1.

Discuss the goal of a supply chain and explain the impact of supply chain decisions on
the success of a firm?
Every firm strives to match supply with demand in a timely fashion with the most
efficient use of resources. Here are some of the important goals of supply chain
management:
 Supply chain partners work collaboratively at different levels to maximize
resource productivity, construct standardized processes, remove duplicate efforts
and minimize inventory levels.
 Minimization of supply chain expenses is very essential, especially when there are
economic uncertainties in companies regarding their wish to conserve capital.
 Cost efficient and cheap products are necessary, but supply chain managers need
to concentrate on value creation for their customers.
 Exceeding the customers’ expectations on a regular basis is the best way to satisfy
them.
 Increased expectations of clients for higher product variety, customized goods,
off-season availability of inventory and rapid fulfillment at a cost comparable to
in-store offerings should be matched.
 To meet consumer expectations, merchants need to leverage inventory as a shared
resource and utilize the distributed order management technology to complete
orders from the optimal node in the supply chain.
Lastly, supply chain management aims at contributing to the financial success of an
enterprise. In addition to all the points highlighted above, it aims at leading
enterprises using the supply chain to improve differentiation, increase sales, and
penetrate new markets. The objective is to drive competitive benefit and shareholder
value.
2. Identify the three key supply chain decision phases and explain the significance of each?
Successful supply chain management requires decisions on the flow of information,
product, and funds that fall into three decision phases.
I. Supply Chain Strategy
II. Supply Chain Planning
III. Supply Chain Operations

i. Supply Chain Strategy

In this phase, decision is taken by the management mostly. The decision to be made
considers the sections like long term prediction and involves price of goods that are very
expensive if it goes wrong. It is very important to study the market conditions at this
stage.
These decisions consider the prevailing and future conditions of the market. They
comprise the structural layout of supply chain. After the layout is prepared, the tasks and
duties of each is laid out.
All the strategic decisions are taken by the higher authority or the senior management.
These decisions include deciding manufacturing the material, factory location, which
should be easy for transporters to load material and to dispatch at their mentioned
 location, location of warehouses for storage of completed product or goods and many
more.
ii. Supply Chain Planning
Supply chain planning should be done according to the demand and supply view. In order
to understand customers’ demands, a market research should be done. The second thing
to consider is awareness and updated information about the competitors and strategies
used by them to satisfy their customer demands and requirements. As we know, different
markets have different demands and should be dealt with a different approach.
This phase includes it all, starting from predicting the market demand to which market
will be provided the finished goods to which plant is planned in this stage. All the
participants or employees involved with the company should make efforts to make the
entire process as flexible as they can. A supply chain design phase is considered
successful if it performs well in short-term planning.
iii. Supply Chain Operations
The third and last decision phase consists of the various functional decisions that are to
be made instantly within minutes, hours or days. The objective behind this decisional
phase is minimizing uncertainty and performance optimization. Starting from handling
the customer order to supplying the customer with that product, everything is included in
this phase.
For example, imagine a customer demanding an item manufactured by your company.
Initially, the marketing department is responsible for taking the order and forwarding it to
production department and inventory department. The production department then
responds to the customer demand by sending the demanded item to the warehouse
through a proper medium and the distributor sends it to the customer within a time frame.
All the departments engaged in this process need to work with an aim of improving the
performance and minimizing uncertainty.
3. Describe the cycle and push/pull views of a supply chain?
The demand characteristics of a product and the needs of a customer segment change as a
product goes through its life cycle
Supply chain strategy must evolve throughout the life cycle
Early: uncertain demand, high margins (time is important), product availability is most
important, cost is secondary
Late: predictable demand, supply predictable, lower margins, price is important
Mostly we find a supply chain as merger of both push and pull systems, where the
medium between the stages of the push-based and the pull-based systems is referred as
the push–pull boundary.
The terms push and pull were framed in logistics and supply chain management, but
these terms are broadly used in the field of marketing as well as in the hotel distribution
business.
To present an example, Wal-Mart implements the push vs. pull strategy. A push and pull
system in business represents the shipment of a product or information between two
subjects. Generally, the consumers use pull system in the markets for the goods or
 information they demand for their requirements whereas the merchants or suppliers use
the push system towards the consumers.
In supply chains, all the levels or stages function actively for the push and the pull
system. The production in push system depends on the demand predicted and production
in pull system depends on absolute or consumed demand.
The medium between these two levels is referred as the push–pull boundary or
decoupling point. Generally, this strategy is recommended for products where uncertainty
in demand is high. Further, economies of scale play a crucial role in minimizing
production and/or delivery costs.
4. Consider the supply chain involved when a customer purchases a book at a bookstore.
Identify the cycles in this supply chain and the location of the push/pull boundary.
At the early stage, the book must be available on the bookstore. After that, the cost of that
book also clearly announce to the costumer and then the costumer pay the price. Lastly,
the book must deliver to the costumer in short period of time.
Here the push/pull boundary is located on the announcing of the cost and paying the
price.
5. Explain why achieving strategic fit is critical to a company's overall success.
For every region or category, the strategy depends on answering the questions given
below.
 How willing is the marketplace to oppose the supplier?
 How supportive are the clients of a firm for testing incumbent supplier
relationships?
 What are the substitutes to the competitive assessment?
Generally, these substitutes are opted when a purchasing firm has little leverage over its
supply base. They will depend on the belief that the suppliers will share the profits of a
new strategy. Thus, we say that the sourcing strategy is an accumulation of all the drivers
thus far mentioned.
Because the way for the company success is based on that of success of, the strategies
that are settle to achieve the company’s success.
Here the achievement of strategic fit is simply the road map of for the company’s
success.
6. Describe how a company achieves strategic fit between its supply chain strategy and its
competitive Strategy?
For example, the competitive strategy of Dell targets customers who value having
customized PCs delivered within days. Given the vast variety of PCs, the high level of
innovation, and rapid delivery, demand from Dell customers can be characterized as
having high demand uncertainty. Some supply uncertainty also exists, especially for
newly introduced components. Dell has the option of designing an efficient or responsive
supply chain. An efficient supply chain may use slow, inexpensive modes of
transportation and economies of scale in production. If Dell made these choices, it would
have difficulty supporting the customer's desire for rapid delivery and a wide variety of
 customizable products. Building a responsive supply chain, however, will allow Dell to
meet its customers' needs. Therefore, a responsive supply chain strategy is best suited to
meet the needs of Dell's targeted customers.
Now, consider a pasta manufacturer such as Barilla. Pasta is a product with relatively
stable customer demand, giving it a low implied demand uncertainty. Supply is also quite
predictable. Barilla could design a highly responsive supply chain in which pasta is
custom made in very small batches in response to customer orders and shipped via a
rapid transportation mode such as FedEx. This choice would obviously make the pasta
prohibitively expensive, resulting in a loss of customers. Barilla, therefore, is in a much
better position if it designs a more efficient supply chain with a focus on cost reduction.
7. Discuss the importance of expanding the scope of strategic fit across the supply chain?
– The functions and stages within a supply chain that devise an integrated strategy
with a shared objective
– One extreme: each function at each stage develops its own strategy
– Other extreme: all functions in all stages devise a strategy jointly
Four categories:
– Intracompany intraoperation scope
– Intracompany intrafunctional scope
– Intracompany interfunctional scope
– Intercompany interfunctional scope
8. Identify the major drivers of supply chain performance?
a. Logistical Drivers
i. Facilities
Are the actual physical locations in the supply chain network where
products are stored, assembled or fabricated?
The two major types of facilities are: production sites (Factories) and
storage sites (Warehouses)
ii. Inventory
Encompasses all the raw materials, WIP, finished goods within a supply
chain.
Changing inventory policies can dramatically alter the supply chain’s
efficiency & responsiveness.
iii. Transportation
Moving inventory from point to point in a supply chain
Combinations of transportation modes and routes
b. Cross-Functional Drivers
i. Information
Consists of data and analysis regarding inventory, transportation, facilities
throughout the supply chain
Potentially the biggest driver of supply chain performance
 ii. Sourcing
Choice of who will perform a particular supply chain activity
Functions a firm performs and functions that are outsourced
Sourcing decisions affect both the responsiveness and efficiency of a
supply chain
iii. Pricing
Determines how much a firm will charge for goods and services that it
makes available in the supply chain

9. Discuss the role of each driver in creating strategic fit between the supply chain strategy
and the competitive strategy?

Facilities (also known as the “Where” of supply chain)It defines the strategic location of the
manufacturing plants, the warehouses/distribution centers,and the retail stores to be
constructed for the supply chain to achieve the goals of competitive strategy.If efficiency
is the priority, then we place economies of scale i.e. we produce items in
largenumbers in bigger facilities to minimize costs and in order to meet the goals of
competitivestrategy.If responsiveness is the priority, then we end up having a larger number of
smaller facilities closerto consumers, more manufacturing plants in order to reduce the lead time.
2.Inventory (also known as the “What” of supply chain)Since the supply and demand do
not converge at all times, inventory comes into picture. Inventory is expensive, but a
larger inventory reveals more responsive supply chain. Inventoryimpacts the material flow
time (time between material entering and exiting the supply chain) andthroughput rate.If a
supply chain is responsive, this allows a company to locate inventory closer to the customers.If it
is an efficient supply chain, the company has a reduced inventory (by reducing the number
offacilities and centralization) to meet the competitive strategy.
3.Transportation (also known as the “How” of supply chain)It is responsible for movement of
products between the various stages in supply chain. A faster mode of transportation results in
more responsiveness and affects inventory and facilities.If the responsiveness is a priority,
then a faster mode of transportation can meet the goals of a competitive strategy, meeting its
customers’ demands at a higher cost. For efficient supply chain,slow modes of transportation is
preferred to reduce the transportation costs for customers who areprice sensitive.
4.InformationIt plays a crucial role in connecting and coordinating between the various stages of
a supply chainsuch as keeping a tab on daily operations within each stage.As a role in
competitive strategy, information systems allow a supply chain to become more efficient
and responsive simultaneously, thereby reducing the need for trade-off.
5.SourcingThis basically deals with buying raw materials and services from different suppliers
(single or multiple, contracts) in a supply chain. The tasks can be either be outsourced or the firm
can havethese tasks performed in-house. In the competitive strategy, sourcing plays an important
role as they affect the level of efficiency and responsiveness in a supply chain and can also help in
improving the same.
6.PricingThese strategies define the price of goods and services that would be charged to the
consumer andare used to match the upply and demand (lowering prices increases demands and
vice-versa).
In competitive strategy, optimal pricing can be used to improve
efficiency/responsiveness,regulate prices and product availability.
10. Define the key metrics that track the performance of the supply chain in terms of each
driver?
Facility-related metrics are capacity, utilization, theoretical flow/cycle time of
production, actual flow/cycle time, flow time efficiency, product variety, volume
contribution oftop 20 percent SKUs/customers, processing/setup/down/idle time, and
average production batch size. Inventory-related metrics are average inventory, products
with more than a specified number of days of inventory, average replenishment batch size,
average safety inventory, seasonal inventory, fill rate, and fraction of time out of stock.
Transportation-related metrics are average inbound transportation cost, average incoming
shipment size, average inbound transportation cost per shipment, average outbound
transportation cost, average outbound shipment size, average outbound transportation
cost per shipment, and fraction transported

by mode. Information-related metrics are forecast horizon, forecast error, seasonal factors,
variance from plan, and ratio of demand variability to order variability. Sourcing-related metrics
are days payable outstanding, average purchase price, range of purchase price, average purchase
quantity, fraction on-time deliveries, supply quality, and supply lead time. Pricing-related metrics
are profit margin, day’s sales outstanding, incremental fixed cost per order, incremental variable
cost per unit, average sale price, average order size, range of sale price, and range of periodic
sales. Each of these metrics directly or indirectly impacts the financial metrics and the
responsiveness to customers
11. Describe the major obstacles that must be overcome to manage a supply chain
successfully.
1.Quality Customer Service The supply chain management is centralized on the needs of
the customers. It is about giving the right quantity and the right quality of the product for
the right amount of money. All this, in perfect timing and setting.

2.Costing Globally speaking, the costs of raw materials, energy and labor have increased
due to economical constraints. In order for operations to continue production and provide
customers with good quality items at affordable rates, adjustments have to be made to
keep operations running.
3.Risk Management Due to the constant change in the market, coming from a variety of
sources such as consumer demands, political agendas and global sourcing, would cause
major issues to the operations.

4.Supplier Relationship By creating a mutually sound and harmonious relationship with

your partners or suppliers, you will be able to provide your customers with products of
high standards in a timely manner. This also allows you to create opportunities for
improvement in terms of performance.
 5.Qualified Personnel Over the years, it has become a challenge to find talent interested
and passionate about this line of work. Personnel hired in this field must have an
understanding about the duties and responsibilities needed.
6.Unforeseen Delays Procurement of materials and products may be easy, but the
delivery may not always be 100% on time, especially with time differences and a variety
of shipping time frames. When items are sourced from different countries, delays like this
are very common
1. How could a grocery retailer use inventory to increase the responsiveness of the
company's supply chain?
Inventory is considered a Trading asset in the balance sheet of the grocery shop. An

effective inventory management system thus leads to greater performance and

profitability. Key is the ability of the firm to reduce the Inventory (Stock) Days on Hand

(IDOH) or Accounts Payable Turnover (APT). These ratios are indicators of the ability

of the grocery shop to quickly sell of her stock for cash. All things being equal, a better

ratio indicate greater sales figures resulting in greater profitability. It also puts the shop in

a better cash flow position to cater for any maturing obligations.

Responsiveness can be defined as the “ability to react purposefully and within an

appropriate time-scale to customer demand or changes in the marketplace, to bring about

or maintain competitive advantage” (Holweg, 2005, p. 605). Customers want their orders

when they make them, not a day later. A failure of supply chain management to keep up

with the ever increasing customer standards will spell doom.

To achieve a greater responsiveness, the grocery owner may decide to stock up greater

quantities of the ‘fastest moving’ products. This information may be sourced from

previous sales data which my capture customer preferences, periods of peak sales etc.

Such large purchases also allow the shop to enjoy the benefits of economies of scale.

There is also the need to manage the trade-off between the cost of holding too much

inventory and the cost of losing sales due to not having enough inventories. This is vital
 for instances of poor supplier response time, replacement of substandard goods, random

demand etc.

There is also the need for the shop to hold seasonal inventory to cater for predictable

peaks like holiday seasons.

Finally the firm must create a comprehensive sourcing policy to determine the criteria for

selecting suppliers who meet the demands of their customer (in terms of quality and

quantity)

In other to achieve this there must be a free flow of information throughout its supply

chain from the shelves to the supplier.

Care however has to be taken not to compromise on efficiency (in terms of storage cost

and cost of capital i.e. facilities). Another barrier is the perishability of the produce.

2. How could an auto manufacturer use transportation to increase the efficiency of its
supply chain?

Transportation refers to the movement of product from one location to another as it

makes its way from the beginning of a supply chain to the customer's handle. Many
manufacturers & retailers have found that they can use state of the art supply chain
management to reduce inventory & warehousing costs while speeding up delivery to the
end customer and at the same time they can do exactly opposite i.e. spending less on
transportation in order to be efficient. There are two keys players in any transportation
that takes place within a supply chain. The shipper is that party that requires the
movement of the product between two points in the supply chain. The carrier is the party
that moves or transports the product. So a company can use slower but cheaper ground
transportation to ship the product, making the supply chain efficient but limiting its
responsiveness.

Two other parties also have a significant role and they are owners and operators of
transportation infrastructure.

Role in the Supply Chain

Transportation has a large impact on supply chain strategies i.e. on both responsiveness
and efficiency. The mode and the type of transportation which a firm or a company is
 using has direct impact on its inventory and drivers as well. Quicker transportation comes
at higher cost and in a responsiveness strategy where as in order to have efficiency a
company must focus on slower and cheaper modes or transportation. Supply chain uses
following modes of transportation

1. Air

2. Package carrier

3. Truck

4. Rail

5. Water

6. Pipeline

7. Intermodal

Role in Competitive Strategy

Inventory plays an important role in a supply chain's ability to support a firms

competitive strategy. Competitive edge can be gained on the basis of following

1. Responsiveness

2. Cost efficiency

If a firm wants to be responsive, a company must increase it transportation cost for

quicker and faster delivery.

3. Identify factors to be considered when designing the distribution network?

Many small sized businesses grow until they reach a point where they need to seriously
consider how their distribution network can be better optimized to keep their customers
satisfied without going to any unnecessary expense.
When considering the design of a distribution network, you need to evaluate its
performance according to two factors. Namely, are your customer’s needs being met? In
addition, how much does it cost to do so?
An efficient distribution network ensures that you meet the following criteria:

 Response time
 Product variety
 Product availability
 Customer experience
 Order visibility
  Return ability

If your customers demand a reduced response time, then your company needs outlets
located closer to its customers. If however, customers are satisfied with response times,
your facilities can be more centralized.
When you alter your distribution network, the costs of Inventory, Transportation,
Facilities and Handling, and Information Systems will all be affected. For example, as
you increase the number of facilities in your supply chain, so the costs of inventory
increase. The most famous online retailer, Amazon.com Inc., operates with a relatively
small number of distribution facilities and is therefore able to clear through its inventory
around once a month. Whereas the now defunct Borders Group, Inc. operated in excess
of 400 facilities, which means it only cleared its inventory twice a year.
So long as transportation costs to your warehouses remain the same, you will see a
decrease in the cost of transportation when you increase the number of facilities you
operate. However, you must be careful not to build too many facilities as this will result
in a loss of economies of scale (for example, trucks won’t be driving with full loads) and
this has the effect of increasing transportation costs.
As such, distribution networks with multiple warehouses will initially reduce
transportation costs when compared to a network that operates with a single warehouse.
The logistics costs can be calculated as a sum of inventory, transport costs, and facility
costs. However, as the number of warehouses increases beyond a certain point, logistics
costs will later increase. As such, you need to find the right balance between the numbers
of facilities so as to minimize these costs.
Generally, companies will build new facilities in strategic locations as customer demand
increases, but managers should take care to only go beyond the cost-minimizing point if
they are confident that revenues will increase because of their company being more
responsive.
4. Discuss the strengths and weaknesses of various distribution options?
Manufacturer storage with direct shipping’s advantages is it is able to centralize inventories at the
manufacturer. In addition, its weaknesses are the ownership structure of the inventories at the
manufacturer. Manufacturer storage with direct shipping and in-transit merge’s advantages is lower
transportation cost and improves customer experience. Its weaknesses is additional effort during the
merge itself. Distributor storage with package carrier delivery’s advantages is fast response tine and
improves customer experience weaknesses is high Inventory & facilities and handling cost. Distributor
storage with last mile delivery’s advantages is quick response tine and good customer experience, and its
weaknesses is the cost is high. Manufacturer/distributor storage with costumer pickup’s Advantages is
lower the delivery cost and its weaknesses is increased handling cost at the pickup site. Retail storage with
customer pickup’s advantages is lower the delivery cost &provides a faster response than other networks,
its weaknesses is increased inventory cost and facility costs.

5. Understand how e-business has affected the design of distribution networks in various
Industries?
6. A specialty chemical company is considering expanding its operations into country B,
where five companies dominate the consumption of specialty chemicals. What sort of
distribution network should this company utilize?
 Indirect Distribution Sales Channel
Explanation:
The specialty chemical company has five companies that are the consumers of the
specialty chemicals. Therefore, it is a Business-to-Business transaction between the
specialty chemical company and their target business customers.
The company should utilize an indirect distribution network. It can be sales operations
only where the chemical is manufactured and being supplied to companies in Brazil.
There should be carefully selected distributors who have their locations near the five
companies. This network will reduce lagging time of order delivery and sales efficiency
will increase.

7. What types of distribution networks are typically best suited for commodity items?
8.