1. Global Logistics Management Shihyu Chou National Taiwan Normal University Unless noted, the course materials are licensed under Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Taiwan (CC BY-NC-SA 3.0) Attribution-NonCommercial-ShareAlike 3.0 Taiwan 1

2. Unit 1 Supply Chain Strategies 2

3. Learning objectives  Highlight the role of logistics and supply chain strategy in the context of firm strategy, and see how logistics and supply chain strategy can actually sometimes drive firm strategy  Outline the evolution of manufacturing, from which various logistics and supply chain strategies have emerged  Look at both lean and agile logistics strategies, and the role of mass customization in the latter  Develop a taxonomy of supply chain strategies 3

4. Outline  Definitions of logistics and SCM  Strategy  The evolution of manufacturing  Lean production  Agile supply chains and mass customization  Combined logistics strategies  Critical factors to consider in supply chain planning 4 Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35)

5. What is logistics?  Logistics involves getting, in the right way, the right product, in the right quantity and right quality, in the right place at the right time, for the right customer at the right cost (8Rs)  It’s not just ‘trucks and sheds’ 5

6. What is supply chain management?  The supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer  Supply chain management (SCM) is the management across a network of upstream and downstream organizations of material, information and resource flows that lead to the creation of value in the form of products and / or services 6

7. Strategy 7

8.  Strategy –It is about planning and configuring the organization for the future according to certain stakeholder expectations. –A particular long term plan for success  An organization without a strategy is like a ship without a compass 8

9. Corporate strategy Business unit strategy Functional strategy Top-down view Firm level SBU level departmental level (marketing, production, logistics,…) 9 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36))

10. Corporate Strategy SBU A’s Strategy SBU B’s strategy Strategy: Function A1 Strategy: Function A2 Strategy: Function A3 Strategy: Function B1 Strategy: Function B2 Strategy: Function B3 Logistics & SCM Strategy A holistic view of logistics and SCM strategy formulation 10 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37))

11.  SCM is an activity that is truly cross-functional and not limited to one functional area.  Companies need to evolve their strategies to meet the challenges of the dynamic, ever changing business environment.  Integration is a key feature of effective SCM  Formulating a strategy for logistics and SCM should not be restricted to the logistics function; instead it should involve taking a cross- functional, process based perspective. 11

12. The evolution of manufacturing 12

13. Output variety Output volume Craft production Mass production Lean production Mass production The evolution of production strategy 13 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39))

14.  Toyota Production System (TPS) is the origin of lean production and lean logistics. (Kiichiro Toyota, Taiichi Ohno, and others)  They improved the Ford can production model and also included the thinking of quality.  TPS: –The emphasis is not on the efficiency of individual machines, but on the flows through the system. 14

15. Lean Production 15

16.  Lean production: –Quick machine turnover, elimination of waste, even production flows, low levels of inventory, faster total process time, achieving total quality –Pulled system (JIT) rather than push system  Eliminating waste in a pull based value stream of activities with level production (i.e. even production runs with neither idle time nor surges in demand) and just-in-time inventory management 16

17.  Typical wastes: –Overproduction, waiting, transportation, inappropriate processing, unnecessary inventory, unnecessary motion, defects  A key aspect of lean is ensuring that value is added at each stage of the process and steps in the process that do not add value are eliminated 17

18.  Lean can also be applied in the service context.  Lean consumption, the principles: –Solve the customer’s problem completely –Don’t waste the customer’s time –Provide exactly what the customer wants –Provide what’s wanted exactly where it’s wanted –Provide what’s wanted where it’s wanted exactly when it’s wanted –Continually aggregate solutions to reduce the customer’s time and hassle. 18

19. Agile supply chains and mass customization 19

20. Agile supply chains  The agile supply chain is a demand-pull chain designed to cope with volatile demand. –Structured so as to allow maximum flexibility  Enabled by mass customization –Often incorporates postponed production  Mass customization involves customization into various different finished products of what are largely mass produced product. 20

21. Mass customization  Customers usually concentrate on the dissimilar features among the similar products.  Different product configurations contain a majority of shared components and features to accommodate volume and variety  Enabled by postponement –the reconfiguration of product and process design so as to allow postponement of final product customization as far downstream as possible –Not only applied to manufacturing –E.g. Packaging postponement is merely delaying final packaging of products until customer orders are received 21

22. Before standardizationAfter standardization The principle of postponement 22 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43))

23. Toyota AYGOCitroen C1Peugeot 107 All three are produced in the new, purpose-built joint TPCA factory in the Czech Republic All three share 92% of the same components 23 Flickr Arrr! Flickr Andy_BB Flickr Tim van Rooyen

24. Combined logistics strategies 24

25. A taxonomy for selecting global supply chain strategies Supply demand characteristicsResulting pipelines Short lead time + predictable demandLean, continuous replenishment Short lead time + unpredictable demandAgile, quick response Long lead time + predictable demandLean, planning and execution Long lead time + unpredictable demandLeagile production/logistics postponement Lean Plan and Execute Leagile Postponement Lean Continuous replenishment Agile Quick Response Long lead time Short lead time Unpredictable demandPredictable demand 25 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46)) National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))

26. Manufacture of base product Final Markets AgileLean Decoupling point The leagile supply chain (the base product can be manufactured at a remote location and shipped to locations nearer the final market) 26 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48)

27. Critical factors to consider in supply chain planning 27

28. Critical factors to consider in supply chain planning (I)  Living supply chains –Companies use a process of dynamic alignment to match changing customer needs and desires with different supply strategies.  Focus on processes and flows –A supply chain approach in that it allows a full end-to- end perspective rather than focus on separate functional areas 28

29. Critical factors to consider in supply chain planning (II)  Focus on high level objectives –The best supply chains are agile, adaptable and have aligned interests among the firms in the supply chain. This is a ‘Triple A Supply Chain. (Hau Lee from Stanford)  The importance of people –It’s people who drive the supply chain, both inside and outside a firm, not hard assets or technology. You can’t do anything without the right people. 29

30. Critical factors to consider in supply chain planning (III)  Its supply chains that compete –Increasingly it is supply chains that compete more so than individual firms and products –A company can have the best and most sophisticated product in the world, but if it doesn’t have a good supply chain behind it, then it will likely not be able to compete, especially in terms of cost and speed, and indeed many other attributes also. 30

31. PageWork LicensingAuthor/Source 3 Highlight the role of logistics… chain strategy can actually sometimes drive firm strategy Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35) 3 Outline the evolution of manufacturing,… chain strategies have emerged Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35) 3 Look at both lean and agile logistics strategies…of mass customization in the latter Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35) 3 Develop a taxonomy of supply chain strategies Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35) 4 Strategy The evolution of …consider in supply chain planning Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p35) Copyright Declaration 31

32. PageWork LicensingAuthor/Source 5 Logistics involves getting, …right customer at the right cost (8Rs) Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p9) 6 The supply chain is the network of …in the hands of the ultimate consumer Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p10) 6 Supply chain management (SCM) is …products and / or services Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p11) 8 It is about planning and …according to certain stakeholder expectations. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36) 8 A particular long term plan for success Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36) Copyright Declaration 32

33. PageWork LicensingAuthor/Source 9 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36)) 10 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37)) 11 SCM is an activity that is …not limited to one functional area. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37) 11 Companies need to evolve …the dynamic, ever changing business environment. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37) 11 Integration is a key feature of effective SCM Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p37) Copyright Declaration 33

34. PageWork LicensingAuthor/Source 11 Formulating a strategy for logistics …taking a cross-functional, process based perspective. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p38) 13 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39)) 14 The emphasis is not… but on the flows through the system. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39) 16 Quick machine turnover…faster total process time, achieving total quality Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39) 16 Eliminating waste in a pull based value …and just-in-time inventory management. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42) Copyright Declaration 34

35. PageWork LicensingAuthor/Source 17 A key aspect of lean is ensuring …the process that do not add value are eliminated Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p41) 18 Solve the customer’s problem completely …. solutions to reduce the customer’s time and hassle. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p41) 20 Mass customization involves …products of what are largely mass produced product. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42) 21 Customers usually concentrate on the dissimilar features among the similar products. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p42) 21 the reconfiguration of product and …customization as far downstream as possible Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43) Copyright Declaration 35

36. PageWork LicensingAuthor/Source 21 Packaging postponement is …products until customer orders are received Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43) 22 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43)) 23 Flickr Arrr! http://www.flickr.com/photos/gasheadsteve/157345234/sizes/m/i n/photostream/ 2012/09/24 visited 23 Flickr Andy_BB http://www.flickr.com/photos/andyboohh/5421789547/ 2012/10/15 visited 23 Flickr Tim van Rooyen http://www.flickr.com/photos/timmee/282614963/ 2012/10/15 vistied Copyright Declaration 36

37. PageWork LicensingAuthor/Source 23 All three are produced in the new, purpose-built joint TPCA factory in the Czech Republic Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p44) 23 All three share 92% of the same components Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p44) 25 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46)) 25 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46)) 26 National Taiwan Normal University Shihyu Chou (reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48) 28 Companies use a process of …needs and desires with different supply strategies. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48) Copyright Declaration 37

38. PageWork LicensingAuthor/Source 29 The best supply chains are agile…This is a ‘Triple A Supply Chain. (Hau Lee from Stanford) Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p49) 29 It’s people who drive the supply chain, …You can’t do anything without the right people. Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p49) Copyright Declaration 38