Module 1: Supply Chain

Strategy and Value

© Business eLearning
 Supply Chain Management
What is it?

Why do we care?
 Supply Chain Management
• “The business discipline responsible
for buying everything an
organization needs to function,
converting it into a form that
customers might want to use, and
getting it to customers.”
The Supply Chain Network
 History of Supply Chain
Management
Trading (pre-1750)

Manufacturing (1750 – 1990)

Components of a Supply Chain
 Integrated Supply Chain
Management
“The systematic coordination of
traditional business functions within a
particular organization and across
organizations within the supply chain
for the purposes of improving the
long-term performance of the
individual enterprises and the system
as a whole.”
Integrated Supply Chain
Management
 Types of Supply Chains

How has technology and innovation

impacted each type of supply chain?
How Does SCM Create Value?
Gaining Competitive Advantage
Supply Chain Financial
Performance
 Emerging Challenges in SCM
• Disruptive Technologies

• Geopolitical and Social Change

• Talent Management
Disruptive Technologies

What else?
Geopolitical and Social Change

What else?
Talent Management

What else?
 Summary
• Supply Chain Management

• Value

• Evolution

• Challenges
 Module 2: Integrating the
Internal Supply Chain
© Business eLearning
 Group Work
How do you plan to complete the group
project?
Total Value Optimization

Customer Value Firm Profit

 Strategic Alignment
Corporate Strategy

Organizational Strategy

Functional Strategy

Source Make Deliver

The SCOR Model

• Plan
– Inputs
– Capacity

• Implement
– Processes
– Activities
 The SCOR Model

• Horizontal Hand-Offs

• Functional Goals

• Multi-Level Alignment
 Traditional Outputs
• “Stack it high and let it fly”

• Long-term Forecasts

• Economies of Scale

• Advanced Positioning
Traditional Integration
Traditional Supply Chain
Management
When does it work?

When does it not?

The Great Divide
Functional Disconnects
Demand Supply
Supply Chain Dis-Integration
Organizing for Integration
The Integrated Supply Chain

What are the necessary skills and

capabilities in integrated SCM?
 Total Customer Value
• “Right” Product
• “Right” Quantity Form Time
• “Right” Place
• “Right” Time Customer
Value
• “Right” Condition
• “Right” Customer Possession Place
• “Right” Cost
Customer Value Stratification
 Value of a Customer
• Revenue
– Customer Sales

• Costs
– Lost Customers
– Customer Service

Are all customers equally profitable?

 Same Service for All
Customer Type

Prod.
A B C  “Average” supplier to
Type key accounts
A 95% 95% 95%  “Superior supplier to
other customers
B 95% 95% 95%
 High inventories
 Excessive expediting
C 95% 95% 95%

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 Tailored Customer Service
Product Type
Customer
A B C  Stronger franchise
Classification
with best customers
I 1 2 6
 Lower logistics costs
II 3 4 7
 Higher inventory
III 5 8 11 turns
IV 9 12 13  Reduced expediting
V 10 14 15

37
 Balanced Management
Fine-line (ABC) analysis
Stratified management guidelines

5%
15%
% of Sales or Profits

80%

Class - A Class - B Class - C

20% 50% 30%

% of Products or Customers
 Summary
• Traditional Internal Organization

• The SCOR Model

• Organizing for Integration

• Customer Value