TOM: Supply Chain Management

Supply Chain Strategies

• Network design

• Supply chain dynamics

• demand forecasting

• inventory management

Network Design Considerations

• storage location companies/rental space + costs associated with it

• their capacity (space)

• have 2 vendors in case something goes wrong

• payment terms (DSO, DIO)

• labor practices (ethics)

• political + geographic factors (tariffs)

Supply Chain Considerations

• Push vs Pull

• choosing certain strategies based on the industry

• responsiveness to the market

• global disruptions (ex. recessions)

• accidents/theft

Demand Forecasting Considerations

• Always wrong!

• Sales is what they use to predict this, NOT demand

Inventory Management Considerations

• transportation

• location of storage and distribution centers

• holding and ordering costs

• lead time

• safety stock

• EOQ (min order, batch?, lot size)

Two biggest enemies

variability and uncertainty

Product Types

Functional and Innovative

Supply Chain Types

Efficient and Response to Market

Considerations with Supply Chain Types

Efficient companies focus on minimizing costs, maximizing capacity utilization, and optimizing predictable, high-volume production. Conversely, responsive companies prioritize speed, flexibility, and adaptability to meet volatile, unpredictable customer demands

Worst Combo?

Functional and Responsive —> already low margins paired with costly inventory strategy

People, Profit, and Planet

Triple bottom line that measures the sustainability impact

Ocean Shipping

The cheapest option but not quick/responsive, high volume (lots of potential for things to go wrong) Ex. bananas if a disease enters the biome. Also cheapest mode is usually not the best for the planet.

Bullwhip

• When a change at a low level creates a large shift at a higher level

• Least Susceptible: Operational excellence is more resistant to bullwhip because they have more value and expertise with operations and getting things done quickly!

• Most Susceptible: Customer intimacy → must provide lots of customization and variability for customer to be satisfied, not easy to forecast

Child Labor Ethical Considerations

• depends if the kid feels forced

• need certification/proof of employee satisfaction for customers to buy. Ex) Lush sticker

downstream

supplier to customer

upstream

customer to supplier

3 things

Products, information, capital

Upstream product

repairs, recycling, testing, defects

Upstream capital

payments, gift cards, loans, invoices, tax

Upstream info

sales, survey results, inventory #s

Downstream info

Capacity, lead time, new products

Supply chain surplus

customer value - supply chain cost

Fisher’s Supply Chain Model

Always match product type to supply chain

Truckload

Completely filled with one type of inventory

LT (less than truckload)

outsourcing delivery from other places, using a portion of the space in a truck

Push

When demand doesn’t lead production (company pushes it out to world)

Supply chain:

• efficient

• preferences and trends change

Pull

When demand does lead to production

Supply Chain:

• responsive

• long lead time, execution may be poor, lowers customer expectation

Closed Loop SC

Reuse, remanufacture, and recycle = lower need for extraction

Sustainability in transportations

• optimize routes for lower emissions

• transport hazardous goods with additional safety

• reduce empty space utilization

End-Of-Life consideraitons

• Product designed with less material or recycled material

• design closed loop systems to reuse product (RRR)

Managing Bullwhip

1. better information

2. reduce/eliminate delays

3. integrate SC to end user

4. true-up pricing

5. shorten SC

6. manage product portfolio so there are less new products to oversee

7. allocate demand - make what’s actually wanted