,
companies make decisions regarding individual customer orders. At the operational level,
supply chain configuration is considered fixed and planning policies are already defined
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.
A supply chain is 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.
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 (Demand uncertain)
Replenishment cycle
Manufacturing cycle
Procurement cycle
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 supply
chain and the desired outcome for each process
The SCOR model provides a description of supply chain
processes, a framework for relationships between these
processes, and a set of metrics to measure process
performance.
, 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 processes are initiated by a customer order, whereas push
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
Macro Processes:
1. Customer Relationship Management (CRM): all processes at the interface between the
firm and its customers
2. Internal Supply Chain Management (ISCM): all processes that are internal to the firm
3. Supplier Relationship Management (SRM): all processes at the interface between the
firm and its suppliers
Within a firm, all supply chain activities belong to one of three macro processes: CRM, ISCM,
and SRM. Integration among the three macro processes is crucial for successful supply chain
management.
Competitive strategy: competitive strategy defines, relative to its competitors, the set of
customer needs that it seeks to satisfy through its products and services. the competitive
strategy is defined based on how the customer prioritizes product cost, delivery time,
variety, and quality
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