Supply Chain Logistics Management

Twenty-first Century Supply

Chains
Supply Chain Management
Consists of firms collaborating to
leverage strategic positioning
and to improve operating
efficiency
Supply Chain Strategy
Is a channel arrangement based
on acknowledged dependency
and relationship management
Logistics
The work required to move and
geographically position inventory
The supply chain revolution has reshaped
contemporary strategic thinking
Successful supply chain strategies
Market Saturation Driven: Focusing on generating high profit,
through strong brands and ubiquitous marketing and distribution.
Operationally Agile: Configuring assets and operations to react
nimbly to emerging consumer trends along lines of product category
or geographic region.
Freshness Oriented: Concentrating on earning a premium by
providing the consumer with product that is fresher than competitive
offerings.
Consumer Customizer: using mass customization to build& maintain
close relationships with end-consumers through direct sales
Logistics Optimizer: Emphasizing a balance of supply chain
efficiency and effectiveness.
Trade Focused: Prioritizing "low price, best value" for the consumer
(as with the logistics optimizer strategy but focusing less on brand
than on dedicated service to trade customers).
SUPPLIER
NETWORK
INTEGRATED
ENTERPRISE
DISTRIBUTIVE
NETWORK
Information, Product, Service, Financial and Knowledge Flows
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Capacity, Information, Core Competencies, Capital and Human Resources
Relationship Management
Procurement
Manufacturing
Distribution
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Generalized Supply Chain Model
Forces driving supply chain strategies
Integrative management
Responsiveness
Financial sophistication
Globalization
Concepts necessary for achieving
integrated management
Lowest total process cost is the focus of integrated
management
Collaboration cross-organizational sharing of operating
information, technology, and risk as ways to increase
competitiveness
Enterprise extension includes expanded managerial
influence and control beyond traditional ownership
boundaries of a single enterprise (information sharing
&process specialization)
Integrated service providers (ISP) provide a range of
logistics services to accommodate customers, ranging
from order entry to product delivery
Commonly known as third or fouth party service providers
Responsiveness emerges as a
competitive advantage
Figure 1.8 Anticipatory Business Model
Figure 1.9 Responsive Business Model
Postponement strategies keep
supply chains responsiveness
Types of Postponement
Manufacturing (or Form)
Geographic (or Logistics)
Combined
Manufacturing postponement
Manufacturing one order at a time
Base modular construction of product
No customization until the exact customer specs
and financial commitment is received
Objective is to maintain products in an
uncommitted status as long as possible
Balances economy of scale with responsiveness
Can build a sufficient quantity of ready to customize
basic units
Requires a lot of forethought during product
design
Example of manufacturing postponement
Keeping all the car panels a base color (white or
gray) until the order is received, then painting to
the color ordered
Geographic postponement
Build or stock a full-line inventory at one or a
few strategic locations
Forward deployment of inventory is
postponed until customer orders are received
Once orders received, specific item is
expedited to the local distributor
Advantages are manufacturing economies of
scale along with responsiveness to customer
Often used for critical, high cost parts and
assemblies (e.g. engines)
Example of geographic postponement
Keeping full inventory in a central warehouse and releasing
customer orders to local distributors or direct shipping to
customer
Combined postponement
Keeping the basic products centralized and
performing the customization at the
destination distributor
Historical example - Autos
Installing dealer options like sound systems,
GPS, sun roofs on new cars purchased
Contemporary example - Computers
Dell Computers, doing final assembly or
packaging additional system options like
printers, digital cameras at a distribution center
Financial sophistication enables
measurement of time-based supply chain
Cash-to-Cash Conversionthe
time required to convert raw material
or inventory purchases into sales
revenue
Dwell Time Minimizationdwell
time is the ratio of time that an
assets sits idle to the time required
to satisfy its supply chain mission
Cash Spinreducing assets in the
supply chain can spin cash for
reinvestment in other projects
Globalization offers firms several
attractive opportunities
Demand exceeds local supply
90% of global demand is not satisfied by local supply
Strategic sourcing
Identifying and matching the sources of raw materials
and components to manufacturers and distributors
Offshoring
Moving manufacturing and distribution operations to
countries with favorable labor costs and tax laws
Significant differences for global
logistics
Distance of typical order-to-delivery operations
is significantly longer compared to domestic
business
Documentation requirements for business
transactions is significantly more complex
Operations must be deal with significant
Diversity in work practices and local operating
environments
How consumers Demand products and services
must accommodate cultural variations