Introductory Discussion (15/Sept/2017 ----Session 2 & 3-----)

Industrial Revolution Quality Revolution Supply Chain Management

According to Forrester 1958 p.57

The five flow system (Material, Manpower, Machine, Information & Finance) interlock to
amplify one another to cause change of fluctuation will form the basis for anticipating the effects of
decisions , policies , organizational reforms and investment choices.

Example for Man & Material Flow Military Supply Chain

The Ford Supply chain (1910-1920) Tightly Integrated chain, owned the entire Supply chain
(SC), Rigid. The Ford SC would offer you any color as long as it was black and any model as long
as it was T-model.
The Toyota Supply Chain (1960-1970) Lean Production system. Keirestu Model: Bulk of
components was sourced from a large number of suppliers with interlocking long term business
relationship.

!! The Controlling Factor in safety stock is the variability in demand

The Dell Supply Chain (1995-2005) No fixed Association (found out new
Methods to discover the fastest and cheapest supply of resources) i.e., not dedicated to one
particular supplier alone. Made use of IT for supply chain integration. Customers could configure
their PC.

!! Now Dell is not following the above model, they have moved to finished product sales i.e. through
retail outlets. The major reasons include Standardization, and multipurpose use of PCs

!! Workstation and Server Class follows the configuration model because of high level of variance

What changed???

1. Product Variety
2. Inventory Level
3. Setup time/ Response time
4. Risks
5. Ownership (control) to integration (contracts)
Explanation:

Sustainability
A business enterprise can be sustainable if it takes care of the triple bottom line. (People
Stakeholders, PlanetEarth, Profit basic need to sustain in a biz)
A perfect a balance of PPP is required to sustain any business.

!! HUL sourcing palm oil from various countries is not a good example of sustainability as deforestation
is majorly involved.

All the elements of the supply chain should individually reduce cost (cost centers).
Profit =(price-cost) X N ; (N is dependent on customer surplus)

Customer Surplus = value associated with the product price of the product.

Eg: Suppose you wish to purchase a LED bulb and perceive the cost of the bulb to be 250 pre
purchase, instead you get the bulb from the retailer at a price of 175 , the difference of 75 is what
you call the customer surplus.
Customer surplus drives more buying!
Flexibility
Incase of any disruption in any part of the supply chain, how can you adapt to the
unforeseen events and bring things back to normal.
 Responsiveness & Delivery Respond to customer on time.
Innovation Supply chain activities changes from time to time. The e-business bypass
various elements in the SC and deliver the product. This indeed is an innovation.(Amazon)

Drivers Of Supply Chain

1. Globalization
2. Technology
3. Empowered Customer
Customer is an essential part of the SC
Customer is the source of revenue in the entire supply chain (critical part)

Reverse Supply Chain

Why is it more challenging?

1. Forecasting is difficult (Predictability issue)

2. No knowledge of location
3. Economies of scale is not possible in reverse SC.
4. Control issue
 5. Incentive issue

Key Processes

Product acquisition from a customer.

Reverse logistics
Inspection and disposition
Remanufacturing or refurbishing
Marketing (creating secondary market for recovered product).

The objective of a supply chain

Maximize the overall value generated

Supply chain Surplus= Customer Value- Supply chain Cost

Follow the given eg to understand the concept

Answer:
 Decision Phases in a SC

1. Supply chain strategies/ decisions outsourcing, location, products, modes of

transportation, information System etc.
2. Supply chain Planning (Tactical) Demand forecast, cost price in market share,
sub-contracting, inventory policies, target production.
3. SC Operation Weekly , Daily

Two ways to view the process

1. Cyclic view divided into series of cycle, each performed at the interface between two
successive entities of the SC. (Refer ppt for diagram)
2. Push Pull view Push: Execution is performed in anticipation of an old demand

Proactive process is based on estimated/ forecast

Pull: Execution is performed in response to an order.

Push pull boundaries is also known as decoupling point

Pure push/pull is not possible usually a combination exists. Following image proves the same.