Supply chain Supply chain
A supply chain consists of all stages involed directly, or indirectly, in fulfilli
A supply chain consists of all stages involed directly, or indirectly, in fulfilli ng a customer request forng a customer request for a product in an
a product in an economy. Thus it includes customers who give economy. Thus it includes customers who give the requests, transporters, retailers,the requests, transporters, retailers, wholesalers, warehoues, manufacturers, and component, service as well as
wholesalers, warehoues, manufacturers, and component, service as well as raw material suppliers.raw material suppliers. Within an organization there is a supply chain that includes all functions involved a filling
Within an organization there is a supply chain that includes all functions involved a filling a customera customer request as well as the order. The functions carried out within an organization include marketing, request as well as the order. The functions carried out within an organization include marketing, new product development, operations, distribution, finance and customer service.
new product development, operations, distribution, finance and customer service.
In a supply chain there is constant flow of information, product and funds between stages. Usually In a supply chain there is constant flow of information, product and funds between stages. Usually supply chain is imagined as product moving from suppliers to manufacturers and from there to supply chain is imagined as product moving from suppliers to manufacturers and from there to wholesalers and retailers and then further to
wholesalers and retailers and then further to customers. But supply chains have two waycustomers. But supply chains have two way movements and also involve movement of information and fund apart from the product. movements and also involve movement of information and fund apart from the product. Customer is an integral part of the supply chain and the primary purpose of a supply chain is Customer is an integral part of the supply chain and the primary purpose of a supply chain is satisfying customer needs and generating profit for itself in the process.
satisfying customer needs and generating profit for itself in the process. The routine supply chain activities begin
The routine supply chain activities begin with a customer order and end with a customer order and end when a satisfied customerwhen a satisfied customer has paid for his purchase.
has paid for his purchase.
In a supply chain, number of customers are there, number of retailers are there, number of In a supply chain, number of customers are there, number of retailers are there, number of transporters are there and number of manufacturing plants can be there. Hence a supply chain is transporters are there and number of manufacturing plants can be there. Hence a supply chain is actually a network or a web. Hence supply network and supply web also describe a supply chain. actually a network or a web. Hence supply network and supply web also describe a supply chain. The objective of every supply chain
The objective of every supply chain is to maximize the overall value gis to maximize the overall value generated. Supply chainenerated. Supply chain management involves the management of flows between and among stages
management involves the management of flows between and among stages in a supply chain in a supply chain toto maximize total profitability.
maximize total profitability.
Decision Phases in a Supply Chain Decision Phases in a Supply Chain
Supply Chain Design, Plan and Operation are identified as three significant decision phases by Supply Chain Design, Plan and Operation are identified as three significant decision phases by Chopra and Meindl.
Chopra and Meindl.
Supply Chain Design: Supply chain strategy is another word used for this phase. Supply chain design Supply Chain Design: Supply chain strategy is another word used for this phase. Supply chain design decisions or strategy decisions include products to be manufactured, location and capacities of decisions or strategy decisions include products to be manufactured, location and capacities of manufacturing plants and warehouses, modes of
manufacturing plants and warehouses, modes of trasport to be utilized and trasport to be utilized and information system toinformation system to be utilized.
be utilized.
Supply Chain Planning: Planning, typically done for an year, establishes parameters within which a Supply Chain Planning: Planning, typically done for an year, establishes parameters within which a supply chain will function over a specified period of time.
supply chain will function over a specified period of time.
Supply Chain Operation: In this phase the time horizons are small, monthly, weekly and daily. The Supply Chain Operation: In this phase the time horizons are small, monthly, weekly and daily. The decisions driven by customer order and
decisions driven by customer order and are related to invidual customer orders. are related to invidual customer orders. There are alsoThere are also decision related to individual production f
decision related to individual production f acilities, warehouses and transporters.acilities, warehouses and transporters.
Process Views of a Supply Chain Process Views of a Supply Chain There are two views.
1. Cycle view 1. Cycle view
In cycle view, the supply chain processes are divided into cycles that are performed at the interface In cycle view, the supply chain processes are divided into cycles that are performed at the interface between two successive stages of a supply chain and one describes the following cycles.
between two successive stages of a supply chain and one describes the following cycles. Customer order cycle
Customer order cycle Replenishment cycle Replenishment cycle Manufacturing cycle Manufacturing cycle Procurement cycle Procurement cycle
A. Customer order cycle A. Customer order cycle
Normally occurs at the
Normally occurs at the retailer place between the customer and the retailer.retailer place between the customer and the retailer.
Activities involved Activities involved
Customer arrival, Customer order entry, Customer order fulfilment, Customer order r
Customer arrival, Customer order entry, Customer order fulfilment, Customer order r eceiving,eceiving, Customer funds payment
Customer funds payment
B. Replenishment cycles B. Replenishment cycles
Normally thought to occur at the retailer/wholesaler or distributor interface. Normally thought to occur at the retailer/wholesaler or distributor interface.
Activities involved Activities involved
Retai order trigger, Retail order entry, Retail order fulfilment, Retail order receiving, Funds payment Retai order trigger, Retail order entry, Retail order fulfilment, Retail order receiving, Funds payment
C. Manufacturing cycle C. Manufacturing cycle
Normally thought to occur at the wholer/manufacturer interface. Depending on the number of Normally thought to occur at the wholer/manufacturer interface. Depending on the number of channels in the distribution channel it can occur at customer manufacturer, or retailer
channels in the distribution channel it can occur at customer manufacturer, or retailer -manufacturer also.
manufacturer also.
Activities involved Activities involved
Order arrival, Production scheduling, Manufacturign and shipping, Receiving by the person ordered, Order arrival, Production scheduling, Manufacturign and shipping, Receiving by the person ordered, Funds payment
Funds payment
D. Procurement cycle D. Procurement cycle
Occurs at the manufacturer/supplier interface Occurs at the manufacturer/supplier interface
2. Push/Pull View 2. Push/Pull View
In this view, pull processes and push processes are categorized and identified in the supply chain. In this view, pull processes and push processes are categorized and identified in the supply chain. Each supply chain will
Each supply chain will have some pull processes and push processes. The activities initiatedhave some pull processes and push processes. The activities initiated by customers' orders form pull process activities. The activities initiated and carried out in by customers' orders form pull process activities. The activities initiated and carried out in anticipation of customer demand are push process activities.
anticipation of customer demand are push process activities.
Importance of Supply Chain Flows Importance of Supply Chain Flows
Flow of information, material and product and cash are important for supply chain functioning and Flow of information, material and product and cash are important for supply chain functioning and fulfilment of its objectives.
fulfilment of its objectives.
Information is key to produce as per customers' order and also to forecast in case of made-to-stock Information is key to produce as per customers' order and also to forecast in case of made-to-stock supply chains.
supply chains.
Supply Design, Planning and Operation
Supply Design, Planning and Operation Related Questions. One will Related Questions. One will find answers to these questionsfind answers to these questions in various chapters of
in various chapters of the Supply Chain Management Book which we the Supply Chain Management Book which we are summarising chapter-wise.are summarising chapter-wise.
1. Why a
1. Why a company outsources some assembly activities and does some within its assembly plant?company outsources some assembly activities and does some within its assembly plant? What characteristics of the product or order characterize outsourced activities?
What characteristics of the product or order characterize outsourced activities?
2. When does a company have only one manufacturing location for the entire country or world? 2. When does a company have only one manufacturing location for the entire country or world? When does it have multiple plants?
When does it have multiple plants?
3. Why certain orders are despatched via couriers for overnight delivery or one day delivery and why 3. Why certain orders are despatched via couriers for overnight delivery or one day delivery and why certain other orders are sent via trucks on full load or part load basis?
certain other orders are sent via trucks on full load or part load basis? 4. How inventories are determined for
4. How inventories are determined for components and finished goods?components and finished goods?
Supply Chain Performance: Achieving Strategic
Supply Chain Performance: Achieving Strategic
Fit and Scope - Review Notes
Fit and Scope - Review Notes
Competitive Strategy and Supply Chain Strategy Competitive Strategy and Supply Chain Strategy
A company's competitive strategy clearly
A company's competitive strategy clearly spells out the set of cspells out the set of c ustomer needs that it seeks to satisfyustomer needs that it seeks to satisfy through its products and services having a defined set of attributes.
through its products and services having a defined set of attributes.
The supply chain design or supply chain strategy must be in alignment with competitive strategy. A The supply chain design or supply chain strategy must be in alignment with competitive strategy. A supply chain design can be taken up only after the competitive strategy is finalised and a supply supply chain design can be taken up only after the competitive strategy is finalised and a supply chain needs to be redesigned or
chain needs to be redesigned or modified whenever there is a change modified whenever there is a change in competitive strategy.in competitive strategy.
Chopra and Meindl use the concept of strategy to refer to what each function will try to do Chopra and Meindl use the concept of strategy to refer to what each function will try to do particularly well. They indicate that product strategy s
particularly well. They indicate that product strategy specifies pecifies the portfolio of products that will bethe portfolio of products that will be offered for sale by the company and product development strategy specifies the portfolio of new offered for sale by the company and product development strategy specifies the portfolio of new products that the company will develop. A marketing and sales strategy specifies how the market products that the company will develop. A marketing and sales strategy specifies how the market will be segmented and the products o
will be segmented and the products of the company are positioned, priced f the company are positioned, priced and promoted. Theand promoted. The supply chain strategy determines the procurement process of
supply chain strategy determines the procurement process of the raw materials, transportation ofthe raw materials, transportation of materials, manufacture of the product,
materials, manufacture of the product, distribution channels, warehousindistribution channels, warehousing and transportation ofg and transportation of the products, and the follow-up
The supply chain strategy includes supplier
The supply chain strategy includes supplier strategy, operations strategy, and logistics strategy.strategy, operations strategy, and logistics strategy. Design decisions regarding inventory, transportation, operating facilities, and information flows in Design decisions regarding inventory, transportation, operating facilities, and information flows in the supply chain of a company are all part of supply chain strategy.
the supply chain of a company are all part of supply chain strategy.
The Process of Achieving Strategic Fit The Process of Achieving Strategic Fit
Strategic fit between competitive strategy and
Strategic fit between competitive strategy and supply chain strategy refers to supply chain strategy refers to the consistencythe consistency between the customer needs that the competitive strategy aims to
between the customer needs that the competitive strategy aims to satisfy and the supply chainsatisfy and the supply chain capabilities that the supply chain strategy aims to build. Chopra and Meindl stated an important capabilities that the supply chain strategy aims to build. Chopra and Meindl stated an important point: no one function can ensure the chain's success. However, failure at one function may lead to point: no one function can ensure the chain's success. However, failure at one function may lead to failure of the overall chain.
failure of the overall chain.
Three steps are involved. Three steps are involved.
1. Understanding the customer needs regarding attributes of
1. Understanding the customer needs regarding attributes of supply.supply. 2. Understanding the supply chain
2. Understanding the supply chain attributes (alternatives available).attributes (alternatives available).
3. Achieving strategic fit. Making decision on the supply chain to best serve the needs of the target 3. Achieving strategic fit. Making decision on the supply chain to best serve the needs of the target segment customers.
segment customers.
Understanding the Needs of the Customer R
Understanding the Needs of the Customer Regarding Supply Attributesegarding Supply Attributes
Some of the attributes or dimensions of the supply are as follows: Some of the attributes or dimensions of the supply are as follows:
The quantity of the product needed in each lot purchased. Preferred purchase quanity of the The quantity of the product needed in each lot purchased. Preferred purchase quanity of the customer.
customer.
The response time from customer's enquiry. The response time from customer's enquiry.
The variety of products needed (applicable in case of a retail store, restaurant etc.). The variety of products needed (applicable in case of a retail store, restaurant etc.). The service level required (shortage of i
The service level required (shortage of i tems)tems) The price of the product or service.
The price of the product or service. The desired rate of innovation. The desired rate of innovation.
Chopra and Meindl argued that while there are many attributes of the supply system which are to be Chopra and Meindl argued that while there are many attributes of the supply system which are to be understood from customer point of view and built into the supply chain, one key measure captures understood from customer point of view and built into the supply chain, one key measure captures the variation for many of these attributes. That measure according to them is implied demand the variation for many of these attributes. That measure according to them is implied demand
uncertainty. It is different from demand uncertainty. Demand uncertainty reflects the uncertainty of uncertainty. It is different from demand uncertainty. Demand uncertainty reflects the uncertainty of customer demand for a product. Implied demand uncertainty is uncertainty for a specific supply customer demand for a product. Implied demand uncertainty is uncertainty for a specific supply chain for the portion of the demand (target market) it caters to.
chain for the portion of the demand (target market) it caters to.
Implied demand uncertainty is defined in the context of multiple supply chains supplying the same Implied demand uncertainty is defined in the context of multiple supply chains supplying the same product. Multiple supply chains come due to different attributes that they satisfy. An example is a product. Multiple supply chains come due to different attributes that they satisfy. An example is a firm supplying a product, say medicines, 24 hours versus a firm that supplies during normal day firm supplying a product, say medicines, 24 hours versus a firm that supplies during normal day
hours. The implied demand uncertainty for the 24 hour firm can be high as on some days there is hours. The implied demand uncertainty for the 24 hour firm can be high as on some days there is heavy demand and some days very less demand and
heavy demand and some days very less demand and also the demand for specific malso the demand for specific medicines can beedicines can be high on some days and can be even zero on some days.
high on some days and can be even zero on some days.
A spectrum can be visualized in terms of implied demand uncertainty from low uncertainty to high A spectrum can be visualized in terms of implied demand uncertainty from low uncertainty to high uncertainty and a firm can be placed on this line or spectrum at some point.
uncertainty and a firm can be placed on this line or spectrum at some point.
Understanding the Supply Chain (Characteristics) Understanding the Supply Chain (Characteristics)
A supply chain can be described initially by two characteristics responsiveness and efficiency. A supply chain can be described initially by two characteristics responsiveness and efficiency.
Various supply chain characteristics co
Various supply chain characteristics contribute to responsiveness and efficiency.ntribute to responsiveness and efficiency.
Supply chain responsiveness is measured by the abilities of the chain to do the following: Supply chain responsiveness is measured by the abilities of the chain to do the following:
Ability to respond to fluctuations in demand Ability to respond to fluctuations in demand Ability to provide short lead times
Ability to provide short lead times
Ability to handle large variety of products Ability to handle large variety of products
Ability to come out with innovations and highly innovative products Ability to come out with innovations and highly innovative products Ability to provide a very high service level
Ability to provide a very high service level
Supply chain efficiency is the cost of making and delivering a
Supply chain efficiency is the cost of making and delivering a product to the customer. Increase inproduct to the customer. Increase in costs lower efficiency.
costs lower efficiency.
Cost-Responsiveness Efficient Frontier Cost-Responsiveness Efficient Frontier
It is a chart or graph with cost on the X-axis (origin is high cost) and Responsiveness on the Y axis It is a chart or graph with cost on the X-axis (origin is high cost) and Responsiveness on the Y axis (origin is low
(origin is low responsiveness). See Exampleresponsiveness). See Example
The frontier shows the minimum cost for a given responsiveness. If a company is operating within The frontier shows the minimum cost for a given responsiveness. If a company is operating within the frontier,
the frontier, at a higher cost, it can decrease the at a higher cost, it can decrease the cost by appropriate actions but keep cost by appropriate actions but keep thethe responsiveness same. When it is operating on
responsiveness same. When it is operating on the efficient frontier, any the efficient frontier, any increase in responsivenessincrease in responsiveness can only come by incurring extra cost.
can only come by incurring extra cost.
The frontier curve is
The frontier curve is a short-run phenomena and companies continually try a short-run phenomena and companies continually try to improve their supplyto improve their supply chain by reducing cost further and increasing responsiveness and thus change the frontier over each chain by reducing cost further and increasing responsiveness and thus change the frontier over each period.
period.
Achieving strategic fit Achieving strategic fit
The greater the implied demand uncertainty, the more
The greater the implied demand uncertainty, the more responsive a supply chain has to be. responsive a supply chain has to be. MoreMore responsive supply chains are more costly supply
responsive supply chains are more costly supply chains. When compared directly with lesschains. When compared directly with less
responsive but more efficient supply chains, their costs may look excessive. But the fit demands that responsive but more efficient supply chains, their costs may look excessive. But the fit demands that for target markets with
employed. employed.
Therefore it is to be emphasized that there is no right supply chain strategy independent of the Therefore it is to be emphasized that there is no right supply chain strategy independent of the competitive strategy. For a given competitive, a right supply chain can be specified.
competitive strategy. For a given competitive, a right supply chain can be specified.
Other Issues affecting the Strategic Fit Decision Other Issues affecting the Strategic Fit Decision
Multiple Target Markets: Most companies may serve two or
Multiple Target Markets: Most companies may serve two or more target markets and the more target markets and the supplysupply chain has to serve them both. In this case some tailoring has to be done by having common facilities chain has to serve them both. In this case some tailoring has to be done by having common facilities and in some supply chain activities and dedicated facilities in some supply chain activities so that and in some supply chain activities and dedicated facilities in some supply chain activities so that economies of scale where exist can be utitlized without deterioration in service for either target economies of scale where exist can be utitlized without deterioration in service for either target markets.
markets.
Product Life Cycle: As the product is new, implied demand uncertainty is high and as it matures, Product Life Cycle: As the product is new, implied demand uncertainty is high and as it matures, implied demand uncertainty is low. Hence supply chain design has to change over the life cycle of implied demand uncertainty is low. Hence supply chain design has to change over the life cycle of the product.
the product.
Competitive situation: As the product matures, more competitors emerge and
Competitive situation: As the product matures, more competitors emerge and implied demandimplied demand uncertainty keeps chaging.
uncertainty keeps chaging.
Expanding the Supply Chain Optimization and Strategic Fit Scope Expanding the Supply Chain Optimization and Strategic Fit Scope
Intracompany Intraoperation scope: The most limited scope over which strategic fit and optimization Intracompany Intraoperation scope: The most limited scope over which strategic fit and optimization can be attempted is one with one operation within a functional area in a company. For example can be attempted is one with one operation within a functional area in a company. For example each warehouse of the company has its own goal.
each warehouse of the company has its own goal.
Intracompany Intrafunctional scope:
Intracompany Intrafunctional scope: If the competitive strategy and If the competitive strategy and supply chain strategy aresupply chain strategy are aligned across all the supply chain activities (supplier strategy, operations strategy, and logistics aligned across all the supply chain activities (supplier strategy, operations strategy, and logistics strategy
strategy ) or functions of the ) or functions of the company and optimization company and optimization is attempted in is attempted in an integral manneran integral manner including the raw material inventory, manufacturing operations, finished goods inventory and including the raw material inventory, manufacturing operations, finished goods inventory and warehouse, and transportation, the scope is extended to
warehouse, and transportation, the scope is extended to intracompany intrafuctional level.intracompany intrafuctional level.
Intracompany Interfunctional scope: At this level of scope, the entire company's activities are Intracompany Interfunctional scope: At this level of scope, the entire company's activities are viewed and modeled as one single system, and
viewed and modeled as one single system, and optimization is done and company profit optimization is done and company profit isis maximized.
maximized.
Intercompany Interfunctional scope: The Maximum Supply Chain Surplus view: At this level of Intercompany Interfunctional scope: The Maximum Supply Chain Surplus view: At this level of optimization and fit making, the entire supply chain (including various different organizations) is optimization and fit making, the entire supply chain (including various different organizations) is modeled as a system and optimization and fit is designed so that supply chain surplus is maximized. modeled as a system and optimization and fit is designed so that supply chain surplus is maximized.
Flexible Intercompany interfunctional scope: The flexibility refers to dynamic situation. Physically, Flexible Intercompany interfunctional scope: The flexibility refers to dynamic situation. Physically, the participants in the supply chain keep changing, products keep changing, technologies keep the participants in the supply chain keep changing, products keep changing, technologies keep changing, facilities keep changing. Mathematically, there are changes in number of variables and changing, facilities keep changing. Mathematically, there are changes in number of variables and variable values. A supply chain capable of optimizing and fit making dynamically over time is a variable values. A supply chain capable of optimizing and fit making dynamically over time is a flexible intercompany interfuctional scope supply chain.
flexible intercompany interfuctional scope supply chain.
Supply Chain Drivers and Obstacles
The supply chain strategic fit
The supply chain strategic fit concept requires that a company achieve the concept requires that a company achieve the desired responsivenessdesired responsiveness and efficiency in its supply chain that best meets the needs of the company's competitive strategy. and efficiency in its supply chain that best meets the needs of the company's competitive strategy.
The performance of a
The performance of a supply chain (responsiveness and efficiency) is supply chain (responsiveness and efficiency) is determined by decisions in thedetermined by decisions in the areas of inventory, transportation, facilities and information. Hence these four areas are identified areas of inventory, transportation, facilities and information. Hence these four areas are identified as drivers of supply chain performance.
as drivers of supply chain performance. A Framework for Structuring Supply Chain
A Framework for Structuring Supply Chain DriversDrivers
Supply chain managers have to
Supply chain managers have to take research and development efforts to improve bothtake research and development efforts to improve both responsiveness and efficiency of their supply c
responsiveness and efficiency of their supply c hains on a continuous basis. hains on a continuous basis. In the past there wereIn the past there were technological and managerial breakthroughs which
technological and managerial breakthroughs which improve one of them without any improve one of them without any deteriorationdeterioration in the other and
in the other and also improvement in both dimensions simulataneously. Actual economic theoryalso improvement in both dimensions simulataneously. Actual economic theory tells, new technologies (capital investments) are adopted for capital productivity. Capital
tells, new technologies (capital investments) are adopted for capital productivity. Capital productivity in the context o
productivity in the context of supply chains comes through f supply chains comes through improvement in responsiveness andimprovement in responsiveness and efficiency.
efficiency.
But at a certain point in time, there can b
But at a certain point in time, there can be tradeoffs between responsie tradeoffs between responsiveness and efficiency. veness and efficiency. HenceHence supply chain designers come with supply
supply chain designers come with supply chains that give various combinations of chains that give various combinations of responsivenessresponsiveness and efficiency (responsiveness - efficiency frontier) and the optimal combination is chosen based on and efficiency (responsiveness - efficiency frontier) and the optimal combination is chosen based on the competitive strategy considerations.
the competitive strategy considerations. Definition/Explanatio
Definition/Explanation of n of Four DriversFour Drivers
Inventory: It consists of all raw material, work in process, and finished goods within a supply chain. Inventory: It consists of all raw material, work in process, and finished goods within a supply chain.
Transportation: It involves moving inventory from one point in the supply chain to another point. Transportation: It involves moving inventory from one point in the supply chain to another point.
Facilities: A facility is a place where inventory is stored, manufactured or assembled. Hence facilities Facilities: A facility is a place where inventory is stored, manufactured or assembled. Hence facilities can be categorised into production facilities and storage facilities.
can be categorised into production facilities and storage facilities.
Information: It consists of data and results of analysis regarding inventory, transportation, facilities, Information: It consists of data and results of analysis regarding inventory, transportation, facilities, customer orders, customers, and funds.
customer orders, customers, and funds.
Inventory Inventory
Inventory is maintained in the supply
Inventory is maintained in the supply chain because of mismatches between supply and demand.chain because of mismatches between supply and demand.
Types of inventory based on reasons f
Types of inventory based on reasons f or keeping them:or keeping them:
Cycle inventory: This results due to producing or buying larger lots to minimize acquisition costs Cycle inventory: This results due to producing or buying larger lots to minimize acquisition costs
related to processing each purchase order or production order. related to processing each purchase order or production order.
Safety Inventory: It is held to counter against uncertainty or variability of demand. Safety Inventory: It is held to counter against uncertainty or variability of demand.
Seasonal Inventory: It is inventory maintained to satisfy higher demands in a period compared to Seasonal Inventory: It is inventory maintained to satisfy higher demands in a period compared to production capacity. It arises due to the decision to service predicted variability in demand through production capacity. It arises due to the decision to service predicted variability in demand through extra production during slack period or low demand periods.
extra production during slack period or low demand periods.
Increasing inventory gives higher responsiveness but results in
Increasing inventory gives higher responsiveness but results in higher inventory carrying cost.higher inventory carrying cost. Transportation
Transportation
Number of decisions have to be taken in designing a supply chain regarding transportation. Number of decisions have to be taken in designing a supply chain regarding transportation.
Decisions Decisions
Mode of Transportation Mode of Transportation
Six basic modes exist Six basic modes exist
Air Air Truck (Road) Truck (Road) Rail Rail Ship Ship Pipeline Pipeline
Electronic transportation (the newest mode for
Electronic transportation (the newest mode for music, documents etc)music, documents etc)
Route and Network Selection Route and Network Selection
Network is a set of facilities or destinations which can be used for transportation of g
Network is a set of facilities or destinations which can be used for transportation of g oods. Route is aoods. Route is a specific selection of facilities or destinations through which goods move.
specific selection of facilities or destinations through which goods move.
Own Transport or Outsourced Transport Own Transport or Outsourced Transport
Facilities Facilities
Within a facility, inventory is either transformed into another state or stored. Within a facility, inventory is either transformed into another state or stored.
Facilities Related Decisions Facilities Related Decisions
Location Location Capacity Capacity
Manufacturing Methodology or Technology Manufacturing Methodology or Technology Warehousing methodology
Information Information
Information does not have a physical presence. It is likely to be overlooked. But it deeply affects Information does not have a physical presence. It is likely to be overlooked. But it deeply affects every part of supply chain. Information is the connection between various stages in a supply chain every part of supply chain. Information is the connection between various stages in a supply chain and allows them to coordinate actions and increase the maximum supply chain profitability. It is also and allows them to coordinate actions and increase the maximum supply chain profitability. It is also essential in daily operations. The stocks
essential in daily operations. The stocks available in warehouses must have visibility so that available in warehouses must have visibility so that when awhen a customer wants an item, it can be delivered to him.
customer wants an item, it can be delivered to him.
Decisions related to Information Decisions related to Information
Push Process Information and Pull Process Information Push Process Information and Pull Process Information
Coordination and information sharing across various facilities in the supply chain. Coordination and information sharing across various facilities in the supply chain. Forecasting Forecasting Aggregate Planning Aggregate Planning Enabling technologies Enabling technologies
Obstacles to Achieving Strategic Fit Obstacles to Achieving Strategic Fit
Increasing Variety of Products:In the era of mass customization production variety is increasing. Increasing Variety of Products:In the era of mass customization production variety is increasing.
The customers becoming increasingly demanding. Today's customers are
The customers becoming increasingly demanding. Today's customers are demanding fasterdemanding faster
fulfillment, better quality, and better performing products for the same price that they are paying fulfillment, better quality, and better performing products for the same price that they are paying today.
today.
The supply chain is getting fragmented. At one time vertical integration was the order of the day. But The supply chain is getting fragmented. At one time vertical integration was the order of the day. But the present trend is to
the present trend is to concentrate on core competence and outsource more activities. Thus concentrate on core competence and outsource more activities. Thus thethe supply chain is more fragmented now.
supply chain is more fragmented now.
Globalization is creating global supply chains and hence physical distance is increasing between a Globalization is creating global supply chains and hence physical distance is increasing between a company and its suppliers and a company and its customers.
company and its suppliers and a company and its customers.
While creating a strategy is difficult, executing it is much more
While creating a strategy is difficult, executing it is much more difficult. Many companies understanddifficult. Many companies understand Toyota Production System now, but still find it difficult to implement and operate
