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Summary Global Supply Chain Management
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Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies. Third edition, Simchi-Levi and Kaminsky. A 4th year IBMS course.
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MNP2602 ASSIGNMENT 1 SEMESTER 2 2023 (DUE Friday, 11 August 2023, 4:00 PM )
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Summary Supply Chain Management - Y3Q1
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Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies Book Summary Chapter 1-12+14
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Summary Global Supply Chain managementLiza Jansen
Content
Chapter 1: Introduction to Supply Chain Management......................................................................5
1.1What is supply Chain Management?............................................................................................5
1.2The development chain.................................................................................................................5
1.3Global optimization.......................................................................................................................5
1.4Managing uncertainty and risk.....................................................................................................5
1.5The evolution of supply chain management.................................................................................6
1.6The complexity..............................................................................................................................6
1.7Key issues in supply chain management.......................................................................................6
Chapter 2: Inventory management and risk pooling..........................................................................7
2.1 Introduction.................................................................................................................................7
2.2 Single stage inventory control......................................................................................................7
2.2.1 the economic lot size model.................................................................................................7
2.2.7 The effect of demand uncertainty.........................................................................................8
2.2.3 Single period models.............................................................................................................8
2.2.4 Initial inventory.....................................................................................................................9
2.2.5 Multiple order opportunities................................................................................................9
2.2.6 Continuous review policy......................................................................................................9
2.2.7 Various lead times...............................................................................................................10
2.2.8 Periodic review policy.........................................................................................................10
2.2.9 Service level optimization...................................................................................................11
2.3 Risk pooling................................................................................................................................11
2.4 centralized versus decentralized systems...................................................................................12
2.5 Managing inventory in the supply chain....................................................................................12
2.6 Practical issues...........................................................................................................................13
2.7 Forecasting.................................................................................................................................13
2.7.1 judgment methods..............................................................................................................14
2.7.2 Market research methods...................................................................................................14
2.7.3 Time-series methods...........................................................................................................14
2.7.4 Causal methods...................................................................................................................14
Chapter 3: Network planning...........................................................................................................15
3.1 Introduction...............................................................................................................................15
3.2 Network design..........................................................................................................................15
3.2.1 Data collection....................................................................................................................15
3.2.2 Data aggregation.................................................................................................................15
3.2.3 Transportation rates............................................................................................................15
3.2.4 Mileage Estimation..............................................................................................................16
3.2.5 Warehouse costs.................................................................................................................16
3.2.7 Potential warehouse locations............................................................................................16
3.2.8 Service level requirements..................................................................................................16
3.2.9 Future demand....................................................................................................................16
3.2.11 Solution techniques...........................................................................................................16
3.2.12 key features of a network configuration SCP.....................................................................17
3.3 Inventory positioning and logistics coordination........................................................................17
3.3.1 Strategic safety stock...........................................................................................................17
3.3.2 Integrating inventory positioning and network design........................................................17
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, 3.4 Resource allocation....................................................................................................................18
Chapter 4: Supply contracts.............................................................................................................19
4.1 Introduction...............................................................................................................................19
4.2 Strategic components................................................................................................................19
4.2.1 Supply contracts..................................................................................................................19
4.2.2 Limitations...........................................................................................................................20
4.3 Contracts for make-to-stock/make-to-order supply chains........................................................20
4.4 contracts with asymmetric information.....................................................................................20
4.5 Contracts for nonstrategic components.....................................................................................20
Chapter 5: The value of information................................................................................................22
5.1 Introduction...............................................................................................................................22
5.2 The bullwhip effect.....................................................................................................................22
5.2.2 The impact of centralized information on the bullwhip effect............................................22
5.2.3 Methods for coping with the bullwhip effect......................................................................23
5.3 Information sharing and incentives............................................................................................23
5.4 Effective forecasts......................................................................................................................23
5.7 Lead-time reduction...................................................................................................................23
5.8 Information and supply chain trade offs....................................................................................24
5.8.1 Conflicting objectives in the supply chain...........................................................................24
5.8.2 Designing the supply chain for conflicting goals..................................................................24
5.9 Decreasing marginal value of information.................................................................................25
Chapter 6: Supply chain integration.................................................................................................26
6.2 Push, pull and push-pull systems................................................................................................26
6.2.1 Push-based supply chain.....................................................................................................26
6.2.2 Pull-based supply chain.......................................................................................................26
6.2.3 Push-pull supply chain.........................................................................................................26
6.2.4 Identifying the appropriate supply chain strategy...............................................................27
6.2.5 Implementing a push-pull strategy......................................................................................27
6.3 the impact of lead time..............................................................................................................27
6.4 Demand-driven strategies..........................................................................................................27
6.5 The impact of the internet on supply chain strategies................................................................28
6.5.1 What is E-business?.............................................................................................................28
6.5.5 impact on transportation and fulfillment............................................................................28
Chapter 7: Distribution strategies....................................................................................................29
7.1 Introduction...............................................................................................................................29
7.2 Direct shipment distribution strategies......................................................................................29
7.3 Intermediate inventory storage point strategies........................................................................29
7.3.1 Traditional warehousing......................................................................................................29
7.3.2 Cross-docking......................................................................................................................30
7.3.3 Inventory pooling................................................................................................................30
7.4 Transshipment............................................................................................................................30
7.5 selecting an appropriate strategy..............................................................................................30
Chapter 8: Strategic alliances...........................................................................................................31
8.1 Introduction...............................................................................................................................31
8.2 A framework for strategic alliances............................................................................................31
8.3 Third-party logistics....................................................................................................................31
8.3.1 What is 3PL?........................................................................................................................31
8.3.2 Advantages and disadvantages of 3PL.................................................................................32
8.3.3 3PL issues and requirements...............................................................................................32
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, 8.3.4 3PL implementation issues..................................................................................................32
8.4 Retailer-supplier partnerships....................................................................................................33
8.4.1 Types of RSP........................................................................................................................33
8.4.2 Requirements for RSP..........................................................................................................33
8.4.4 issues in RSP implementation..............................................................................................33
8.4.5 Steps in RSP implementation..............................................................................................33
8.4.6 Advantages and disadvantages of RSP................................................................................33
8.5 Distributor integration...............................................................................................................34
8.5.1 Types of distributor integration...........................................................................................34
8.5.2 Issues in distributor integration...........................................................................................34
Chapter 9: Procurement and outsourcing strategies........................................................................35
9.2 Outsourcing benefits and risks...................................................................................................35
9.3 A framework for buy/make decisions.........................................................................................35
9.4 procurement strategies..............................................................................................................36
9.4.1 Supplier footprint................................................................................................................36
9.5 E-procurement...........................................................................................................................37
Chapter 10: Global logistics and risk management..........................................................................38
10.1 Introduction.............................................................................................................................38
10.1.1 Global market forces.........................................................................................................38
10.1.2 Technological forces..........................................................................................................38
10.1.3 Global cost forces..............................................................................................................38
10.1.4 Political and economic forces............................................................................................38
10.2 Risk management....................................................................................................................38
10.2.1 Many sources of risks........................................................................................................39
10.2.2 Managing the unknown-unknown....................................................................................39
10.2.4 Requirements for global strategy implementation............................................................40
10.3 Issues in international supply chain management...................................................................40
10.3.1 International versus regional products..............................................................................40
10.3.2 Local autonomy versus central control..............................................................................40
10.3.3 Miscellaneous dangers......................................................................................................40
10.4 Regional differences in logistics................................................................................................41
10.4.1 Cultural differences...........................................................................................................41
10.4.2 Infrastructure....................................................................................................................41
10.4.3 Performance expectations and evaluation........................................................................41
10.4.4 Information system availability.........................................................................................41
10.4.5 Human resources..............................................................................................................41
Chapter 11: Coordinating product and supply chain design.............................................................42
11.1 a general framework................................................................................................................42
11.2 Design for logistics...................................................................................................................42
11.2.1 Overview...........................................................................................................................42
11.2.2 Economic packaging and transportation...........................................................................43
10.2.3 Concurrent and parallel processing...................................................................................43
10.2.4 Standardization.................................................................................................................43
11.2.5 selecting a standardization strategy..................................................................................44
11.2.7 the push-pull boundary.....................................................................................................44
11.3 Supplier integration into new product development................................................................44
11.3.1 The spectrum of supplier integration................................................................................44
11.3.2 Keys to effective supplier integration................................................................................44
11.3.3 A “bookshelf” of technologies and suppliers....................................................................44
11.4 Mass customization..................................................................................................................44
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, 11.4.1 What is mass customization?............................................................................................44
11.4.2 Making mass customization..............................................................................................45
Chapter 12: Customer value............................................................................................................46
12.1 Introduction.............................................................................................................................46
12.2 The dimensions of customer value...........................................................................................46
12.2.1 Conformance to requirements..........................................................................................46
12.2.2 Product selection..............................................................................................................46
12.2.3 Price and brand.................................................................................................................47
12.2.4 Value-added service..........................................................................................................47
12.2.5 Relationships and experiences..........................................................................................47
12.2.6 dimensions and Achieving excellence...............................................................................47
12.3 Customer value measures........................................................................................................47
12.4 Information technology and customer value............................................................................48
Chapter 14: Information technology and business processes...........................................................49
14.1 Introduction.............................................................................................................................49
14.2 The importance of business processes.....................................................................................49
14.3 Goals of supply chain IT............................................................................................................50
14.4 Supply management system components................................................................................50
14.4.1 Decision-support systems.................................................................................................50
14.4.2 Supply chain excellence.....................................................................................................51
14.5 Sales and operations planning.................................................................................................52
14.6 Integrating supply chain information technology.....................................................................52
14.6.1 Implementation of ERP and DSS........................................................................................52
14.6.2 ‘best of breed’ versus single-vendor ERP solutions...........................................................52
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, Chapter 1: Introduction to Supply Chain Management
1.1 What is supply Chain Management?
Supply chain management is a set of approaches utilized to efficiently integrate suppliers,
manufacturers, warehouses, and stores, so that merchandise is produced and distributed at
the right quantities, to the right locations, and at the right time, in order to minimize system
wide costs while satisfying service level requirements.
Difficulties of managing the supply chain.
1. Supply chain strategies cannot be determined in isolation. They are directly affected
by another chain that most organizations have, the development chain.
2. It is challenging to design and operate a supply chain so that total system wide costs
are minimized, and system wide service levels are maintained.
3. Uncertainty and risk are inherent in every supply chain.
1.2 The development chain
The Development chain is the set of activities and processes
associated with new product introduction. Includes the
product design phase, the associated capabilities and
knowledge that need to be developed internally, sourcing
decisions, and production plans.
-What to make internally and what to buy from outside
suppliers.
1.3 Global optimization
Challenges of finding the best system wide, globally optimal
and integrated solution
1. Supply chain is a complex network dispersed over a large geography
2. Different facilities in the supply chain frequently have different, conflicting objectives.
Suppliers goals in conflict with manufacturers desire.
3. The supply chain is a dynamic system that evolves/changes over time.
4. System variations over time, e.g contractual agreements.
1.4 Managing uncertainty and risk
Uncertainty can create enormous risk to the organization, various factors contribute to this.
1. Matching supply and demand. Because months before demand is realized,
manufacturers have to commit themselves to specific production levels. Huge
financial and supply risks.
2. Inventory and back-order levels fluctuate considerably across the supply chain.
(Bullwhip effect)
3. Forecasting doesn’t solve the problem. Impossible to predict the precise demand for
a specific item, even with the most advanced forecasting techniques.
4. Demand is not the only source of uncertainty. Delivery lead times, transportation
times can have significant supply chain impact.
5. Recent trends such as lean manufacturing, outsourcing, and offshoring that focus on
cost reduction increase risks significantly. Outsourcing and offshoring imply that the
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