The document discusses various aspects of supply chain strategy and design. It describes how supply chain design decisions determine the structure of the supply chain by establishing locations and capacities of facilities, products made at each location, transportation modes, and information systems used. These strategic design decisions must support overall business objectives and are long-term and expensive to change. The document then discusses supply chain planning, which establishes short-term operations policies based on the supply chain configuration, and supply chain operations, which focuses on implementing operating policies over short time horizons with less uncertainty.
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Supply Chain Strategy Or Design
1. Supply Chain Strategy or Design
Decisions about the structure of the supply chain and
what processes each stage will perform
Strategic supply chain decisions
Locations and capacities of facilities
Products to be made or stored at various locations
Modes of transportation
Information systems
Supply chain design must support strategic
objectives
Supply chain design decisions are long-term and
expensive to reverse – must take into account market
uncertainty
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2. Supply Chain Planning
Definition of a set of policies that govern short-term
operations
Fixed by the supply configuration from previous
phase
Starts with a forecast of demand in the coming year
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3. Supply Chain Planning
Planning decisions:
Which markets will be supplied from which locations
Planned buildup of inventories
Subcontracting, backup locations
Inventory policies
Timing and size of market promotions
Must consider in planning decisions demand
uncertainty, exchange rates, competition over the
time horizon
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4. Supply Chain Operation
Time horizon is weekly or daily
Decisions regarding individual User orders
Supply chain configuration is fixed and operating
policies are determined
Goal is to implement the operating policies as
effectively as possible
Allocate orders to inventory or production, set order
due dates, generate pick lists at a warehouse,
allocate an order to a particular shipment, set delivery
schedules, place replenishment orders
Much less uncertainty (short time horizon)
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5. Process View of a Supply Chain
Cycle view: processes in a supply chain are divided
into a series of cycles, each performed at the
interfaces between two successive supply chain
stages
Push/pull view: processes in a supply chain are
divided into two categories depending on whether
they are executed in response to a User order (pull)
or in anticipation of a User order (push)
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6. Cycle View of Supply Chains
User
User Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
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7. Cycle View of a Supply Chain
Each cycle occurs at the interface between two
successive stages
User order cycle (User-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Figure (see previous power point)
Cycle view clearly defines processes involved and
the owners of each process. Specifies the roles and
responsibilities of each member and the desired
outcome of each process.
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8. User Order Cycle
Involves all processes directly involved in receiving
and filling the User’s order
User arrival
User order entry
User order fulfillment
User order receiving
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9. Replenishment Cycle
All processes involved in replenishing retailer
inventories (retailer is now the User)
Retail order trigger
Retail order entry
Retail order fulfillment
Retail order receiving
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10. Manufacturing Cycle
All processes involved in replenishing distributor (or
retailer) inventory
Order arrival from the distributor, retailer, or User
Production scheduling
Manufacturing and shipping
Receiving at the distributor, retailer, or User
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11. Procurement Cycle
All processes necessary to ensure that materials are
available for manufacturing to occur according to
schedule
Manufacturer orders components from suppliers to
replenish component inventories
However, component orders can be determined
precisely from production schedules (different from
retailer/distributor orders that are based on uncertain
User demand)
Important that suppliers be linked to the
manufacturer’s production schedule
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12. Push/Pull View of Supply Chains
User Order
Procurement,
Manufacturing and Cycle
Replenishment cycles
PUSH PROCESSES PULL PROCESSES
User
Order Arrives
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13. Push/Pull View of
Supply Chain Processes
Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to User demand
Pull: execution is initiated in response to a User
order (reactive)
Push: execution is initiated in anticipation of User
orders (speculative)
Push/pull boundary separates push processes from
pull processes
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14. Push/Pull View of Supply Chain
Processes
Useful in considering strategic decisions relating to
supply chain design – more global view of how
supply chain processes relate to User orders
Can combine the push/pull and cycle views
The relative proportion of push and pull processes
can have an impact on supply chain performance
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15. A Framework for Structuring
Drivers
C om petitive S tra tegy
S u p p ly C h ain
S tra teg y
E fficien cy R esp o n siven ess
S u p p ly ch ain stru ctu re
L o gistical D rivers
F a cilities In ven to ry T ra n sp o rta tio n
In fo rm a tio n S o u rcin g P ricing
C ro ss F u n ction al D rivers
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