ì  BA  244:  Supply  Chain  Management  

Supply  Chain  

ì  ‘Encompasses  all  organiza1ons  and  ac1vi1es  associated  with  the  flow  and  transforma-on  of  goods  from  the  raw  materials  stage,  through  to  the  end  user,  as  well  as  the  associated  informa-on  flows.  Material  and  informa1on  flows  both  up  and  down  the  supply  chain.’  (Handfield  &  Nichols,  Supply  Chain  Redesign)  

EmmeE  (Supply  Chain  in  90  Minutes)  

Supplier’s  Supplier   Supplier   Firm   Customer   Customer’s  

Customer  

UPSTR

EAM  

DOWNSTRE

AM  

Simple  Supply  Chain  

Goods  and  Services  

Informa1on  (demand  forecast,  orders,  customer  feedback)  

Payments  

Products  (  refund,  servicing)  –  Reverse  Logis1cs  /  Closed  Loop  Supply  Chain  Bailey  et  al  

Feeds  Supplier  

Pork  Supplier  

Hotdog  Company  

Restaurant   Buyer  

UPSTR

EAM  

DOWNSTRE

AM  

Supply  Chain  Example  

Dyadic  Supply  Relationships  

Immediate  or  first-­‐1er  supplier  (seller  of  inputs)   Dyad  

Focal  Firm  

Dyad  

Immediate  Customer  (buyer  of  outputs)  

ì  Commercial  rela1onships  between  2  par1es  

ì  ‘One  to  one’  or  ‘two-­‐party’  rela1onships  

ì  Used  to  be  the  main  way  in  which  supply  chains  were  viewed  

Dyadic  Supply  Relationships  

Immediate  or  first-­‐1er  supplier  (seller  of  inputs)   Dyad  

Focal  Firm  

Dyad  

Immediate  Customer  (buyer  of  outputs)  

ì  Management  of  immediate  upstream  and  downstream  rela1onships  is  s1ll  important  e.g.  SRM,  CRM  

ì  The  supply  chain  func1on  is  devoted  to  supplier  selec1on,  performance  management,  and  development  of  strategic  rela1onships  

Inter-­‐business  Supply  Chains  

ì  Dyadic  rela1onships  happen  within  the  context  of  a  lengthier  process  

ì  Controlled  through  supply  contracts  and  collabora1ve  rela-onships  between  separate  en11es  

Supply  Chain  

Inter-­‐business  Supply  Chains  

ì  The  Chain  metaphor  emphasizes  that:  ì  Each  player  contributes  value  at  its  stage  in  the  

sequence  ì  Weak  links  (e.g.  underperforming  supplier  or  

distributor)  may  disrupt  the  flow  of  supply  ì  Value  is  added  not  just  by  each  element  in  the  

chain,  but  by  the  quality  of  the  rela-onships  between  them  

ì  It  is  con1nuous  and  non-­‐direc1onal  

Internal  Supply  Chain  

Procurement   Produc1on   Storage   Distribu1on   Sales  and  Marke1ng  

Informa1on  (capacity  data,  delivery  schedules,  payment  terms)  Materials  (finished  goods,  services)  

Informa1on  (promo1on  plans,  sales  forecast,  orders)  Materials  (returns,  goods  for  repair)  

Finance  (payment)  

Internal  Supply  Chain  

ì  Important  idea  for  the  internal  customer  concept  

ì  Makes  extensive  use  of  cross-­‐func1onal  project  teams,  quality  circles,  and  other  mechanisms  (e.g.  ERP  systems)  which  facilitate  informa1on  sharing  and  collabora1on  with  internal  customers  

ì  Supply  Chain  Networks  

Focal  Firm   Customer  Supplier  

e-­‐procurement  IT  Consultancy  

Finance  provider  

Transport  services  provider  

Market  research  consultancy  

Customer’s  Customer  

Customer’s  Customer  

Supplier’s  Supplier  

Supplier’s  Supplier  

Supply  Chain  Networks  

ì  Mul1ple  other  rela1onships  with  customers,  suppliers,  industry  contacts,  partners,  advisers,  compe1tors  (in  trade  associa1ons  or  industry  think  tanks)  

ì  A  more  appropriate  metaphor  is  a  network  or  web  

Retail  Supply  Networks  

Donald  

Angela’s  Sari  Sari  Store  

Purefoods  

P&G  

SM  

Robinsons  

Unilever   Rustans   Rody  

Manufacturers   Retailers   Consumers  

Helpful  why?  

ì  More  strategic  model  for  analysis  

ì  Raises  possibility  of  a  wider  range  of  collabora1ons  (e.g.  supplier  associa-ons,  buying  consor-a,  or  strategic  alliances)  

ì  Recognizes  ‘extended  enterprises’  crea1ng  poten1al  risk  (e.g.  intellectual  property)  

Helpful  why?  

ì  Business  Associa1ons  ì  Open  Handset  

Alliance  ì  Formed  in  2007  ì  Google,  Intel,  

Samsung,  HTC,  LG,  Sony  

ì  Result?  ì  Android  

Helpful  why?  ì  Buying  Consor1a  

ì  PHP  123B  Laguna  Lakeshore  Expressway  Dike  PPP  

ì  47  km  expressway  and  45  km  flood  control  dike  ì  Trident  Infrastructure  –  

Aboi1z  Equity,  Megaworld  Corp.,  Ayala  Land,  SM  Prime  Holdings  

ì  San  Miguel  ì  MTD-­‐PAVi-­‐Hanshin  

Consor1um  

ì  Any  business  associations  that  your  organization  is  in?  

Structuring  Supply  Chains  

Tiered  Supply  Chain  Structures  

Top-­‐level  purchaser  

Supplier  A   Supplier  B   Supplier  C   Supplier  D   Supplier  E  

ì  All  manufacturing  /  services  performed  by  top-­‐level  purchaser  

Tiered  Supply  Chain  Structures  

Top-­‐level  purchaser  

Supplier  X  

Supplier  1   Supplier  2  

Supplier  Y  

Supplier  3   Supplier  4  

ì  Purchaser  OUTSOURCES  all  ac1vi1es  other  than  the  final  stages  of  produc1on  

ì  Direct  rela1onship  will  be  with  the  first  1er  suppliers  

ì  First-­‐1er  suppliers  make  use  of  second-­‐1er  suppliers  

VENDOR  /  SUPPLIER  BASE  

e.g.  ORIGINAL  EQUIPMENT  MANUFACTURER  (OEM)  

Tiered  Supply  Chain  Structures  

ì  Components  and  Assemblies  

ì  Subassemblies  ì  Finished  output  of  

others  used  in  products  

Tiered  Supply  Chain  Structures  

Focal  Firm  

Key  Accounts  

Customer  1   Customer  2  

Wholesalers  

Customer  3   Customer  4  

ì  Can  be  applied  to  Customers  

Tiered  Supply  Chain  Structures  

ì  What  for?  

ì  Fewer  Key  commercial  rela1onships  to  manage  

ì  Fewer  opera1onal  tasks  and  transac1ons  allowing  a  strategic  focus  

ì  To  minimize  reputa1onal  risk,  there  is  a  need  to  ‘drill  down’  through  the  1ers,  monitoring  policies  and  performance  e.g.  Nike  

ì  Sharing  informa1on  with  expert  first-­‐1er  suppliers  

Closed  Loop  Supply  Chains  (Reverse  Logistics)  

ì  The  process  of  planning,  implemen1ng,  and  controlling  the  efficient,  cost-­‐effec1ve  flow  of  raw  materials,  in-­‐process  inventory,  finished  goods  and  related  informa-on  from  the  point  of  consump-on  to  the  point  of  origin,  for  the  purpose  of  recapturing  value  or  proper  disposal  (Rogers  and  Tibben-­‐Lembke,  Reverse  Logis9cs  Glossary)  

ì  End-­‐users  become  suppliers  of  goods  (once  past  their  useful  life)  back  to  the  manufacturer  

Closed  Loop  Supply  Chains  (Reverse  Logistics)  

ì  Drivers  ì  Environmental  aspects  of  waste  disposal  ì  Poten1al  returns  from  the  reuse  of  products  or  the  

recycling  of  materials  

ì  May  also  be  due  to  product  recalls  or  returns,  and  the  offering  of  repair  and  maintenance  services  

Closed  Loop  Supply  Chains  (Reverse  Logistics)  

ì  Management  Issues  ì  Effec1ve  supplier  and  customer  rela1onships  ì  Supplier  selec1on  based  on  recycling  or  ecologically  

friendly  disposal  capacity  ì  Product  and  Packaging  Design  to  facilitate  return  

ì  Supply  Base  Optimization  

Broadening  Supply  

ì  More  suppliers  

ì  Back-­‐up  suppliers  in  case  of  poli1cal  unrest,  bad  weather,  unforeseen  peaks  in  demand,  or  supplier  failure  

ì  Buyer  can  be  more  opportunis1c  

Narrow  Supply  

ì  Supply  Base  Ra1onaliza1on  /  Op1miza1on  ì  Determining  how  many  

suppliers  the  buying  firm  wants  to  do  business  with  

Supply  Base  Rationalization  /  Optimization  

ì  Advantages?  ì  Larger  volume  orders  mean  discounts  ì  Collabora1ve  rela1onships  with  fewer  suppliers  ì  Maintain  the  security  of  supply  by  ensuring  that  

there  are  enough  approved  suppliers  to  cover  supplier  failure,  shortages,  or  other  risks  

Supply  Base  Rationalization  /  Optimization  

ì  How?  ì  Exis1ng  suppliers  will  be  evaluated  on  

performance,  cost,  service,  quality,  volume  of  business,  and  compa1bility  for  closer  rela1onship  

ì  An  Approved  Supplier  List  will  be  drawn  up  ì  KPIs  with  Approved  Suppliers  to  ensure  non-­‐

complacency  

SUPPLY  CHAIN  MANAGEMENT  

ì  The  management  of  upstream  and  downstream  rela-onships  with  suppliers  and  customers  to  deliver  superior  customer  value  at  less  cost  to  the  supply  chain  as  a  whole  (Christopher)  

ì  End