SUPPLY_CHAIN

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Supply Chain and e-Supply Chain: Structures, Strategies and Drivers

page 1

Supply Chain and e-Supply Chain:

Structures, Strategies and Drivers

1. SUPPLY CHAIN DESCRIPTION

Supply Chain: Activities involved in fulfilling a customer request

Actors: Suppliers, Sub-Contractors, Manufacturers, Transporters,

Warehouses, Retailers, Customers

Functions: Product, Development, Marketing, Procurement, Manufac-turing, Operations, Distribution, Finance, Customer Service

Objective: Maximize value generated through customer satisfaction

Decision Phases

1. Strategy (Design)

Locations, Capacity channel design, Warehouses, Manufacturing, Out-sourcing

2. Planning

Supply scheme, Inventory policy, Subcontracting

3. Operations

Allocation of individual orders to inventory or production, allocation to

transportation routes, etc.

Prof. P. Miliotis

Supply Chain and e-Supply Chain: Structures, Strategies and Drivers

page 2 Process view of the Supply Chain

Cycle view

1. Customer Order Cycle

Customer arrival

Customer order entry

Customer order fulfilment

Customer order receiving

2. Replenishment Cycle

Retail order trigger

Retail order entry

Retail order fulfilment

Retail order receiving

3. Manufacturing Cycle

Order arrival

Production scheduling

Manufacturing and Shipping

Receiving

4. Procurement Cycle

Supplier / Manufacturer interface

Sources Converters Retailers

Suppliers Distributors Consumers Product and Service Flow

Information Flow

Funds Flow Prof. P. Miliotis

Supply Chain and e-Supply Chain: Structures, Strategies and Drivers

page 3 Customer

Order

Replenishment

Manufacturing

Procurement Pull

Push Customer arrival

Customer order entry

Customer order fulfilment

Customer order receiving

Retail order trigger

Retail order entry

Retail order fulfilment

Retail order receiving

Order arrival from distributors

Production scheduling

Manufacturing and Shipping

Receiving (distributors, retailers,

customers

Cycles Prof. P. Miliotis

Supply Chain and e-Supply Chain: Structures, Strategies and Drivers

page 4 Push-Pull view of S.C.

Pull Process: Execution is initiated in response to a customer

order (increased responsiveness)

Push Process: Execution is initiated in anticipation to a customer

order (increased efficiency)

Push-Pull Boundary: Which processes are of each type

Push Systems MRP supported

Pull Systems Require fast information transmission and sharing

2. STRATEGIC FIT

Matching of the company’s competitive strategy to supply chain strategy

Competitive Strategy: Define ways to satisfy customer require-ments through products and services

 Product Development Strategy

 Marketing and Sales Strategy

Supply Chain Strategy: Design strategy to achieve the right mix of

efficiency and responsiveness

Products with high demand uncertainty (and usually high profit margins) require

responsive supply chains. This usually occurs early in the life cycle of the prod-uct.

Products with low demand uncertainty (and usually low profit margins) require

effective supply chains. This usually occurs late in the life cycle of a product.

Supply chains serving multiple products and multiple customer segments require

the right balance between effectiveness and responsiveness.

Achieving strategic fit: Matching S.C. to customer segment require-ments

Understanding the cus-tomer: Volumes, variety, response time, service level,

price innovation rates

Prof. P. Miliotis

Supply Chain and e-Supply Chain: Structures, Strategies and Drivers

page 5

Understanding the supply

chain: Responsiveness

 Response to wide range of quantities

(excess capacity)

 Meet short lead time

 Handle a large variety of products

 Meet a high level service

Efficiency

 Economies of scale

 Low capacity (excess costs)

 Low cost transport

Supply chain Characteristics

Efficient Responsive

Primary goal Lowest cost Quick response to demand

Product design Max per. at min cost Modularity for postpone-ment of product differen-tiation

Pricing Lower margins price

prime customer drive High margins

Manufacturing

strategy Lower costs through high

utilization Capacity availability to

meet unexpected demand

Inventory strat-egy Minimize inventory to lower cost Maintain buffer inventory to meet unexpected de-mand

Lead time Reduce but not at expense

of cost Reduce aggressively even

if costs are significant

Supplier strat-egy Select based on cost and

quality Select based on speed,

flexibility and quantity

Transportation Low cost models Responsive models