Supply Chain

Management
Chapter 2

Recap: Decisions in SCM

1) Location

Geographic placement of production facilities, stocking points, and sourcing points

2) Production

What products to produce,

In which plants to produce

Allocation of suppliers to plants

3) Inventory
4) Transportation (distribution)

Transportation choice

Transportation is more than 30 percent of the logistics costs

Operating efficiently makes good economic sense

Components of Supply Chain

Management
Broad Components

Conceptual
Components

Upstream

SC Configuration

Internal Supply Chain

SC Relationship

Downstream

SC Coordination

Value Creation by Supply Chain

Five areas in which supply chain management can have a
direct effect on corporate value:
Profitable growth
Working-capital reductions
Fixed-capital efficiency
Global tax minimisation
Cost minimisation

Chapter 2: Global Supply Chain

Management
Learning Objective:
Differentiate global and local perspective of SCM
Demonstrate key challenges of SCM
Response of SCM to Globalisation
Supply Chain Integration: Challenges and good practice

Global vs. Domestic Supply Chain

Border Crossing
Technology
Visibility
Supply chain visibility (SCV) is the ability of parts, components or
products in transit to be tracked from the manufacturer to their final
destination.
Supply chain visibility technology promotes quick response to change
by allowing privledged users to take action and reshape demand or
redirect supply.

Flexibility

Global Supply Chain

Key challenges of SCM

Unable to apply the right metrics to manage supply chains
effectively
Difficulty prioritising supply chain improvement efforts
Performance is lagging
Complexity of supply chains
Finding and holding on to supply chain talent

Dimensions of Challenges
Market dimension
Technology dimension
Resource dimension
Time dimension

Response of Supply Chain to

Globalisation
Collaboration
Working together to achieve a common goal
Sharing resources
Achieve synergy:
Risk sharing
Innovation:

Supply chain integration

close internal and external coordination across the supply chain operations and
processes under the shared vision

Divergent product portfolio

Development of blue ocean strategy

Supply Chain Integration:

Challenges and Good Practices
Establish a vision of how financial and nonfinancial results will improve with supply chain
integration.
Develop people, culture and an organisation that
supports the supply chain vision.
Develop customer-centric metrics.
Develop multiple supply chains to meet the
needs of different customer and market
segments.
Establish the correct positioning of work on a
global basis.
Incorporate supply chain consideration into
product and service design decisions.

Supply Chain Integration: Challenges

and Good Practices (contd)
Maintain sourcing as a first-level priority.
Stay focused and consistent in relationships with customers and
suppliers.
Create an effective Sales and Operations process.
Develop valid and reliable databases, data and information.
Develop the capabilities and analytic tools required to make
effective decisions in an increasingly complex and risky
environment.
Build trust within and across organisations in the supply chain.
Find ways to share risk equitably among supply chain partners.
Find ways to share rewards equitably among supply chain