08/09/21

Framework for discussion

Title
Subtitle

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Supply Chain
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Framework for discussion

Profit = Revenue – Cost

• Prior to supply chain focus

• Revenue generated from customer
• Cost of transactions within the organisation

• Supply chain focus

• Revenue generated from customer
• Cost of transactions across the supply chain

What are the sources of the costs across the supply chain?

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The movement of information, funds and products

across the supply chain

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What are the drivers of information, product and

funds movement ?

Facilities-- The places where product is stored, assembled, or fabricated

Sourcing– The set of business processes required to purchase goods and services

Inventory-- Raw materials, work in process, and finished goods

Information-- The data and analysis concerning facilities, inventory,

transportation, cost, prices, and customers

Transportation-- Moving inventory from point to point

Pricing– The process by which a company decides how much to charge for its
products or services

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Basic model

Reference:: Adapted from Chopra, S .and Meindl, P, Supply Chain Management, Prentice Hall, 2010

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Decision issues
• Facilities
• Location
• Centralisation versus decentralisation
• Other factors to consider (e.g., proximity to customers)

• Capacity

• Manufacturing methodology

• Warehousing methodology

• Overall trade-off: Responsiveness versus efficiency

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Decision issues
• Inventory
• Type
• Raw materials, work in process, and finished goods within a supply
chain

• Amount
• more inventory: greater responsiveness but greater cost
• less inventory: lower cost but lower responsiveness

• Approach
• cost of carrying additional inventory versus cost of flexible
production

• Overall trade-off: Responsiveness versus efficiency

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Decision issues
• Transportation
• Mode of transportation:
• air, truck, rail, ship, pipeline, electronic transportation
• vary in cost, speed, size of shipment, flexibility

• Route and network selection

• route: path along which a product is shipped
• network: collection of locations and routes

• In-house or outsource

• Overall trade-off: Responsiveness versus efficiency

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Decision issues
• Sourcing
• In-house versus outsource decisions
• Comparative advantage

• Supplier evaluation and selection

• Best value criterion

• Procurement process
• Type of contractual arrangement

• Overall trade-off: Increase in supply chain profits versus the risk of third
party involvement

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Decision issues
• Information
• Push versus pull

• Coordination and information sharing

• Forecasting

• Utilisation of enabling technologies

• Internet
• ERP systems
• RFID

• Overall trade-off: Responsiveness versus efficiency

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Decision issues
• Pricing
• Consideration of economies of scale

• Everyday low pricing versus high-low pricing

• Fixed price versus menu pricing

• Overall trade-off: Increase the company profits

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