Supply Chain Management
Lecture 15
Outline
• Today
– Simulation game results
– Midterm review
• Next week
– Midterm Tuesday March 9
The Teams
Place Team
AdWiJuMa
Brittany
Brown Squad
Cobras
COSTA
Do Nothing
Jafar's Crew
No use for a name
Pangeans for Outsourcing
Pole Position
Robert and Alex
Team Bison
Team Predator
Team Shinnannigans
We Want Dutch Wafers
End money
The Scores
Place Team
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16 Do Nothing
End money
43,114,415.24
42,636,799.36
42,529,886.20
42,401,421.85
41,623,140.34
41,461,152.91
41,011,414.46
40,621,780.33
40,150,372.51
40,149,781.61
39,836,011.64
39,581,049.55
37,850,401.65
37,305,034.75
36,659,589.53
35,394,768.57
Jafar’s Crew
13
14
$37,850,401
Team Bison
$37,305,034
20
40
16
40
10
15
40
COSTA
16
Do Nothing
$36,659,589
$35,394,768
20
20
16
16
16
9
AdWiJuMa
10 We Want Dutch Wafers
$40,150,372
$40,149,781
60
37
40
46
15
16
16
18
11
12
Brittany
$39,836,011
$39,581,049
112
30
118
16
36
16
5
Team Shinnannigans
$41,623,140
The Designs
6
Robert and Alex
$41,461,152
60
60
40
16
7
45
15
15
No use for a name
$41,011,414
10
8
16
Team Predator
$40,621,780
50
66
46
16
20
40
16
16
16
16
16
2
Pole Position
4
$42,636,799
Brown Squad
$42,401,421
100
55
53
56
16
1
Cobras
3 Pangeans for Outsourcing
$43,114,415
$42,529,886
72
71
16
95
65
The Results
Place Team
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Cobras
Pole Position
Pangeans for Outsourcing
Brown Squad
Team Shinnannigans
Robert and Alex
No use for a name
Team Predator
AdWiJuMa
We Want Dutch Wafers
Brittany
Jafar's Crew
Team Bison
COSTA
Do Nothing
End money
43,114,415.24
42,636,799.36
42,529,886.20
42,401,421.85
41,623,140.34
41,461,152.91
41,011,414.46
40,621,780.33
40,150,372.51
40,149,781.61
39,836,011.64
39,581,049.55
37,850,401.65
37,305,034.75
36,659,589.53
35,394,768.57
Midterm
• Questions? Stop by…
– Friday March 5
– Monday March 8
Midterm
• Chapter 1
– Sections 1, 2, 3, 4, 5
• Skipping
– Section 1.5: Supply chain macro processes in a firm
– Important concepts
•
•
•
•
•
•
Supply chain
Supply chain surplus
3 decision phases in a supply chain
Cycle view
4 process cycles
Push/pull view
Supply Chain Stages
Q1
• A typical supply chain may involve a variety of
stages
Supplier
Manufacturer
Distributor
Retailer
Customer
Most supply chains are actually supply networks
Midterm
• Chapter 2
– Sections 1, 2, 3, (4e: also 4)
– Important concepts
•
•
•
•
•
•
•
•
•
Competitive strategy
Supply chain strategy
Strategic fit
How is strategic fit achieved
Implied demand uncertainty
Responsiveness/efficiency
Issues affecting strategic fit
Scopes of strategic fit
Obstacles to achieving strategic fit (3e: Chapter 3 section 9)
What is Competitive Strategy?
Q2
• Competitive strategy
– Defines, relative to competitors, a company’s set of
customer needs that it seeks to satisfy through its
products and services
• Wal-Mart
– Everyday low prices (low cost retailer for a wide variety of products)
• Coors
– The coldest tasting beer in the world, brewed with Rocky Mountain
spring water
• Dell
– Custom-made computer systems at a reasonable cost
How do you execute your competitive strategy?
Midterm
• Chapter 3
– Sections 1, 3, 4, 5, 6, 7, 8, (3e: also 9)
• Hint
– Sections 3 through 9 focus at:: Role in the competitive strategy, and
Overall trade-off
• Skipping
– Sections 3 though 9: Information-related metrics
– Important concepts
• 6 drivers of supply chain performance
–
–
–
–
–
–
Facilities
Inventory
Transportation
Information
Sourcing
Pricing
From Strategy to Decisions
Q3
Corporate Strategy
Competitive Strategy
Supply Chain Strategy
Responsiveness
Efficiency
Facilities Inventory Transportation Information Sourcing Pricing
Logistical drivers
Cross functional drivers
Midterm
• Chapter 4
– Sections 1, 2, 3
– Important concepts
•
•
•
•
•
•
Distribution
Factors influencing network design
Customer service components
Relationship between number of facilities and response time
Relationship between number of facilities and cost
6 distribution network design options
– Relative performance (advantages/disadvantages)
Transportation Cost and Number of
Facilities
Transportation
Costs
Number of
Facilities
Q4
Design Options For a Distribution
Network
Q5
Manufacturers
Manufacturers
Distributor
Warehouse
Retailer
Retailer
Distributor
Warehouse
Manufacturers
Retailer
Consumers
Manufacturers
Consumers
Retailer
Retailer
Consumers
Distributor
Warehouse
Mergers
Consumers
Manufacturers
Distributor
Warehouse
Distributor
Warehouse
Consumers
Manufacturers
Distributor
Warehouse
Distributor
Warehouse
Consumers
Distributor
Warehouse
Midterm
• Chapter 5
– Sections 1, 2
• Skipping
– Section 5.2: Locating to split the market
– Important concepts
•
•
•
•
4 classifications of network design decisions
8 factors influencing network design decisions
6 facility strategic roles
Positive externalities
Factors Influencing Network Design
Decisions
• Strategic factors
Q6
Strategic role
Global
Customers
Regional
Customers
Lead
Outpost
Offshore
Server
<low-cost>
<exports only>
<local market>
<avoid tariffs>
Many Asian plants
Suziki’s Indian venture
Maruti
<advanced
technology>
<access to Lockheed Martin’s JSF in Dallas
knowledge>
Dell in Ireland
Source
Contributor
<low-cost>
<global market>
<customization>
<development skills>
Nike plants in Korea
Maruti
Factors Influencing Network Design
Decisions
Q7
• Macroeconomic factors
– Quotas, tariffs, and tax incentives
• Economic trade agreements: Nafta, EU, APTA, AFTZ
– Exchange rate and demand risk
– Different states or countries often offer economic incentives to
companies that decide to set up shop there, including tax
incentives and low-interest economic development loans
How can trade agreements influence the number
of facilities in a supply chain?
Factors Influencing Network Design
Decisions
• Political factors
– Political stability
• Infrastructure factors
– Availability of transportation terminals, labor
• Most of Amazon’s distribution centers are located near airports
• Competitive factors
– Positive externalities (many stores in a mall makes it more
convenient for customers – one location for everything the
customers need)
Q7
Midterm
• Chapter 6
– Sections 1, (3e: 2), 3, 4, (4e: 5), (3e: 6)
• Important concepts
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–
–
–
–
–
Discounted cash flow
Net present value
Decision tree
Calculating NPV
Calculating NPV using decision trees
Risk management and network design
Midterm
• Chapter 7
– Sections 1, 2, 3, 4, 5, 6
– Important concepts
•
•
•
•
Factors influencing demand forecast
4 characteristics of forecasts
4 forecast types
Static and adaptive
– Static method, moving average, exponential smoothing, Holt's
method
• Calculating forecasts
• Forecast errors
• Calculating forecast errors
Types of Forecasts
• Qualitative
– Primarily subjective, rely on judgment and opinion
• Time series
– Use historical demand only
• Causal
– Use the relationship between demand and some
other factor to develop forecast
• Simulation
– Imitate consumer choices that give rise to demand
Q8
Midterm
• Chapter 8
– Sections 1, 2, 3
– Important concepts
• Aggregate planning
• Operational parameters
• Aggregate planning strategies
Aggregate Planning Strategies
• Basic strategies
– Level strategy (using inventory as lever)
• Synchronize production rate with long term average demand
• Swim wear
– Chase (the demand) strategy (using capacity as lever)
• Synchronize production rate with demand
• Fast food restaurants
– Time flexibility strategy (using utilization as lever)
• High levels excess (machine and/or workforce) capacity
• Machine shops, army
– Tailored strategy
• Combination of the chase, level, and time flexibility strategies
Q9
Midterm
• Chapter 9
– Sections 1, 2, 3
• Hint
– Section 3 focus at Impact of promotion on demand (market growth,
stealing share, and forward buying), and impact on promotion timing
• Important concepts
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–
–
–
–
Responding to predictable variability
Managing supply
Managing demand
3 reasons for increase in demand due to promotion
Impact on promotion timing
Managing Demand
Q10
• Pricing and other forms of promotion
– Timing of promotion is important
• Demand increases from promotion can result from a
combination of three factors:
– Market growth (increased sales, increased market size)
• Increase in consumption from both new and existing customers
• Example: Toyota Camry attracting buyers who were considering
lower-end models
– Stealing share (increased sales, same market size)
• Product substitution (overall demand stays the same)
• Example: Toyota Camry attracting buyers who were considering
Honda Accord
– Forward buying (same sales, same market size)
• Customers move up purchases (does not increase sales)
Midterm Formula Sheet