Name the six drivers to ashive strategic fit
Facilities, Inventory, Transportation (Logistics)
Information, sourcing, pricing (cross-functional drivers)
Goal of the drivers? Are they independet?
Increase supply chain surplus. Supplychain structure should sitibably deal with implied demand uncertainty.
The drivers are not independent. They interact with each other.
What is IKEAs SC tactic?
Low price, acceptible quality. Unsamble furnitures, low component varity.
Facilities. And the role in the supply chain?
The physical locations in the supply chain network where products is stored, assembled or fabricted.7
- Direct influence on the level of repsonsiveness.
- More facillites = less transpirtation costs but more facilities and inventory costs.
Example. IKEA vs Seven-Eleven
The three components of facillities decisions
- Capability
- flexible or dedicated capacity?
- product- or functional-focused facility?
-cross-docking or storage? - Location
- Capacity
- Facility-related metrics (processing time, quality losses, produt varity…)
Inventory and its role in supply chain?
- To match supply and demand.
All raw materials, work in process, and finised goods within a supply chain.
Role in the Supply Chain:
- Littles law
- Match the supply and demand
- Prodcuing in large quantaites to fullfill the future demand
- Increases the responsiveness!
Example: Amazon books.
What is Littles law?
I=DT
D= thoughout
T= material flow time
I= avarage inventory
What are the components of inventory decisions?
- Cycle inventory
- Safety inventory
- Seasonal inventory
- Level of product invenotry (can you promise?)
- Inventory - related metrics avarafe (inventory, inventory turns, avarage safelty, seasonal invenotry)
Example of inventory
Amazon holds on avarage 100,000 units of books in stock
Sells 1000 a day
Little Law= 100,000/1,000=100 days on avarage in inventory
Transportation and role in supply chain?
Moves products between stages
Faster transportation = higher costs, but also higher level of responivness
Exmaple. Blu Nile uses FedEx
Components of transportatin decions
- Design of transportation network
- Choise of transportation mode
- Transportation related metrics (avarage in-/outbound transportation costs, shipment size)
Information and role in supply chain?
Data and analysis concerning facilities, inventory, transportation, costs, prices and costumers thoughout the supply chain.
Role in the supply chain:
- Impoves utilization and coordination of supply chain assets and flows
-Increase responsiveness
-Reduce costs
For exmaple: Walmart is cross-docking, airlines has discounted flights. DHL centralized integrated system.
Components of information descions
- Demand planning (clear time horizon)
- Coordination sharing
- Sales and operations planing
- Information related metrics (forecast horizon, frequency of upates, forecasr error…)
What is sourcing and its role in Supply Chain?
- To purchase goods
- Responsive or efficent source (otherwise KFC case)
- Internal source or third party
Example Zara.
Components of sourcing decions
- In-house or outsource
- Supplier selection
- Procurement
- Source-relarted metrics (days payable, avarage purchase, price, supply clead time…)
Example: Boing 787 case
Pricing and its role in Supply Chain?
- How much to charge the costumer
- Influence costumer expectation
- Match supply and demand
Example: Amazone (diffrent shipping services)
Components of Pricing Decisions
- Pricing and economies
- Everyday low pricing vs high-low pricing (Appie vs Lidl)
- Fixed price vs menu pricing
-Source-related metrics (profit margins, pays sales outstanding…)
Structuring drivers model
Competative Strategy —> Supply Chain Stategy —-> Drivers
What is the role of distrobution in SC?
The steps taken to move and store a product from the supplier stage to the costumer stage in a supply chain. Key driver to profit.
Affects SC cost + costumer value
Tex.
raw materials from supplier–>manufacture, finnished products from manufactoe—>costumer
Give example of distrobution in the cement industry. And successfull distrobutions:
- Cement industry (India): Distribution cost is about 30% of production and sale.
- The apparel retail industry: Distribution affects about 35% of the revenue.
Choise of distrobution can achive supply chain objectives from low cost to high responsiveness.
Walmart + Seven Eleven!
Two phases of designing a distrobution network:
- visulising the broad network (number of stages and their role)
-specifying the details (location, capability, capacaty, demand allocation)
Examplr, new TV set implementation in Europe, where do you wany yo store and sell it? Mediamarkt?
Example off companys and their distrobution network. P&G, Dell, HP, Gateway, Apple.
P&G:
-direct distrobution to large supermarkets
- extra stage when distrobutiong to small players
Dell: direct delivery to vostumer
HP: sale trhough retailers
Gateway: (direct delivery from factory) - bank rupt
Apple - sale through retailers
Distrobution tactics for small vs. big players?
Smaller players has contacts more close by, however big players has huger transportation and therefore they can afford distrobution center closer by.
What happened with Giant?
Had their wearhouse very far away, changed to have it in Lelystad.
Saved money on it in the end!
Restructer your network to keep up with the flactuating market.
