Module 1

30 August 2024 21:33

Decision Phases of SC:

1. Strategy of SC ----- how to structure SC for the next years to come
2. Planning of SC ---- Decisions over the next quarter or year
3. Operation of SC --- Daily or weekly operations decisions
Decision regarding individual cust. Orders
SC Config. Is fixed, operating policies are determined
Implement those policies as perf as we can
Least amount of uncertainty due to shorter time horizon
EG: allocate orders for inventory/production, set due dates, generate
pickup lists, set delivery schedules, place replenishment orders etc.

SC Strategy:
1. Decide what the structure of the SC is and what each of the stages will do in the SC
2. Mistakes are expensive and cant be reversed - take market uncertainty into account
3. Take into account:
a. Location and capacity of facility
b. Products to be made/stored at diff locations
c. Modes of transport
d. Information Systems

SC Planning:
1. Define a set of policies to govern the short term operations
2. Fixed based on the prev phase of SC configurations
3. Starts w a forecast demand of the coming year
4. Decisions related to planning:
a. Which market to be supplied from where
b. Planned inventories
c. Backup Locations
d. Inventory policies
e. Timing and size of promotions
f. CONSIDER: Demand uncertainty. Exchange rates, future competition.

PROCESS VIEW of a SC:

1. Push View: Orders produced based on cust. Demand Forecast. (Speculative)
2. Pull View: Orders produced based on actual cust. Demand. (Reactive)
3. Cycle View: Each process of the SC is divided into cycles, they are performed b/w
two successive stages of the SC.

Push and Pull are separated by a boundary

The relative proportion of push/pull process effects our SC performance.

The process inside these two views can be divided into:

1. Cust. Relationship Management (CRM) - Market, Price, Sell, Call Centre, Order
Management.
2. Internal Supply Chain Management (ISCM) -Strategic Planning, Demand planning, Supply
Planning, Fulfillment, Field Service.
3. Supplier Relationship Management (SRM) - Source, Negotiate, Buy, Design and Supply
Collaboration.

They need to be integrated for a successful and effective SCM

 Module 2
31 August 2024 02:52

Competitive SCM
1. Competitive Strategy is the set of cust. needs that a firm tries to satisfy through its products or services
2. New product portfolio is defined by diff product development strategies
3. Market segmentation, product pricing, positioning, promotion, are defined by the marketing and sales strategy
4. SC Strategy determines the nature of material procurement, transportation of materials, manufacturing of
products / creating of services, distribution of product.

All the functional strats. Support one and another and the competitive strategy.

Strategic Fit:

• It is obtained when the competitive strategy and the SC Strategies have aligned goals.
• Company may fail due to poor strategic fit
• Competitive strategy and all other functional strategy together are called coordinated overall strategy
• Companies must structure their process and resources to be able to execute these strategies properly.

How to achieve strategic fit:

• Understand the customer and Supply Chain uncertainty
• Understand the SC Capabilities
• Achieve strategic fit

1. Understanding customer and SC uncertainty:

Customer Needs:

a. Qty of product in each lot

b. Response time that customers wouldn’t mind
c. Variety of products that are needed
d. Min. Service level that is expected and required
e. Pricing
f. Desired rate of innovation in the product

A. IMPLIED DEMAND UNCERTAINTY:

Resulting uncertainty only for the portion of demand that the SC plans to satisfy based on the
attributes the customer wants.
  Products w uncertain demand have higher margins and low demand
 Forecasting is more accurate when demand has LESS uncertainty
 Increased implied demand uncertainty leads to increased difficulty in matching supply with
demand -- We can end up w oversupply or undersupply

B. Supply Source Capability:

i. Frequent Breakdowns
ii. Low Yield Rate and predictability
iii. Poor Quality
iv. Less Supply Capacity
v. Flexibility of Supply Capacity
vi. Evolving Production Process

C. Levels of implied Demand uncertainty:

2. Understanding the SC Capabilities:

Supply Chain responsiveness is the ability to:

i. Respond to wide range of quantities demanded
ii. Meet shorter lead times
iii. Handle large variety in products
iv. Build more innovative products
v. Meet a very high service level

• Responsiveness comes at a cost ---> SC efficiency is the inverse to the cost of making and delivering the
product to the customer
• The Cost Responsiveness Efficient Frontier Curve:
lowest possible cost for given amount of responsiveness.
 • The responsive spectrum:

3. Achieving strategic fit:

• Degree of SC Responsiveness is consistent with the implied uncertainty
• Assign roles to diff parts of the SC to ensure responsiveness
• Ensure all functions maintain the strategies consistently to support competitive strategy.

• Zone of strategic Fit: Efficient SC when demand is Certain and Responsive SC when uncertain demand exists.

• Roles can be allocated differently:

 • Differentiate Effective and Responsive SCs:

• Achieving strategic fit for many diff products while serving many diff customer segments, it is needed to share
some links in the SC w some products and have separate operations for other links

CHALLENGES:

1. Increasing Product Variety and shrinking life cycles increases the uncertainty and reduces the window of
opportunity to achieve strategic fit.
2. Globalization has led to increase in uncertainty due to fluctuation in exchange rates, global demand, price of
crude oil. Other commodities being fluctuated.
3. Fragmentation of SC ownership has resulted in less vertically integrated firms, take advantage of supplier and
customer competencies (which they couldn’t before), new ownership makes managing and aligning the SC
more difficult, Aligning all members in SC is crucial to ensuring Strategic Fit.
4. Changing technology and customer needs can force the firms to rethink their SC strategies.
5. The environment and sustainability also must be accounted for while forming the SC.
Module 3
09 December 2024 14:35
Module 4
10 December 2024 03:14
MACRO PROCESS:

• Amazon has done an excellent job of using IT to enhance its CRM process. The company
customizes the products presented to suit the individual customer (based on an analysis of
customer preferences from past history and current clicks). Quick ordering is facilitated by
systems that allow one-click orders. The order is then visible to the customer until it is delivered.
In the rare instances that a customer uses the call center, systems are in place to support a
positive experience, including offering a callback if the call center is heavily loaded

• Given that the ISCM macro process aims to fulfill demand that is generated by CRM processes,
strong integration is needed between the ISCM and CRM macro processes. When forecasting
demand, interaction with CRM is essential, as the CRM applications are touching the customer and
have the most data and insight on customer behavior. Similarly, the ISCM processes should have
strong integration with the SRM macro process. Supply planning, fulfillment, and field service are
all dependent on suppliers and therefore on the SRM processes. It is of little use for your factory
to have the production capacity to meet demand if your supplier cannot supply the parts to make
your product. Order management, which we discussed under CRM, must integrate closely with
fulfillment and be an input for effective demand planning. Again, extended supply chain
management requires that we integrate across the macro processes.

• Significant improvement in supply chain performance can be achieved if SRM processes are well
integrated with appropriate CRM and ISCM processes. For instance, when designing a product,
incorporating input from customers is a natural way to improve the design. This requires inputs
from processes within CRM. Sourcing, negotiating, buying, and collaborating tie primarily into
ISCM, as the supplier inputs are needed to produce and execute an optimal plan. However, even
these segments need to interface with CRM processes such as order management. Again, the
theme of integrating the three macro processes is crucial for improved supply chain performance.
Module 5
Tuesday, 10 December 2024 2:52 AM
CYCLE INVENTORY

• A lot or batch size is the quantity that a stage of a supply chain either produces or purchases at a
time. Consider, for example, a computer store that sells an average of four printers a day. The
store manager, however, orders 80 printers from the manufacturer each time he places an order.
The lot or batch size in this case is 80 printers. Given daily sales of four printers, it takes an
average of 20 days before the store sells the entire lot and purchases a replenishment lot. The
computer store holds an inventory of printers because the manager purchases a lot size larger
than the store’s daily sales.
• Cycle inventory is the average inventory in a supply chain due to either production or purchases in
lot sizes that are larger than those demanded by the customer.
• The larger the cycle inventory, the longer the lag time between when a product is produced and
when it is sold. A lower level of cycle inventory is always desirable, because long time lags leave a
firm vulnerable to demand changes in the marketplace. A lower cycle inventory also decreases a
firm’s working capital requirement

• Toyota, for example, keeps a cycle inventory of only a few hours of production between the
factory and most suppliers. As a result, Toyota is never left with unneeded parts, and its working
capital requirements are less than those of its competitors. Toyota also allocates very little space
in the factory to inventory.
• Zara and Seven-Eleven Japan are two companies that have built their strategy on the ability to
replenish their stores in small lots.
• Seven-Eleven replenishes its stores in Japan with fresh food three times a day. The small
replenishment batch allows Seven-Eleven to provide product that is is always very fresh.
• Zara replenishes its European stores up to three times a week. Each replenishment batch thus
contains only about two days of demand. This ensures that Zara’s inventory on hand closely tracks
customer demand.
• In both instances the firms have used small batch replenishment to ensure that their supply
closely tracks customer demand trends.
• Ideally, cycle inventory decisions should be made considering the total cost across the entire
supply chain. In practice, however, it is generally the case that each stage makes its cycle
inventory decisions independently

SAFETY INVENTORY

• Safety inventory is inventory carried to satisfy demand that exceeds the amount forecast. Safety
inventory is required because demand is uncertain, and a product shortage may result if actual
demand exceeds the forecast demand.
Module 6
10 December 2024 03:47
Module 7
10 December 2024 01:09
NOTE:
If weights don’t add upto 1, then
normalize them by dividing the total
NOTE: If no Forecast value
for first period is given
assume it is A1=F1 and
hence in turn F2 also will be
equal to A1, F1
 Weighted Moving avg

Exponential Smoothening