SUPPLY CHAIN ANALYTICS

Introduction to Supply Chain Management

Dr. RAJAT AGRAWAL
DEPARTMENT OF MANAGEMENT STUDIES

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 Outline

• What is a Supply Chain?

• Important Changes in Supply Chains over the ages
• Decision Phases in a Supply Chain
• Process View of a Supply Chain
• The Importance of Supply Chain Flows
• Examples of Supply Chains
• Competitive and supply chain strategies
• Achieving strategic fit
• Expanding strategic scope

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 What is a Supply Chain?

• All stages involved, directly or indirectly, in fulfilling a customer request.

• Includes manufacturers, suppliers, transporters, warehouses, retailers,
and customers.
• Integration of Demand and supply
• Within each company, the supply chain includes all functions involved in
fulfilling a customer request (product development, marketing,
operations, distribution, finance, customer service).

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 What is a Supply Chain?
• Customer is an integral part of the supply chain.
• Includes movement of products from suppliers to manufacturers to
distributors, but also includes movement of information, funds, and
products in both directions.
• Probably more accurate to use the term “supply network” or “supply web”

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Different Types of Generic Supply Chains
Wholesaler Retailer
Manufacturer Customer

Retailer
Manufacturer Customer

Manufacturer Customer

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 What is a Supply Chain?
Customer wants
P&G or other Third Big Bazar
detergent and goes
manufacturer party DC Supermarket
to Big Bazar

Chemical
Plastic Tenneco
manufacturer
Producer Packaging
(e.g. Oil Company)

Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g. Oil Company)

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 Flows in a Supply Chain

Information

Product
Customer
Funds

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 The Objective of a Supply Chain

• Maximize overall value created.

• Supply chain value: difference between what the final product is worth to
the customer and the effort the supply chain expends in filling the
customer’s request.
• Value is correlated to supply chain profitability (difference between
revenue generated from the customer and the overall cost across the
supply chain).

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 Value addition in Supply Chain
Tier 2 Tier 1
Tier 3 supplier supplier Manufactur Wholesaler Retailer Customer
supplier er

Most Value addition due to

Most value addition due to
processing and manufacturing
marketing and logistics activities
activities

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 The Objective of a Supply Chain
• Example: Micromax receives Rs10,000 from a customer for a mobile
phone (revenue)
• Supply chain incurs costs (information, storage, transportation,
components, assembly, etc.)
• Difference between Rs10,000 and the sum of all of these costs is the
supply chain profit
• Supply chain profitability is total profit to be shared across all stages of the
supply chain
• Supply chain success should be measured by total supply chain
profitability, not profits at an individual stage

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THANK YOU

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 SUPPLY CHAIN ANALYTICS
Evolution of Supply Chain Management
Dr. RAJAT AGRAWAL
DEPARTMENT OF MANAGEMENT STUDIES

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 Evolution of Supply Chain Management
• The First Revolution (Beginning of 20th century)
– The Ford supply Chain
• The Second Revolution (around 1960s)
– The Toyota supply chain
• The Third Revolution (around 1995)
– The Dell supply chain

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 The Objective of a Supply Chain

• Sources of supply chain revenue: the customer.

• Sources of supply chain cost: flows of information, products, or funds
between stages of the supply chain.
• Supply chain management is the management of flows between and
among supply chain stages to maximize total supply chain profitability.

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 Supply Chain Challenges
• Lack of synchronization between planning and execution.
• Lack of real-time data visibility, with no common view across all
businesses and channels.
• Irregular reviews of safety stock levels, causing frequent stock-outs
or excess inventory.
• Lack of flexibility in the network and distribution footprint, so that
decision-makers find it difficult to prioritize between cost to serve
and customer service levels, resulting in less profitability.
• Price volatility and difficulty in de-risking.
• Production line imbalance and suboptimal batch sizes, creating asset
underutilization.

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 Supply Chain Analytics
• Supply Chain Analytics aims to improve
operational efficiency and effectiveness by
enabling data-driven decisions at strategic,
operational and tactical levels.
• It encompasses virtually the complete value
chain: sourcing, manufacturing, distribution
and logistics.
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 The Value Chain: Linking Supply Chain and Business Strategy

Finance, Accounting, Information Technology, Human Resources

New Marketing
Product and Operations Distribution Service
Development Sales

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THANK YOU

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 SUPPLY CHAIN ANALYTICS
Analytics in Supply Chain Management
Dr. RAJAT AGRAWAL
DEPARTMENT OF MANAGEMENT STUDIES

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 Supply Chain Analytics
• Supply chain Analytics, plays a key role in
enhancing the performance of supply chain by
improving supply chain visibility, managing
volatility, and reducing fluctuations in cost.

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• Visibility of global supply chain and logistic
processes
• Managing Demand Volatility
• Cost fluctuations in supply chain

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 Analytics in Supply Chain
• Moving to Smarter Logistics to improve Supply
chain visibility
• Managing volatility though demand and
inventory management
• Reducing cost fluctuations by optimizing
sourcing and logistics activities
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 Decision Phases of a Supply Chain

• Supply chain strategy or design

• Supply chain planning
• Supply chain operation

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 Supply Chain Strategy or Design

• Decisions about the structure of the supply chain and what processes each
stage will perform.
• Strategic supply chain decisions:
– Locations and capacities of facilities
– Products to be made or stored at various locations
– Modes of transportation
– Information systems
• Supply chain design must support strategic objectives.
• Supply chain design decisions are long-term and expensive to reverse –
must take into account market uncertainty.

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THANK YOU

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SUPPLY CHAIN ANALYTICS
Supply Chain Planning
Dr. RAJAT AGRAWAL
DEPARTMENT OF MANAGEMENT STUDIES

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 Supply Chain Planning

• Definition of a set of policies that govern short-term operations.

• Fixed by the supply configuration from previous phase.
• Starts with a forecast of demand in the coming year.

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 Supply Chain Planning

• Planning decisions:
– Which markets will be supplied from which locations
– Planned buildup of inventories
– Subcontracting, backup locations
– Inventory policies
– Timing and size of market promotions
• Must consider in planning decisions demand uncertainty, exchange rates,
competition over the time horizon.

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 Supply Chain Operation
• Time horizon is weekly or daily.
• Decisions regarding individual customer orders.
• Supply chain configuration is fixed and operating policies are determined.
• Goal is to implement the operating policies as effectively as possible.
• Allocate orders to inventory or production, set order due dates, generate
pick lists at a warehouse, allocate an order to a particular shipment, set
delivery schedules, place replenishment orders.
• Much less uncertainty (short time horizon).

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 Process View of a Supply Chain

• Cycle view: processes in a supply chain are divided into a series of cycles,
each performed at the interfaces between two successive supply chain
stages.
• Push/pull view: processes in a supply chain are divided into two
categories depending on whether they are executed in response to a
customer order (pull) or in anticipation of a customer order (push).

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 Cycle View of Supply Chains

Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
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 Cycle View of a Supply Chain
• Each cycle occurs at the interface between two successive stages
• Customer order cycle (customer-retailer)
• Replenishment cycle (retailer-distributor)
• Manufacturing cycle (distributor-manufacturer)
• Procurement cycle (manufacturer-supplier)
• Cycle view clearly defines processes involved and the owners of each
process. Specifies the roles and responsibilities of each member and the
desired outcome of each process.

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THANK YOU

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SUPPLY CHAIN ANALYTICS
Different views of Supply Chain
Dr. RAJAT AGRAWAL
DEPARTMENT OF MANAGEMENT STUDIES

1
 Process View of a Supply Chain

• Cycle view: processes in a supply chain are divided into a series of cycles,
each performed at the interfaces between two successive supply chain
stages.
• Push/pull view: processes in a supply chain are divided into two
categories depending on whether they are executed in response to a
customer order (pull) or in anticipation of a customer order (push).

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 Cycle View of Supply Chains

Customer
Customer Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
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 Cycle View of a Supply Chain
• Each cycle occurs at the interface between two successive stages
• Customer order cycle (customer-retailer)
• Replenishment cycle (retailer-distributor)
• Manufacturing cycle (distributor-manufacturer)
• Procurement cycle (manufacturer-supplier)
• Cycle view clearly defines processes involved and the owners of each
process. Specifies the roles and responsibilities of each member and the
desired outcome of each process.

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 Push/Pull View of Supply Chains

Procurement, Customer Order

Manufacturing and Cycle
Replenishment cycles

PUSH PROCESSES PULL PROCESSES

Customer
Order Arrives
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 Push/Pull View of Supply Chain Processes

• Supply chain processes fall into one of two categories depending on the
timing of their execution relative to customer demand.
• Pull: execution is initiated in response to a customer order (reactive).
• Push: execution is initiated in anticipation of customer orders
(speculative).
• Push/pull boundary separates push processes from pull processes.

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 Push/Pull View of Supply Chain Processes

• Useful in considering strategic decisions relating to supply chain design –

more global view of how supply chain processes relate to customer orders.
• Can combine the push/pull and cycle views
• The relative proportion of push and pull processes can have an impact on
supply chain performance.

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 Competitive and Supply Chain Strategies
• Competitive strategy: defines the set of customer needs a firm seeks to satisfy
through its products and services
• Product development strategy: specifies the portfolio of new products that
the company will try to develop
• Marketing and sales strategy: specifies how the market will be segmented
and product positioned, priced, and promoted
• Supply chain strategy:
– determines the nature of material procurement, transportation of
materials, manufacture of product or creation of service, distribution of
product
– Consistency and support between supply chain strategy, competitive
strategy, and other functional strategies is important

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 The Value Chain: Linking Supply Chain and Business Strategy

Finance, Accounting, Information Technology, Human Resources

New Marketing
Product and Operations Distribution Service
Development Sales

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 Achieving Strategic Fit

• Strategic fit:
– Consistency between customer priorities of competitive strategy and
supply chain capabilities specified by the supply chain strategy
– Competitive and supply chain strategies have the same goals
• A company may fail because of a lack of strategic fit or because its
processes and resources do not provide the capabilities to execute the
desired strategy.

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 How is Strategic Fit Achieved?

• Step 1: Understanding the customer and supply chain uncertainty.

• Step 2: Understanding the supply chain.
• Step 3: Achieving strategic fit.

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THANK YOU

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