The document discusses various aspects of supply chain strategy and design. It describes how supply chain design decisions determine the structure of the supply chain by establishing locations and capacities of facilities, products made at each location, transportation modes, and information systems used. These strategic design decisions must support overall business objectives and are long-term and expensive to change. The document then discusses supply chain planning, which establishes short-term operations policies based on the supply chain configuration, and supply chain operations, which focuses on implementing operating policies over short time horizons with less uncertainty.

1. Supply Chain Strategy or Design
 Decisions about the structure of the supply chain and
what processes each stage will perform
 Strategic supply chain decisions
Locations and capacities of facilities

Products to be made or stored at various locations

Modes of transportation

Information systems

 Supply chain design must support strategic
objectives
 Supply chain design decisions are long-term and
expensive to reverse – must take into account market
uncertainty
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2. Supply Chain Planning
 Definition of a set of policies that govern short-term
operations
 Fixed by the supply configuration from previous
phase
 Starts with a forecast of demand in the coming year
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3. Supply Chain Planning
 Planning decisions:
 Which markets will be supplied from which locations
 Planned buildup of inventories
 Subcontracting, backup locations
 Inventory policies
 Timing and size of market promotions
 Must consider in planning decisions demand
uncertainty, exchange rates, competition over the
time horizon
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4. Supply Chain Operation
 Time horizon is weekly or daily
 Decisions regarding individual User orders
 Supply chain configuration is fixed and operating
policies are determined
 Goal is to implement the operating policies as
effectively as possible
 Allocate orders to inventory or production, set order
due dates, generate pick lists at a warehouse,
allocate an order to a particular shipment, set delivery
schedules, place replenishment orders
 Much less uncertainty (short time horizon)
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5. Process View of a Supply Chain
 Cycle view: processes in a supply chain are divided
into a series of cycles, each performed at the
interfaces between two successive supply chain
stages
 Push/pull view: processes in a supply chain are
divided into two categories depending on whether
they are executed in response to a User order (pull)
or in anticipation of a User order (push)
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6. Cycle View of Supply Chains
User
User Order Cycle
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
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7. Cycle View of a Supply Chain
 Each cycle occurs at the interface between two
successive stages
User order cycle (User-retailer)

Replenishment cycle (retailer-distributor)

Manufacturing cycle (distributor-manufacturer)

Procurement cycle (manufacturer-supplier)

Figure (see previous power point)

Cycle view clearly defines processes involved and

the owners of each process. Specifies the roles and
responsibilities of each member and the desired
outcome of each process.
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8. User Order Cycle
 Involves all processes directly involved in receiving
and filling the User’s order
User arrival

User order entry

User order fulfillment

User order receiving

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9. Replenishment Cycle
 All processes involved in replenishing retailer
inventories (retailer is now the User)
Retail order trigger

Retail order entry

Retail order fulfillment

Retail order receiving

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10. Manufacturing Cycle
 All processes involved in replenishing distributor (or
retailer) inventory
Order arrival from the distributor, retailer, or User

Production scheduling

Manufacturing and shipping

Receiving at the distributor, retailer, or User

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11. Procurement Cycle
 All processes necessary to ensure that materials are
available for manufacturing to occur according to
schedule
 Manufacturer orders components from suppliers to
replenish component inventories
 However, component orders can be determined
precisely from production schedules (different from
retailer/distributor orders that are based on uncertain
User demand)
 Important that suppliers be linked to the
manufacturer’s production schedule
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12. Push/Pull View of Supply Chains
User Order
Procurement,
Manufacturing and Cycle
Replenishment cycles
PUSH PROCESSES PULL PROCESSES
User
Order Arrives
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13. Push/Pull View of
Supply Chain Processes
 Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to User demand
 Pull: execution is initiated in response to a User
order (reactive)
 Push: execution is initiated in anticipation of User
orders (speculative)
 Push/pull boundary separates push processes from
pull processes
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14. Push/Pull View of Supply Chain
Processes
 Useful in considering strategic decisions relating to
supply chain design – more global view of how
supply chain processes relate to User orders
 Can combine the push/pull and cycle views
 The relative proportion of push and pull processes
can have an impact on supply chain performance
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15. A Framework for Structuring
Drivers
C om petitive S tra tegy
S u p p ly C h ain
S tra teg y
E fficien cy R esp o n siven ess
S u p p ly ch ain stru ctu re
L o gistical D rivers
F a cilities In ven to ry T ra n sp o rta tio n
In fo rm a tio n S o u rcin g P ricing
C ro ss F u n ction al D rivers
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