TOM_4250_Lecture_2

Introduction to Supply Chain Network Design

  • Lecture: TOM 4250 - Spring 2025

  • Focus: Strategic Fit in supply chain network design.

Decision Phases in a Supply Chain

  • Supply Chain Strategy

    • Long-term decisions regarding structure, outsourcing, location, capacity, and modes of transportation.

    • Consideration of the US-China trade war as a strategic factor.

  • Supply Chain Planning

    • Medium-term decisions for the upcoming quarter or year.

    • Key activities include demand forecasting, supply-demand matching, inventory policies, and making marketing/price adjustments.

  • Supply Chain Operation

    • Short-term decisions focused on handling incoming customer orders effectively.

Supply Chain Strategy or Design

  • Involves decisions on supply chain configuration, resource allocation, and process performance.

  • Key aspects include:

    • Outsourcing and managing supply chain functions.

    • Determining locations and capacities of facilities.

    • Deciding products to manufacture or store at facilities.

    • Implementation of information systems to support operational efficiency.

  • Must align with strategic objectives; design decisions are typically long-term and costly to reverse.

Supply Chain Planning

  • Definition: Policies governing short-term operations derived from strategic decisions.

  • Goal: Maximize supply chain surplus while adhering to constraints.

  • Key Components:

    • Demand forecasting for the upcoming year.

    • Decisions regarding market supply from locations, inventory buildup, and subcontracting.

    • Timing and size of market promotions.

  • Important Factors: Demand uncertainty, exchange rates, and competitive landscape.

Supply Chain Operations

  • Short-term focus with a time horizon measured in weeks or days.

  • Operations include:

    • Order allocation to inventory/production and setting due dates.

    • Generating pick lists and managing shipments.

    • Structured to minimize uncertainty during order fulfillment.

Process Views of a Supply Chain

  • Cycle View: Processes divided into cycles between two stages in the supply chain.

  • Push/Pull View: Processes categorized based on their execution relative to customer orders.

    • Pull: Reactive, initiated by customer orders.

    • Push: Speculative, conducted in anticipation of orders.

Cycle View of Supply Chain Processes

  • Key Cycles:

    • Customer Order Cycle

    • Replenishment Cycle

    • Manufacturing Cycle

    • Procurement Cycle

Push/Pull View of Supply Chain Processes

  • Classifies processes as either push or pull, separated by a push/pull boundary.

  • Discusses engagement of customer orders and related manufacturing and procurement cycles across different entities (e.g., manufacturer, supplier).

Supply Chain Macro Processes

  • Classification of processes into three categories:

    • Customer Relationship Management (CRM)

      • Processes at the interface with customers.

    • Internal Supply Chain Management (ISCM)

      • Internal processes within the firm.

    • Supplier Relationship Management (SRM)

      • Processes intersecting with suppliers.

Examples of Supply Chains

  • Notable companies discussed in coursework include:

    • Gateway and Apple

    • Zara

    • W.W. Grainger and McMaster-Carr

    • Toyota

    • Amazon

    • Macy's

Specific Case Analyses

  • Gateway vs. Apple: Inventory strategies and challenges in retail environments.

  • Zara: Benefits of a responsive supply chain and mixed manufacturing strategies.

  • W.W. Grainger & McMaster-Carr: Distribution center locations, inventory management, and order fulfillment.

  • Toyota: Plant flexibility, capacities, and market allocation strategies.

  • Amazon: Warehouse development, inventory decisions, and optimal channel usage.

  • Macy’s & W.W. Grainger: Online order fulfillment strategies versus traditional retail setups.

Developing Skills for Your Career

  • Emphasis on skills acquired throughout the course, including communication, critical thinking, and data literacy.

  • Connection between strategic decision-making and analytics.

Competitive and Supply Chain Strategies

  • Definitions of competitive strategy, product development strategy, market and supply chain strategy.

  • Importance of aligning functional strategies to support competitive strategy.

The Value Chain

  • Overview of how various functions (finance, marketing, product development, etc.) interact within the firm's value chain.

Achieving Strategic Fit

  • Importance of strategic fit between competitive and supply chain strategies for firm success.

  • Coordination of functional strategies is crucial in supporting overall company goals.