Jacques Vallerand
Managing Director
Master in Global Supply Chain Management
Faculty of Business Administration
Université Laval
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Sourcing Management vs Supply Management
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What is Strategic Supply Chain Management?
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Insights into the Future of Strategic Supply
Chain Management
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An Overview of the Master Program offered at
Laval University
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Is a development born out of
practice, not theory
Is continuously changing and
evolving in response to the
needs of the firm, its suppliers
and customers
Is changing in response to new
technology
Is changing as people continue
to explore new capabilities
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Buying
Purchasing
Procurement
Materials Management
Sourcing Management
Supply Management
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The Four Sourcing Options
Proactive
Supplier
development
SCM
Supplier
selection
Supply chain
sourcing
1st-tier
Supply Chain
Relational
Focus
Reactive
Scope
Cox (2004)
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Customer needs
Finality
Source
Suppliers
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What is a supply chain?
Direct supply chain – a company, a supplier, and a
customer involved in the flows of products, services,
finances, and/or information.
Extended supply chain – includes 2nd tier suppliers and
2nd tier customers, all involved in the flows of products,
services, finances, and/or information.
Ultimate supply chain – all organizations involved
in the flows of products, services, finances, and
information from ultimate supplier to end customer.
Mentzer, John T. et al. (2001), “Defining Supply Chain Management” Journal of Business Logistics, Vol. 22, No. 2, pp. 1-25.
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Mentzer, John T. et al. (2001), “Defining Supply Chain Management” Journal of Business Logistics, Vol. 22, No. 2, p. 5.
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WHAT IS A SUPPLY CHAIN?
“A supply chain consists of all parties involved, directly or
indirectly, in fulfilling a customer request. Within each
organization, the supply chain includes all functions
involved in receiving and filling a customer request.”
(Chopra and Meindl 2004)
Parties: manufacturers, suppliers, transporters,
warehouses, retailers, customers
Functions: new product development, marketing,
operations, distribution, finance,
customer service
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Taylor (2004)
p. 15 – “Every company that touches
a product is part of a supply chain.”
p. 21 – “A supply chain is basically
a set of facilities connected by
transportation lanes.”
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SUPPLY CHAIN FEATURES
• Functions: Logistics, Purchasing,
Marketing, Operations, . . .
• Institutions: Manufacturers,
Retailers, Logistics Service
Providers, . . .
• Behaviors
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Power/Dependence
Conflict
Competition
Cooperation, e.g. sharing information
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Taylor (2004)
p. 16 – “No one in the company is
responsible for running the supply chain.
Engineering designs the product,
marketing sets prices and runs promotions,
sales cuts deals with customers, purchasing
negotiates with suppliers, manufacturing
controls the inventories, logistics arranges
transportation, accounting handles the
cash flow, and so on.”
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What is SCM?
Exercise: 4 Perspectives
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SCM vs. Purchasing: 4 Perspectives
Re-labeling
Purchasing
Purchasing
SCM
SCM
Unionist
Intersectionist
SCM
SCM
Source: Paul D. Larson & Árni Halldórsson (2002),
“What is SCM? And, where is it?” Journal of Supply
Chain Management, Vol. 38, No. 4, pp. 36-44.
Traditionalist
Purchasing
Purchasing
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Traditionalist
Purchasing
SCM
Purchasing hires “supply chain analysts” to
study relationships with second-tier suppliers.
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TRADITIONALIST
“SCM is a procurement tool that
. . . strategically integrates the
whole procurement process.”
Source: Ronnie LaCourse Korosec (2003), “Assessing the Feasibility
of Supply Chain Management within Purchasing and Procurement,”
Public Performance & Management Review, 27(2), pp. 92-109.
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Re-labeling
Purchasing
SCM
“Purchasing Manager”
“Supply Chain Manager”
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Unionist
SCM
Purchasing
SCM = purchasing + logistics + operations + marketing + . . .
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“all the traditional business functions
should be included”
1. Marketing & sales
2. Research & development
3. Forecasting
4. Production
5. Purchasing
6. Logistics
7. Information systems
8. Finance
9. Customer service
Mentzer, John T. et al. (2001), “Defining Supply Chain Management” Journal of Business Logistics, Vol. 22, No. 2, pp. 1-25.
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Mentzer, John T. et al. (2001), “Defining Supply Chain Management” Journal of Business Logistics, Vol. 22, No. 2, p. 19.
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THE SCOR MODEL
• Five Core Management Process
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Plan (Balance Demand and Supply)
Source (Purchasing)
Make (Production)
Deliver (Logistics)
Return
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Intersectionist
SCM
Purchasing
SCM staff function; internal consultants
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INTERSECTIONIST
“SCM should be functionally independent.
. . . an independent department that
coordinates key functions within the
individual organisations and links
them into the wider supply chain.”
Source: Rachel Mason-Jones (2004), “Procurement’s Place
in the Chain,” Supply Management (July 22), pp. 30-31.
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The Breadth & Depth of SCM
Breadth
Depth
NARROW
BROAD
SHALLOW
Traditionalist
Intersectionist
Re-labeling
Unionist
DEEP
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SCM Flows
Flows
Conveyed through
Demand
Orders
Supply
Shipments
Cash
Payments
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Push-Pull Boundary
S2
S1
Push Segment
M = manufacturer
S = supplier
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R
C
Pull Segment
C = consumer
R = retailer
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Upstream & Downstream
Supply Chain
Network
Upstream
Procurement
Internal
Company
Downstream
Distribution
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Complexity & Variability
• Complexity
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Flows
Functions
Documents
Structure
• Variability
• Demand
• Supply
• Increases Inventory
• Bullwhip effect
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Today’s supply chain is a result of actions
taken in the past.
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Tomorrow’s supply chain will be the result of
actions that we take today.
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Strategically-Decoupled, Price-Driven
Focused
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Measured by three critical indicators
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Driven by supply chain disruptions/risk, leadership within
the supply chain, managing the timely delivery of goods
and services
Price
Delivery
Quality
Not linked to strategic objectives
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Strategically-Coupled, Value –Driven
Far more complex in nature
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A by product of being driven by value
Increasing emphasis on value creation
Critical issues
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Performance alignment, product design, environmental
considerations, power/influence
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Global
Highly adaptive
More complex performance measurement
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Cost savings
Cost avoidance
Increase revenue
Strategic in nature
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A corporate capability and asset
A necessity and an opportunity
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Source: Steven A. Melnyk
Michigan State University
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Our current supply chain frameworks are too
limited, too simple, and too old.
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Limits our ability to talk with others.
Multiple dimensions
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Driver
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Duration
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Demand Driven Supply Chains
Supply Driven Supply Chains
Customer Driven Supply Chains
Technology Driven Supply Chains
Project Based Supply Chains
Non-terminating Supply Chains
Each is managed differently
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How we view supply chains is also strongly
influenced by the industrial context:
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Consumer product supply chains
Oil supply chains
Military supply chains
Music supply chains
Not everyone appreciates a supply chain for a
service!
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The emerging challenge for supply chains
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Creating, delivering, and maintaining value
The “challenge” of abundance
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American homes
Growth of the Self-storage industry
Increasing response
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INNOVATION
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Product
Process
Supply Chain
Service
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Need to create greater visibility for strategic
impact of supply chain management.
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The “cult of the invisible”
Lack of quantitative models showing the relationship
between supply chain decisions and corporate
performance
Lack of case studies showing how supply chain can
positively affect corporate financial and strategic
performance
Lack of conceptual frameworks that can be used to
describe the different “types” of supply chains and
the condition under which they are most and least
appropriate
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Increasing importance of leadership
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Critical element in transformation management
“Sell” supply chain management to top management
Leadership has to be broader than simply focusing
on analytical tools (and efficiency)
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We have enough left-brained managers!
Increasing importance of soft skills and awareness
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Culture/group dynamics
No formal process for training and developing
strategic supply chain leaders!
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Increasing importance of metrics
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Elements of a metric
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Measure, standard, reward
Metrics as communication
Must rethink the current metrics for SCM
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Current metrics emphasize:
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Cost savings at the firm/business unit level
Yet, they ignore:
Cost avoidance
² Revenue growth
² Supply chain impacts
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Increasing importance of risk
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Risk can adversely affect
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Profitability
Impact
Price
Quantity
Timing
Reputation
Yet,
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Risk does not simply affect supply, it affects demand
Risk clearly includes Intellectual Property
Risk is also an attitude
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Increasing importance of transformation
management
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Prevent the curse of becoming a commodity
Challenges
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How to bring about change in the absence of a crisis?
How to bring about change across supply chain
partners?
Recognizing that what made you successful in the
past may hold you back now
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The problem of lean and six sigma!
Dealing with organizational culture
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Supply chain design and management
influenced by:
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Geographic impact
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Europe vs North America
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Economic development
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Developed economies
Developing economies
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Collaboration
Kenya and medical supplies
Mexico and A1(H1N1) virus
Supply Chains have a DNA
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Lessons learned from the Red Cross
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Supply chain life cycle matter
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Supply chain design matters
Supply chains are not simply economic
networks; they are also social networks
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Each stage must be managed differently
Lessons learned from the Utility Companies of the
Pacific Northwest
Supply base churn is important
Our supply chain is shirking
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Today, some people see supply chain
management as a “fad”.
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In the future, it will all be about Supply Chain
Management!
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John Chambers (CEO, CISCO)
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Supply chain design and management
influenced by:
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Geographic impact
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Europe vs North America
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Collaboration
Economic development
Developed economies
² Developing economies
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Kenya and medical supplies
Mexico and A1(H1N1) virus
Supply Chains have a DNA
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