OUTLINE Questions? Comments? Stories or experiences with supply chains? Take roll Discuss last homework Chapter 1 – main points New Homework Another cost example Chapter 2 (Chopra) Discussion Quiz next Tuesday

Strategic Framework for Analyzing Supply Chains Chapter 1 – Understanding Chapter 2 – Performance

Chapter 1 – main concepts What is a supply chain? Decision Phases Processes Importance Examples

What is a supply chain? All the activities required to fill a customer’s order Objective – Satisfy the customer’s requirements Do customers know what they want? How do they express their requirements? Maximize the overall value that is generated - How should the value be distributed?

Phases Design Decide on structure Planning Define operating policies for short term operations Annual forecast Operation Implement operating policies

Process View Cycles Customer Retailer Distributor Manufacturer Supplier Push/pull Push : initiated by anticipation of orders Pull : initiated by a customer order Examples?

Importance Can make or break a company

Examples Gateway- A direct sales manufacturer 7-Eleven – A convenience store W.W. Granger and McMaster-Carr – Distributors of MRO (Maintenance, Repair and Operational) products Toyota - A Global Auto Manufacturer Amazon.com – An e-business What examples did you use?

Another cost example For the whole company: Material overhead = $1M Total Purchased direct material = $95M Indirect overhead = $15M Total standard hours = 125,000 Labor efficiency = 80% Direct labor cost = $18/hr _______________________________________________ For a product: number of hours per unit = 0.15 cost of direct material per unit = $22

Chapter 2 discussion