Koç University
OPSM 305 Supply Chain Management
Prof. Barış Tan
btan@ku.edu.tr,
SPRING 2011
Course Description:
Supply chain management is concerned with managing the flow of goods and information through a production
or distribution network, encompassing all stages from the supplier to the customer. Its reach can go across
different functional areas of an organization and beyond the boundaries of several firms. As such, it is not only
concerned with the provision of customer service in a single firm, or the meeting of supply and demand in a
single facility, but also involves the coordination of these activities across multiple decision makers.
In this course, we will discuss selected topics related to strategic and tactical issues faced by a supply chain. The
topics that will be covered include strategic issues like manufacturing and distribution network design, capacity
expansion and consolidation, formation and development of partnerships, information systems, as well
as tactical and operational issues like demand and supply planning, supplier and customer collaboration,
production planning, transportation and logistics planning.
Objective:
The course will emphasize the importance of developing an integrated supply chain strategy. Supply chain
practice, and new developments in supply chain management will be explored in the context of cases and
examples from industry.
The objective of the course is to give a detailed overview of logistics and supply chain management and a
framework to think about how to design, manage, and improve supply chains.
Furthermore strategic
importance of logistics and supply chain management for the competitiveness of a corporation will be
emphasized. The course is designed for students who consider working in consulting firms, in sales, marketing,
supply chain, and logistics management departments of organizations in different industries, and also for those
who consider working in logistics service providers.
Text Book
Required text book. The following books include chapters related to the topics we will discuss:
Design and Managing the Supply Chain by Simchi-Levi and Kaminsky
Additional articles will be available in the course pack
Topics
1- Introduction
Supply Chain and Logistics Management
Competitive Advantage through SCM
2- Design of Supply Chains
Process-based business models
Choosing the right supply chain for the right product
Choosing the right supply chain for the right business model
Designing the right supply chain
Supply chain network design
3- Logistics Management
Transportation
Transportation Costs, Pricing
Transportation Carrier Characteristics
Intermodal Combinations
Distribution Planning
Routing
Case: V estel : Improving Distribution Management and 3PL Relations
Warehousing
Warehousing Operations
Cross-docking
Case: Merloni Ellettrodomestici SpA: The Transit Point Experiment
4- Planning in Supply Chains
Inventory Management
Inventory management for new products
Inventory management for existing products
Case: Sport Obermeyer
Positioning inventory in a supply chain
Safety Stock and Risk Pooling
Simulation: Harvard Global Supply Chain Management Simulation
5- Coordination Issues in Supply Chains
Bullwhip Effect
Coordination Mechanisms
Case: Barilla SpA
Simulation: Beer Game
Effects of Contracts: Exploring the incentive issues
6- Procurement and Outsourcing Strategies
Procurement strategies
What to outsource?
Logistics Outsourcing
Managing Outsourcing Relations
7- Strategic Alliances: 3rd Party Logistics
3rd Party Logistics
4th Party Logistics
Business models for working with 3rd Party Logistics providers
8- Future Trends in Supply Chain Management
Instructional Methods
In order to reach the objectives of this course, we will utilize lectures, case studies, an interactive simulation, and
guest speakers.
Lectures
Class time will be devoted to lectures concerning important concepts and issues as well as to the analysis and
discussion of case studies. In addition, we will have a number of guests who will participate in case discussions
and inform us about related issues they are facing at their companies.
Students are expected to have read the assigned materials, and carefully analyzed the cases before coming to
class. It is essential to take an active role in the class discussions. Because all the cases assigned are taken from
the field, they are rich in context, detailed, and often quite complex; therefore students are strongly encouraged
to work in study groups, but are expected to present their own analysis and perspective in class. Students are
expected to be present and to participate in all class sessions.
Class participation will account for 10% of your final grade. Strong participation is founded on adequate
preparation. For a case discussion, this requires a thorough quantitative and qualitative analysis of the case,
defining the problems, identifying and evaluating trade-offs, and preparing a plan of action. When students are
prepared, the class discussion and the learning process are greatly enhanced. What you get from this course
depends on what you put in. Preparation involves not just thorough analysis, but also developing a personal
position on the issues raised in the cases and readings. Unless you have thought about and adopted a personal
position, it is very hard to learn from others’ contributions in the class.
Case Studies
We will study 4 cases during the course. Each case introduces a framework or a set of tools and concepts for
analyzing operations problems. Each case will be presented by one team. All the teams will submit a case report
that addresses the specific questions that will be provided. All the students are expected to be prepared for the
case discussions.
Merloni Ellettrodomestici SpA: The Transit Point Experiment – Harvard Business School
Merloni Elettrodomestici is a leading Italian manufacturer of domestic appliances. In 1986, an exposition
for Merloni customers is scheduled at its Milano regional warehouse. During the two-month period
preceding the event, when the warehouse must be free of inventory, the company conducts a "transit
point" experiment. Each day, a truckload of products from the company's central warehouse is sent to
Milano, where it is immediately transferred to small trucks for local delivery. At the conclusion of the
experiment, the company is considering the replacement of its 17 regional warehouses with transit
points. Students are asked to evaluate this proposal and recommend a configuration for Merloni's
distribution network. Issues to be considered in the analysis of the case include the impact of different
network configurations on customer service and on inventory, labor, operating, and transport costs.
Vestel: Improving Distribution Management and 3PL Relations- Koç GSB Case
Description :
Vestel Durable Goods Marketing is the domestic distribution company of Vestel, the largest television
producer of Europe and one of the major white goods producers in Turkey. The case describes Vestel
Durable Goods Marketing’s initiative to improve its distribution system by implementing an advanced
planning and optimization system, Manugistics. The case also depicts how this new system is used to
redesign its pricing strategy with Vestel's 3PL provider, Horoz Logistics., and the effects of this system
on Vestel's relationship with Horoz Logistics. Vestel's proposal for a strategic alliance with some of its
competitors on distribution planning is also presented. The case can be used to address several
important topics: i) the complexity of logistic network design and management problems (along with a
quantitative exercise to illustrate this to students) ii) the story of a detailed implementation of a supply
chain planning tool (Manugistics) and its novel use in pricing iii) the relationship between a company and
its 3PL provider illustrating various incentive issues, power, and trust dynamics iv) strategic alliances in
logistics along with associated information sharing issues v) an example illustrating the impact of the
local context, Turkey, on supply chain management issues.
Subjects
Durable Goods, Distribution, Third-party logistics (3PL), 3PL Relations, Pricing
Sport Obermeyer Ltd. – Harvard Business School
Describes operations at a skiwear design and merchandising company and its supply partner. Introduces
production planning for short-life-cycle products with uncertain demand. In addition, provides details
about information and material flows that allow one to make recommendations for operational
improvements, including comparisons between sourcing products in Hong Kong and China.
Barilla SpA - Harvard Business School
Barilla SpA, an Italian manufacturer that sells to its retailers largely through third-party distributors,
experienced widely fluctuating demand patterns from its distributors during the late 1980s. This case
describes a proposal to address the problem by implementing a continuous replenishment program,
under which the responsibility for determining shipment quantities to the distributors would shift from
the distributors to Barilla. Describes support and resistance within Barilla's different functional areas and
within the distributors Barilla approached with the proposal. Teaching Purpose: Allows students to
analyze how a company can effectively implement a continuous replenishment system to both reduce
channel costs (in this case, inventory and transportation costs incurred by Barilla as well as inventory
costs incurred by the distributors) and improve service levels (defined in this case as the percent of
retailers' orders filled from distributors' inventory).
Simulation
We will use two simulations in the course: Global Supply Chain Management Simulation and the Beer Game.
Global Supply Chain Management Simulation – Harvard Business School
This interactive online simulation allows students to try their hands at managing the complexities of a
global supply chain by putting them in the shoes of the supply chain manager of a mobile phone
manufacturer. Students become responsible for the rollout of two models of mobile phones. Illustrates
key concepts of supply chain management, such as: creating a balanced supply chain across suppliers
with different lead times, building flexibility into the supply chain to avoid stock-outs and excess
inventory, and evaluating and using demand forecasts. Student success is measured by company profits
as well as through a dynamic evaluation process in which students answer probing questions from the
company's board members. Students can use the simulation individually or in teams.
The Beer game
The production-distribution game or the beer game, as it is often called, has been used in management
education and development for more than 30 years. The beer game is a role-playing game where the
participants have to minimize costs by managing inventory levels in a production-distribution chain.
The beer game consists of 4 sectors: retailer, wholesaler, distributor and factory. You try to minimize
the costs by managing inventory levels in this production-distribution chain. That is each week decide
how much to order (or how much to produce) to fulfill the demand and to minimize inventory carrying
cost.
Grading
The course grade will be based on classroom participation, two simulation reports, homework assignments, and a
final according to the following weight distribution:
Item
Midterm
Final
Class Participation
Assignments
Total
(ind.)
(ind.)
(ind.)
(ind.)
Contribution to the Final Grade
30%
40%
10%
20%
100%
You should come and discuss the topic of the project before you start. This project may fulfill the project
requirement of the MBA program.
Reading Material
1. What is the Right Supply Chain for Your Product?, M. Fisher, Harvard Business Review, 1997
2. Which e-business is right for your supply chain, S. Chopra and A. Mieghem, SCM Review 2000
3. Control Your Inventory in a World of Lean Retailing, F.H. Aberbathy, J.T. Dunlop, J.H.
Hammond, D. Weil, Harvard Business Review, 2000
4. Making Supply Meet Demand in an Uncertain World, M. Fisher, J.H. Hammond, W.R.
Obermeyer, A. Raman, Harvard Business Review, 1994
5. The Triple-A Supply Chain, H. Lee, Harvard Business Review, 2004
6. Aligning Incentives in Supply Chains, V.G. Narayanan and A. Raman, Harvard Business
Review, 2004
Optional Articles (in Turkish)
o Şirketlerin “Hız” Yarışı, Capital, August 2004
o Rekabet ve Tedarik Zinciri Yönetimi, B. Tan, Capital, October 2003
o Rekabet İçin İşbirliği, B. Tan,Capital, Mart 2004
o Birlikten Kuvvet Doğar, B. Tan, Capital, Şubat 2006
o Çok Uluslu Ürün Zamanı, Capital, Aralık 2007
o Global Tedarik Kararları Nasıl Alınıyor?, B. Tan, Capital Ocak 2006
o Satın Alma Süreçlerinin Etkin Yönetimi ile Rekabet, B. Tan, Capital, Haziran 2005
o Rekabet için Lojistik, B. Tan, Capital, Nisan 2004
o Rekabet için Lojistikte İnovasyon, B. Tan, Capital, Aralık, 2007
o Tedarik Zincirlerinde Risk Yönetimi, B. Tan, February 2004
o Niçin Dış Kaynak Kullanımı?, B. Tan, Capital Kasım 2003
o Tedarik Zincirinde Sistemin Yapısı Davranışı Belirler, B. Tan, Capital, May 2005
o Tedarik Zincirinde Kârın ve Riskin Paylaşımı, B. Tan, Capital, September 2005
o Stok Azaldı Devir Hızlandı, Capital, August 2004
o Perakendecilik Mühendisliği, B. Tan, Capital, Aralık 2003.
o Gelir Yönetimi Yaklaşımı ile Rekabet, B. Tan, Capital, October 2004
Lecture Notes
The copies of the material used in the lectures will be available on the web page.
Remarks:
1. The academic rules and regulations are in effect (Koç University Catalogue)
“Academic dishonesty in the forms of cheating, plagiarism or collusion are serious offences and will not be
tolerated at Koç University....Cheating includes, but is not limited to, copying from a classmate or providing
answers or information, either written or oral, to others...”
Cheating, plagiarism, and collusion are serious offences resulting in an F grade and disciplinary action:
•
•
•
Individual accountability for individual work, written or oral. Copying from others or providing answers
or information, written or oral, to others is cheating.
Providing proper acknowledgment of original author. Copying from another student’s paper or from
another text without acknowledgment is plagiarism.
Study of project group activity is effective and authorized teamwork. Unauthorized help from another
person or having someone else write one’s paper or assignment is collusion.
2. Students are responsible for all the announcements made in class.
3. All grades are considered final two weeks after grading.