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all lecture notes supply chain management
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These are the comprehensive lecture notes of the supply chain management course, everything you need to know for the exam
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Supply chain management examSecond part of the first lecture
In the past we had manufacturers who were working with a few suppliers. They were selling the
products through few distribution channels. And a limited customer bases. So the interaction was
limited.
As the industrial revolution progressed, we see vertical integration. One example of vertical
integration is Ford Rouge plant. They make a car from iron to vehicle. They do everything themselves.
Later we see that many car manufacturers don´t really own the companies that they provide the
materials for the cars components.
Component and material suppliers are different firms.
Located in the same geographical area. But they belong to different companies. Materials are
received in the factory just in time. That means exactly in the sequence that they are needed for the
production to be completed. This is a new concept that we talk about the emergence of the Toyota
City concept.
So in the early supply chains we see:
- Geographical proximity
- Integrated ownership structures
Why is this the case?
- Transportation slow and costly. So transportation cost were high. It was slow and costly.
- Communication and information exchange challenges. It was more challenging than
nowadays. There were no IT technologies.
Today supply chains are characterized by multiple suppliers and multiple distribution channels. That
means fragmented supply chains where lots of interaction, communications and product flows
happen. Also SKU proliferation: companies more than ever offer their customers big variety of
products.
In contrast to FORD concept. Where there was a single factory producing everything themselves.
Now there are very many different components needed from different companies.
Globally dispersed manufacturing: the suppliers from a product can be all over the world.
This all increases the network complexity of the supply chains; because the firms offer a lot more to
their customers and the suppliers are all over the world.
Supply chains are tough to manage.
All the problems have a big consequence for the firms. They affect profitability, they may even force
firms to discharge personal. They may create share holders problems and so on.
Matching supply and demand is not only challenging for the case of new products or the case of the
retail sector forecasting consumer demand is more challenging.
Dealing with uncertainty:
- Matching supply and demand is difficult
- Forecasting doesn’t solve the problem. Forecasting helps in order to plan the supply chain
management activities better. The inventory, production planning and so on. But it is not the
only uncertainty. Usually there is also uncertainty in the supply side. We may have
uncertainty in the lead times, when the products or components that we need for
, manufacturing are received, we may have uncertainty with transportation times. But we also
have more disruptive events like the pandemic of earthquakes. Then you also get uncertainty
in whether are supplier can continue in their businesses or not. So lead times, transportation
times, natural disasters and supplier bankruptcy
- Multiple, inter-related sources of uncertainty.
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.
1. Supply chain coordination risks are associated with the day-to-day management of the
supply chain.
2. Disruption risks are caused by natural or manmade disasters.
Risk management framework
1. Identify the sources of potential disruptions
2. Assess the potential of the risk
3. Develop plans to mitigate the risk
- Contingency planning, insurance, redundancy (e.g, multiple suppliers).
First lecture part C: trends and developments
The main goal for every supply chain management is to minimize cost and maximize customer
service levels. So it is about finding the balance between cost and customer service. supply chain
management is not strictly a cost reduction paradigm. What the right balance is depends on the
industry where you operate in, the type of the product of the strategy that the company is following.
Sustainability: the ability to meet current resource needs without compromising the ability of future
generations to meet their needs.
Supply chains face a lot of pressure from various stakeholders, such as governments, customers but
even their own shareholders to be sustainable.
Sustainability has three pilars:
, - Economic prosperity: the supply chain should generate enough revenue or return on
investment for its shareholder and ensure that the economic viability of the supply chain.
- Environmental stewardship: more and more supply chains become green. Very often go
hand in hand with increased return on investment. Improving processes for example. but
also procurement and so on. It reduces waste. At the same time economic benefit for the
company and positive impact on the environment.
- Social responsibility: so they should adopt the business practices that are fair to their
employees. To the labor, to the community they are operating and serving. But also the
region where they conduct their businesses.
Another important trend that influences the supply chain a lot is online sales. The majority of the
products that customers buy online are clothing and foodwhere and books and electronics, skin care
and so on.
Some developments:
- Delivery charges a key parameter to select a online supplier. So people choose a retailer for
example because they have free delivery. That can only be achieved If you have good
practices in order fulfillment and keep costs low.
- Order fulfillment glitches detrimental for consumer loyalty. Like the customer receives the
wrong product or under the wrong conditions, then you lose customers.
- Multi-channel and alternative delivery options are growing. So companies that are not pure
online retailers or the other way around.
1. Click and collect
2. Fast delivery and many options
- Integration of technologies.
- Omni-channel order fulfillment strategies.
- Anticipatory shipping: is about using predictive analytics in order to be able to anticipate
where demand will occur. so you can predict the demand before the customer has placed
the order. Based on the browsing history and many more.
There are different ways to fulfill online orders:
- Amazon locker: people can pick their online order up in a locker
- Vending machine: frisdrank machine bijvoorbeeld.
There is a lot of innovation in how we can better fulfill anticipate demand and fulfill customer order.
Airborne fulfillment centers (AFC): the idea is you have a zeppelin that is powered with helium. And is
stationed close to points where we expect the search and demand. That could be city centrum or a
place where is a big event and so on. And then you have inventory close to demand that can be
transported through drones as demand arises. And there is a smaller zeppelin that does the
inventory.
- Amazon patent: for storing and deploying packages
- Goal: support same day or even same hour fulfillment.
Similar to this patent is mobile containers: there is a small mobile warehouse and there are
containers. The containers can be transported through ships or rail. they are mobile, it means they
can be stationed close to city centers, again close to points where we expect demand to happen.
They can receive signal or orders through wireless technology. And in the mobile warehouse are
robots that automatic pick up the order that is transported through drones.
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