1. Operations & Logistics Management
Lesson 9- The Supply Network Perspective

2. THE SUPPLY NETWORK PERSPECTIVE
Looks at the entire network of a product, from the original supplier of the raw material to the final client that buys the product from the store shelve.
The operations function is dependent on a number of suppliers to provide all the materials, parts, information, packaging, bits and pieces needed to produce their goods and services: Supply side of the supply network

3. THE SUPPLY NETWORK PERSPECTIVE

4. THE SUPPLY NETWORK PERSPECTIVE
The demand side: is represented by various wholesalers, distributors and retailers, which distribute the goods and services through the network until it reaches the customer.
Importance of the supply network
Provides a basis from which to understand the dynamics of competitiveness.
It allows the identification of important links in the network.
It focuses attention on long-term issues.

5. DESIGN DECISIONS WITHIN THE SUPPLY CHAIN
The following design decisions enable an organisation to position itself within the supply chain:
How much of the network should the organisation own?
Where should the various parts of the organisation’s network be located?
How much capacity should the various parts of the organisation’s network have?
Supply Network Planning and Control

6. 1. HOW MUCH OF THE NETWORK SHOULD THE ORGANISATION OWN?
Traditionally, organisations owned the whole network from the first tier to the shop front.
Global economy brought changes in the last few decades.
Organisations downscaled their networks to focus on their core strengths so as to obtain greater from the network.
The extent of network ownership is referred to as vertical integration and includes considering a number of choices:
Disintermediation
Co-operation
Buy or Make
In-source/Out-source.

8. 2. WHERE SHOULD THE VARIOUS PARTS OF THE ORGANIZATION’S NETWORK BE LOCATED?
On the supply side, important considerations include:
cost of labour and land,
availability and cost of electricity,
availability and reliability of the transportation infrastructure,
and transportation cost.
On the demand side, important considerations include:
Labour skills,
Suitability of location (e.g. luxury resort vs budget over-night hotel)

9. This is a complex and important factor when designing the network.
3. HOW MUCH CAPACITY SHOULD THE VARIOUS PARTS OF THE ORGANISATION’S NETWORK HAVE?
This is a complex and important factor when designing the network.
Capacity is directly related to the cost factors in terms of the cost associated with building the capacity and the product cost as determined by the production processes.

10. 4. SUPPLY NETWORK PLANNING AND CONTROL
Supply chain management starts at the beginning and end by ensuring that the goods and services reaches the customer.
From the start of the process, in obtaining the necessary materials; Purchasing and supply management deals with the organisation’s relationships with its suppliers.
The transport of those materials to the production centre(s).
The movement of the materials within the process.
The release of the goods and services to the distribution sections
Ultimately ensuring that the goods and services reach the customer.

11. IMPORTANT
The objectives of the Supply Network perspective embody everything that operations management stands for. Organisations are viewed through this perspective as a cohesive and holistic “organism” that must be managed and operated as a whole.
Supply chain management is a broad concept which includes the management of the entire supply chain from the supplier to the end customer.

12. QUESTIONS
What is the difference between the supply and demand sides of the supply chain?
Which factors should be taken into consideration when determining the location of the various parts of the supply chain?
How is the capacity decision affected by the supply chain decisions?
Discuss the objectives of supply chain management.

13. Any questions?