Global Supply-Chain Management


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  • Marketing textbook
  • Eight key processes: customer relationship management, customer service management, demand management, order fulfillment, manufacturing flow management, procurement, product development & commercialization, managing returns
  • Logo:
  • If you compare Nestle’s sales to countries’ GDPs, Nestle would be 63rd in the world (below Iraq and above Cuba) (source of GDP data:,,,,,,,,,, brands:
  • Global Supply-Chain Management

    1. 1. GLOBAL SUPPLY-CHAIN MANAGEMENT Prof. Sameer Mathur, Ph.D.
    2. 2. Agenda 3 Qualities of Top Supply Chains 6 Key Supply Chain Activities Pull versus Push Supply-Chains 3 Components of Supply-Chain Management Supply-Chain Network Structure Supply-Chain Business Processes Managing Supply-Chain Activities Supply-Chain Agility and Resiliency Making Supply-Chain Adaptable Supply-Chain Alignment
    3. 3. Sameer Mathur Indian Institute of Management, Lucknow Marketing Professor 2013 – Marketing Professor 2009 – 2013 Ph.D. and M.S. (Marketing) 2003 – 2009
    4. 4. Supply Chain Networks Individual companies no longer compete as autonomous entities but as supply-chain networks. Supply-chain management (SCM): cooperation of intra and intercompany integration and management.
    5. 5. Top Performing Supply Chains 3 DISTINCT QUALITIES Agile enough to readily react to sudden changes in demand or supply. Adapt over time as market structures and environmental conditions change. Align the interests of all members of the supply-chain network in order to optimize performance.
    6. 6. 6 Key Supply-Chain Activities Distribution Customer service Sales forecasting Production planning Purchasing Materials management *These processes are critical to the success of manufacturers, wholesalers, or service providers alike.
    7. 7. Supply Chains: From Push to Pull Raw materials supplier Consumer Manufa-cturer Distributor Retailer Traditional “Push” model Raw materials supplier Manufacturer Distributor Retailer Consumer
    8. 8. From Push to Pull
    9. 9. Supply Chains: From Push to Pull Push Model • Traditional • manufacturers, suppliers, distributors, and marketers have most of the power Pull Model • Driven by e-commerce and internet • Less product-centric • More focused on the consumer • A shift in power from suppliers to consumers
    10. 10. Zara’s Global Business Model • Explosive growth worldwide 266 new Zara locations in first 9 months of 2009 (90 of which were in Asia)
    11. 11. Zara’s Global Business Model • Encourages occasional shortages to give its products an “air of exclusivity.” • Prefers to follow trends: Fashion at an affordable price. Does not collaborate with big name designers or use multimillion-dollar advertising campaigns.
    12. 12. Zara’s Global Business Model • Balance between flexibility and cost: fashion items made by company-owned factories in Spain • Concentrated activities in 11,000-square-foot hall where tightly synchronized teams work • Managed to release one of hottest trends in just 4 weeks in 2006! Inditex headquarters Arteixo, Spain Centralized design, production, distribution
    13. 13. Mini-case: Zara
    14. 14. Supply-Chain Management (SCM) Three Principle Components 1. Supply-chain network structure 2. Developing supply-chain business processes 3. Managing the supply-chain activities
    15. 15. Supply-Chain Network Structure • Consists of the member firms and the links between these firms • Primary members: carry out value-adding activities • Supporting members: provide resources, knowledge etc for primary members – ex. companies that supply production equipment, print marketing brochures, provide administrative assistance
    16. 16. Supply-Chain Network Structure Horizontal: number of tiers across the supply chain Horizontal Position: where a company lies between supply chain endpoints. Vertical: number of companies at each tier.
    17. 17. Supply-Chain Network Structure Three Structural Dimensions: Horizontal: number of tiers across the supply chain; long versus short Vertical: number of suppliers or customers represented within each tier; narrow versus wide The company’s horizontal position within the supply chain is near the initial supplier, near the ultimate customer, or somewhere in between
    18. 18. Supply-Chain Business Processes • Business processes: Activities that produce value. • Management’s task: Integrate these business processes into value delivery network Customer Relationship Management Customer Service Management Demand Managemen t Order Fulfillment Manufacturin g Flow Management Managing Returns Product Development & Commercial-ization Procurement
    19. 19. Managing the Supply-Chain Activities • Supply-chain management function – a Functional structure – a Process structure • The number of business processes that is critical or beneficial to integrate and manage between companies will likely vary.
    20. 20. Managing the Supply-Chain Activities • With the shift from “push” to “pull”, SCM has changed - the integration of e-commerce has produced: – Greater cost efficiency – Distribution flexibility – Better customer service – The ability to track and monitor shipments
    21. 21. Supply-Chain Agility and Resiliency • Differentiate best companies from rivals. • More critical in recent years because sudden shocks to supply chains have become more frequent.
    22. 22. Supply-Chain Agility and Resiliency Help supply chains recover more quickly from such sudden setbacks. • Key to increasing agility and resilience is building flexibility into the supply-chain structure, processes, and management.
    23. 23. Making Supply Chains Adaptable Focus Competing Focus basis Companies Operational excellence Creating supply chains that deliver goods and services to consumers as quickly and inexpensively as possible. Invest in state-of-the art technologies. Employ metrics and reward systems. Aimed at boosting supply-chain Customer A focus on performance. intimacy efficiency is not enough – agility is a key factor. Able to add and delete products and services as customer needs change. Product leadership Able to adapt their supply chains to changes in technology and capitalize on new ideas. A focus on efficiency is not enough – agility is a key factor.
    24. 24. Making Supply Chains Adaptable  All companies must align the interests of all the firms in the supply network so that companies optimize the chain’s performance when they maximize their interests.
    25. 25. Nikon, with the help of UPS, focuses on Supply-Chain Innovation • Needed to redesign distribution network. • Decided to outsource this task to UPS Supply Chain Solutions.
    26. 26. MANUFACTURING CENTRES South Korea Japan Indonesia RETAILERS Latin America Caribbean North America Products are shipped from manufacturing centres to UPS HQ in Louisville, KentuckTyhey are then “kitted” and distributed to retailers
    27. 27. The Result… • Digital cameras are Nikon’s fastest-growing product category • Improved supply chain performance & customer service • From manufacturing facility to retailer in as little as 2 days • Accurate & timely information throughout supply chain
    28. 28. Supply-Chain Alignment • Goal: Interests of all supply chain members should be aligned. • Otherwise supply chain performance will be affected. • Roles & responsibilities must be carefully defined.
    29. 29. Creating Supply-Chain Alignment Ways to Align Risks, costs, and rewards must be equitably shared Equal access to information along the supply chain is crucial Use of intermediaries may help ensure interests are aligned
    30. 30. Creating Supply-Chain Alignment • Prerequisite: availability of information - so that all the companies in a supply chain have equal access to forecasts, sales data, and plans. • Next: partner roles and responsibilities must be carefully defined – so that there is no scope for conflict. • Finally: align incentives – so that when companies try to maximize returns, they also maximize the supply chain’s performance.
    31. 31. Nestlé • World’s largest food company • $70 billion in annual sales • Operations in 200+ countries; 511 factories; 247,000 employees • 127,000 different products • In other words, thousands of supply chains!
    32. 32. Nestlé Pieces Together its Global Supply Chain • Launched GLOBE (Global Business Excellence) • Program aimed at a single set of procurement, distribution, and sales management systems • Three baseline goals: • harmonize processes • standardize data • standardize systems
    33. 33. Nestlé Pieces Together its Global Supply Chain • Goal: Single procurement, distribution, sales management system for all 200+ countries • Before: 14 separate SAP systems • Cost: $2-4 billion • Timeline: 3.5 years A truly global firm: “the first company to operate in hundreds of countries in the same manner as if it operated in one.”
    34. 34. Summary • Today, companies compete as Supply-Chain Networks instead of autonomous entities • The switch from “push” to “pull” models • Top-performing supply chains possess: agility, adaptability, alignment. • Supply chain Management (SCM) has 3 principle components: • Supply-chain network structure • Developing supply-chain business processes • Managing the supply chain activities
    35. 35. Summary • The best companies create supply chains that can respond to sudden and unexpected changes in markets = agility and flexibility are helpful qualities. • Companies competing on the basis of operational effectiveness, customer intimacy, or product leadership have different focuses in order to adapt their supply networks. • Leading companies aim to align the interests of all the firms in their supply chain with their own to maximize the chain’s performance.
    36. 36. Summary 3 Qualities of Top Supply Chains 6 Key Supply Chain Activities Pull versus Push Supply-Chains 3 Components of Supply-Chain Management Supply-Chain Network Structure Supply-Chain Business Processes Managing Supply-Chain Activities Supply-Chain Agility and Resiliency Making Supply-Chain Adaptable Supply-Chain Alignment
    37. 37. Recommended Reading
    38. 38. Over 1 Million views from more than 100 countries Prof. Sameer Mathur Top 1% most viewed Over 250 presentations on Marketing