1. OVERVIEW OF SUPPLY CHAIN PLANNING ISSUES
Introductions – Names, prior work experience including summer, what do students hope to get from class?
Mention some prototypical supply chains we will use repeatedly in class – Wal-Mart, 7-Eleven, Dell and Compaq, Amazon and Borders, Supermarket and e-grocer, W.W. Grainger and McMaster Carr - our goal is to identify factors that drive supply chain success and make a comparison between different supply chains.
Administration of course - We will discuss concepts and methodologies for supply chain management. The context within which both will be learnt and discussed is provided by cases. Discuss role of case packet readings, cases and book.
5 cases due - 10% for each case
25% for final project
20% for final exam
5% for electronic posting
Discuss key dates for submitting project. Three groups will be selected to present.
Show course web page and its organization

2. Helpful References (Print)
Chopra, S. and Meindl, P., “Supply Chain Management: Strategy, Planning and Operation,” Prentice Hall, 2004
Chase, Aquilano and Jacobs, “Operations Management for Competitive Advantage,” 9th Edition, McGraw Hill, 2001
Handfield, R.B. and Nichols, E.L., “Introduction to Supply Chain Management,” Prentice Hall, 1999

3. Helpful References (Internet)

4. Operations Management (OM)
OM: Design, operation & improvement of the production systems
OM: Concerned with conversion of inputs to outputs

5. OM Framework TRANSFORMATION Tangible vs. Intangible
OUTPUTS
Tangible vs. Intangible
Direct vs. Indirect
INPUTS
People
Plants
Parts
Processes
Planning & control systems
TRANSFORMATION
Assembly
Blending
Storing

6. OM: Transformation Types
Transformations can be:
Physical
Location
Physiological
Informational

7. Characteristics of Manufacturing Environment
Increased product diversity
Reduced product life cycles
Increased awareness of the environment
impact of products & manufacturing systems
Difficulties of estimating the costs and benefits
Changing social expectations

8. Manufacturing System Views
Closed System
Manufacturing is seen as an internal function buffered from suppliers, customers, and other functions
Open Systems
Manufacturing is seen as closely linked to suppliers, customers and other functions 

9. Distribution & Logistics
A Closed System View
R&D
Marketing
Finance
Manufacturing
Customer Service
Purchasing
Personnel
Distribution & Logistics
Suppliers
Customers

10. An Open System View Manufacturing External Customers Suppliers
Other Functions

11. Evolution From OM to Supply Chain
OM View
Supply Chain View
Closed System
Open System
Manufacturer Orientation
Customer Orientation
Local Optimization
Global Optimization
Technology (hardware, software, multimedia, etc.)
Local System Capabilities
Enterprise System Capabilities

12. Changing Basis of Competition
Yesterday
Manufacturing company versus Manufacturing company
Today
Manufacturing company and it’s supply chain versus Manufacturing company and it’s supply chain

13. Customers Consumers External customers Internal customers
Pay for your company’s final product
External customers
Receiving outputs from your company
Internal customers
Receiving outputs from you to others within the company

14. Supply Chain: Definition
Supply chain is a network of interconnected organizations or organizational entities developed with the goal of getting the right product to the right place at the right time

15. Supply Chain: Scope
Supply chain encompasses every effort involved in producing and delivering a final product, from the supplier’s supplier to the customer’s customer
Efforts include managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing, information management, distribution and delivery to customers

16. Supply Chain: Flows (1)
The following flows have to be managed in a supply chain:
Materials
Information
Cash

17. Supply Chain: Flows (2) Material, Information, Invoicing Suppliers
Manufacturers
Distributors
Customers
After-sales support, Recycling, Order information, Payments

18. Supply Chain: Elements
Supply chain consists of elements internal and external to the company
These elements range from material producers to the customers
All supply chain elements must be appropriately integrated for a company to be able to effectively compete in chosen markets

19. What is a Supply Chain?
All stages involved, directly or indirectly, in fulfilling a customer request
Includes manufacturers, suppliers, transporters, warehouses, retailers, customers
Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service)
Examples: Fig. 1.1 (Wal-Mart), Dell

20. What is a Supply Chain?
Customer is an integral part of the supply chain
Includes movement of products from suppliers to manufacturers to distributors, but also includes movement of information, funds, and products in both directions
Typical supply chain stages: customers, retailers, distributors, manufacturers, suppliers (Fig. 1.2)
All stages may not be present in all supply chains (e.g., no retailer or distributor for Dell)

21. What is a Supply Chain? P&G or other manufacturer Jewel or third
party DC
Jewel
Supermarket
Customer wants
detergent and goes
to Jewel
Plastic
Producer
Tenneco
Packaging
Chemical
manufacturer
(e.g. Oil Company)
Notes:
Supply chain involves everybody, from the customer all the way to the last supplier.
Key flows in the supply chain are - information, product, and cash. It is through these flows that a supply chain fills a customer order. The management of these flows is key to the success or failure of a firm. Give Dell & Compaq example, Amazon & Borders example to bring out the fact that all supply chain interaction is through these flows.
Chemical
manufacturer
(e.g. Oil Company)
Paper
Manufacturer
Timber
Industry

22. The Objective of a Supply Chain
Maximize overall value created
Supply chain value: difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request
Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain)

23. The Objective of a Supply Chain
Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)
Supply chain profitability is total profit to be shared across all stages of the supply chain
Supply chain success should be measured by total supply chain profitability, not profits at an individual stage

24. The Objective of a Supply Chain
Sources of supply chain revenue: the customer
Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain
Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability

25. Decision Phases of a Supply Chain
Supply chain strategy or design
Supply chain planning
Supply chain operation

26. 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

27. 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

28. 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

29. Supply Chain Operation
Time horizon is weekly or daily
Decisions regarding individual customer 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)

30. 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 customer order (pull) or in anticipation of a customer order (push)

31. Cycle View of Supply Chains
Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
The supply chain is a concatenation of cycles with each cycle at the interface of two successive stages in the supply chain. Each cycle involves the customer stage placing an order and receiving it after it has been supplied by the supplier stage.
One difference is in size of order. Second difference is in predictability of orders - orders in the procurement cycle are predictable once manufacturing planning has been done.
This is the predominant view for ERP systems. It is a transaction level view and clearly defines each process and its owner.
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier

32. Cycle View of a Supply Chain
Each cycle occurs at the interface between two successive stages
Customer order cycle (customer-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.

33. Customer Order Cycle
Involves all processes directly involved in receiving and filling the customer’s order
Customer arrival
Customer order entry
Customer order fulfillment
Customer order receiving

34. Replenishment Cycle
All processes involved in replenishing retailer inventories (retailer is now the customer)
Retail order trigger
Retail order entry
Retail order fulfillment
Retail order receiving

35. Manufacturing Cycle
All processes involved in replenishing distributor (or retailer) inventory
Order arrival from the distributor, retailer, or customer
Production scheduling
Manufacturing and shipping
Receiving at the distributor, retailer, or customer

36. 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 customer demand)
Important that suppliers be linked to the manufacturer’s production schedule

37. Push/Pull View of Supply Chains
Procurement,
Customer Order
Manufacturing and
Cycle
Replenishment cycles
PUSH PROCESSES
PULL PROCESSES
In this view processes are divided based on their timing relative to the timing of a customer order. Define push and pull processes.
They key difference is the uncertainty during the two phases.
Give examples at Amazon and Borders to illustrate the two views
Customer
Order Arrives

38. 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 customer demand
Pull: execution is initiated in response to a customer order (reactive)
Push: execution is initiated in anticipation of customer orders (speculative)
Push/pull boundary separates push processes from pull processes

39. 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 customer orders
Can combine the push/pull and cycle views
L.L. Bean (Figure 1.8)
Dell (Figures 1.9 and 1.10)
The relative proportion of push and pull processes can have an impact on supply chain performance

40. Examples of Supply Chains
Micron Electronics Inc. (A direct sales Manufacturer)
Why has assembly of certain PCs been outsourced? What characterizes PCs or orders that have been outsourced?
Why does Micron have only one manufacturing site?
Why are individual orders shipped using FedEx and large corporate orders shipped using LTL?
Why are individual orders merged in transit rather than at the assembly site itself?
How much inventor of components and finished products is maintained?

41. Examples of Supply Chains
7-Eleven ( A Convenience Store) (Japan)
One of the company’s objectives is to micro-match supply and demand by location, season, and time of day.
Fresh food and distribution center.
Toyota (A Global Auto Manufacturer)
Global production and distribution network.

42. Examples of Supply Chains
Amazon.com (An E-Business)
Why is Amazon.com building more warehouses as it grows? How many warehouses should it have, and where should they be located?
What advantages does selling books via the Internet provide over a traditional bookstore? Are there any disadvantages to selling via the Internet?
Why does Amazon.com stock best-sellers while buying other titles from distributors?
Des the Internet channel provide greater value to a bookseller like Borders with retail outlets or to an e-business like Amazon.com?

43. Stages of a Detergent Supply Chain

44. Supply Chain Stages