Supply Chain Management

Lecture 15

Outline
Today
Simulation game results Midterm review

Next week
Midterm Tuesday March 9

The Teams
Place Team
AdWiJuMa Brittany Brown Squad Cobras COSTA Do Nothing Jafar's Crew No use for a name Pangeans for Outsourcing Pole Position Robert and Alex Team Bison Team Predator Team Shinnannigans We Want Dutch Wafers

End money

The Scores
Place Team
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Do Nothing

End money
43,114,415.24 42,636,799.36 42,529,886.20 42,401,421.85 41,623,140.34 41,461,152.91 41,011,414.46 40,621,780.33 40,150,372.51 40,149,781.61 39,836,011.64 39,581,049.55 37,850,401.65 37,305,034.75 36,659,589.53 35,394,768.57

13

Jafars Crew
20 40

14

Team Bison

$37,850,401

$37,305,034
40

16 15

10 COSTA 16

40 Do Nothing

$36,659,589
20

$35,394,768
20

16

16

16

AdWiJuMa
60 40

10 We Want Dutch Wafers

$40,150,372

$40,149,781
37 46

16 11

15

16 12

18 Brittany 30

$39,836,011
112

$39,581,049
36

118

16

16

Team Shinnannigans
60 40

Robert and Alex

60 45

$41,623,140 The Designs

$41,461,152

16 7

15

15

10 8

16 Team Predator

20

No use for a name 50

$41,011,414
46

$40,621,780
66

40

16

16

16

16

16

16

Pole Position
100 55

Brown Squad
53 56

$42,636,799

$42,401,421

16 1 Cobras 72 3 Pangeans for Outsourcing

$43,114,415
71

$42,529,886
95

65

16

The Results
Place Team
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Cobras Pole Position Pangeans for Outsourcing Brown Squad Team Shinnannigans Robert and Alex No use for a name Team Predator AdWiJuMa We Want Dutch Wafers Brittany Jafar's Crew Team Bison COSTA Do Nothing

End money
43,114,415.24 42,636,799.36 42,529,886.20 42,401,421.85 41,623,140.34 41,461,152.91 41,011,414.46 40,621,780.33 40,150,372.51 40,149,781.61 39,836,011.64 39,581,049.55 37,850,401.65 37,305,034.75 36,659,589.53 35,394,768.57

Midterm
Questions? Stop by
Friday March 5 Monday March 8

Midterm
Chapter 1
Sections 1, 2, 3, 4, 5
Skipping
Section 1.5: Supply chain macro processes in a firm

Important concepts
Supply chain Supply chain surplus 3 decision phases in a supply chain Cycle view 4 process cycles Push/pull view

Supply Chain Stages

A typical supply chain may involve a variety of stages
Supplier Manufacturer Distributor Retailer

Q1

Customer

Most supply chains are actually supply networks

Midterm
Chapter 2
Sections 1, 2, 3, (4e: also 4) Important concepts
Competitive strategy Supply chain strategy Strategic fit How is strategic fit achieved Implied demand uncertainty Responsiveness/efficiency Issues affecting strategic fit Scopes of strategic fit Obstacles to achieving strategic fit (3e: Chapter 3 section 9)

What is Competitive Strategy?

Competitive strategy
Defines, relative to competitors, a companys set of customer needs that it seeks to satisfy through its products and services
Wal-Mart

Q2

Everyday low prices (low cost retailer for a wide variety of products)

Coors
The coldest tasting beer in the world, brewed with Rocky Mountain spring water

Dell
Custom-made computer systems at a reasonable cost

How do you execute your competitive strategy?

Midterm
Chapter 3
Sections 1, 3, 4, 5, 6, 7, 8, (3e: also 9)
Hint
Sections 3 through 9 focus at:: Role in the competitive strategy, and Overall trade-off

Skipping
Sections 3 though 9: Information-related metrics

Important concepts
6 drivers of supply chain performance
Facilities Inventory Transportation Information Sourcing Pricing

From Strategy to Decisions

Corporate Strategy
Competitive Strategy Supply Chain Strategy Responsiveness Efficiency

Q3

Facilities Inventory Transportation Information Sourcing Pricing

Logistical drivers

Cross functional drivers

Midterm
Chapter 4
Sections 1, 2, 3 Important concepts
Distribution Factors influencing network design Customer service components Relationship between number of facilities and response time Relationship between number of facilities and cost 6 distribution network design options
Relative performance (advantages/disadvantages)

Transportation Cost and Number of Facilities

Transportation Costs

Q4

Number of Facilities

Design Options For a Distribution Network

Manufacturers Manufacturers Manufacturers

Q5

Distributor Warehouse Retailer Retailer

Distributor Warehouse Retailer

Retailer

Mergers

Retailer

Consumers Consumers Manufacturers

Consumers

Manufacturers

Manufacturers

Distributor Warehouse

Distributor Warehouse

Distributor Warehouse

Distributor Warehouse

Distributor Warehouse

Distributor Warehouse

Consumers

Consumers

Consumers

Midterm
Chapter 5
Sections 1, 2
Skipping
Section 5.2: Locating to split the market

Important concepts
4 classifications of network design decisions 8 factors influencing network design decisions 6 facility strategic roles Positive externalities

Factors Influencing Network Design Decisions

Strategic factors Global Customers Strategic role Regional Customers

Q6

Lead Outpost
Dell in Ireland

Offshore
<low-cost> <exports only>
Many Asian plants

Server
<local market> <avoid tariffs>
Suzikis Indian venture Maruti

<access to Lockheed Martins JSF in Dallas knowledge>

<advanced technology>

Source
<low-cost> <global market>
Nike plants in Korea

Contributor
<customization> <development skills>
Maruti

Factors Influencing Network Design Decisions

Macroeconomic factors
Quotas, tariffs, and tax incentives
Economic trade agreements: Nafta, EU, APTA, AFTZ

Q7

Exchange rate and demand risk Different states or countries often offer economic incentives to companies that decide to set up shop there, including tax incentives and low-interest economic development loans

How can trade agreements influence the number of facilities in a supply chain?

Factors Influencing Network Design Decisions

Political factors
Political stability

Q7

Infrastructure factors
Availability of transportation terminals, labor
Most of Amazons distribution centers are located near airports

Competitive factors
Positive externalities (many stores in a mall makes it more convenient for customers one location for everything the customers need)

Midterm
Chapter 6
Sections 1, (3e: 2), 3, 4, (4e: 5), (3e: 6)
Important concepts
Discounted cash flow Net present value Decision tree Calculating NPV Calculating NPV using decision trees Risk management and network design

Midterm
Chapter 7
Sections 1, 2, 3, 4, 5, 6 Important concepts
Factors influencing demand forecast 4 characteristics of forecasts 4 forecast types Static and adaptive
Static method, moving average, exponential smoothing, Holt's method

Calculating forecasts Forecast errors Calculating forecast errors

Types of Forecasts
Qualitative
Primarily subjective, rely on judgment and opinion

Q8

Time series
Use historical demand only

Causal
Use the relationship between demand and some other factor to develop forecast

Simulation
Imitate consumer choices that give rise to demand

Midterm
Chapter 8
Sections 1, 2, 3 Important concepts
Aggregate planning Operational parameters Aggregate planning strategies

Aggregate Planning Strategies

Basic strategies
Level strategy (using inventory as lever)
Synchronize production rate with long term average demand Swim wear

Q9

Chase (the demand) strategy (using capacity as lever)

Synchronize production rate with demand Fast food restaurants

Time flexibility strategy (using utilization as lever)

High levels excess (machine and/or workforce) capacity Machine shops, army

Tailored strategy
Combination of the chase, level, and time flexibility strategies

Midterm
Chapter 9
Sections 1, 2, 3
Hint
Section 3 focus at Impact of promotion on demand (market growth, stealing share, and forward buying), and impact on promotion timing

Important concepts
Responding to predictable variability Managing supply Managing demand 3 reasons for increase in demand due to promotion Impact on promotion timing

Managing Demand
Pricing and other forms of promotion
Timing of promotion is important

Q10

Demand increases from promotion can result from a combination of three factors:
Market growth (increased sales, increased market size)
Increase in consumption from both new and existing customers Example: Toyota Camry attracting buyers who were considering lower-end models

Stealing share (increased sales, same market size)

Product substitution (overall demand stays the same) Example: Toyota Camry attracting buyers who were considering Honda Accord

Forward buying (same sales, same market size)

Customers move up purchases (does not increase sales)

Midterm Formula Sheet