AEM 6209: Supply Chain Management

Dr. Syed Mithun Ali, Department of

IPE, BUET, Dhaka
E-mail: [email protected]

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AEM 6209: Supply Chain Management

Frequently Asked Questions and Answers!

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 The topics that will be covered

 Lecture 1: Introducing Supply Chain

Management
 Lecture 2: Global Sourcing
 Lecture 3: Inventory Management
 Lecture 4: Warehouse Design and
Management
 Lecture 5: Domestic and Global Logistics
 Lecture 6: Procurement

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 The topics that will be covered

 Lecture 7: Performance Measurement in

Supply Chains
 Lecture 8: Sustainable and Resilient
Supply Chain Management
 Lecture 8: Supply Chain Finance
 Lecture 9: Supply Chain Coordination
and Contracts
 Lecture 10: IoT-Based Supply Chains in
Industry 4.0
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Marks Distribution in AEM 6209

Sl. Number Type Marks

Allotted
1 Mid-1 40%
2 Mid-2 30%
3 Final exam 30%
Total 100%

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 Question Pattern!
 Any type including multiple choice, fill in
the blanks, short-answer questions,
mathematical problems, case studies.

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 Reference books

 Chopra, S., & Meindl, P. (2016). Supply chain

management: Strategy, planning, and
operation, Pearson Education, Inc.
 Khan, S.A.R., & Zhang, Yu. (2019). Strategic
Supply Chain Management. Springer.

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AEM 6209: Supply Chain Management

Lecture 1:
Introducing Supply Chain Management

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 Definition of Supply Chain
Management

Simchi-Levi et al. (2003) defines Supply chain

management as “a set of approaches utilized to
efficiently integrate suppliers, manufacturers,
warehouses and stores, so that merchandise is produced
and distributed at the right quantities, to the right
locations, and at the right time, in order to minimize
system wide costs while satisfying service level
requirements”. (p. 1).

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 Definition of Supply Chain
Management

According to Chopra and Meindl (2001), “SCM is the

processes which occur before manufacturing or
production into a deliverable product or service,
typically processes dedicated to getting raw materials
from suppliers; and the processes which occur after
manufacturing or production dedicated to getting
goods and services to customers. ”(p. 3).

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 Definition of Supply Chain
Management

Supply chain management is the design and management of

seamless, value-added processes across organizational
boundaries to meet the real needs of the end customer. (The
Institute of Supply Chain Management).

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Definition of Supply Chain
Management

Supply chain management encompasses the planning

and management of all activities involved in sourcing
and procurement, conversion, and all logistics
management activities. Importantly, it also includes
coordination and collaboration with channel partners,
which can be suppliers, intermediaries, third party
service providers, and customers. In essence, supply
chain management integrates supply and demand
management within and across companies. (The
Council of Supply Chain Management Professionals).

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An Example Supply Chain

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An Example of Supply Chain
Stages

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Process View of a Supply
Chain

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Supply Chain Process Cycles

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Push/Pull View of a Supply
Chain

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 Supply Chain Macro Processes
Supply chain processes discussed in the two views can be
classified into
1. Customer Relationship Management (CRM):
all processes at the interface between the firm and
its customers
2. Internal Supply Chain Management (ISCM):
all processes that are internal to the firm
3. Supplier Relationship Management (SRM):
all processes at the interface between the firm and
its suppliers
 Key Points to Remember
Within a firm, all supply chain activities
belong to one of three macro
processes: CRM, ISCM, and SRM.
Integration among the three macro
processes is crucial for successful
supply chain management.
Supply Chain Macro Processes

FIGURE 1-8
 Put Your Ideas
 Draw a hypothetical supply chain if you want to
produce a product in the soft drink category. Who
are the actors/players/agents in the supply chain?
What are the challenges in maintaining the continuity
of material and information flow in the supply chain?
Share your ideas to resolve the challenges.
 List the flows in the supply chain.
 Connect all partners in the supply chain. Does it look
like a network?
 Put Your Ideas
 Draw a hypothetical supply chain if you want to
establish a blood bank supply chain in Bangladesh.
Who are the actors/players/agents in the supply
chain? What are the challenges in maintaining the
continuity and safety of blood flow in the supply
chain? Share your ideas to resolve the challenges.
 List the flows in the supply chain.
 Connect all partners in the supply chain. Does it look
like a network?
 Put Your Ideas
 Do you know about GlaxoSmithKline?
 Do you know about their supply chains in
Bangladesh?
 What was the challenges faced by supply chain
partners who were linked to them?
 How can you overcome the challenges?
 What are your suggestions for supply chain
practitioners?
 The Objective of a Supply
Chain

 Maximize overall value generated

Supply Chain Surplus

= Customer Value – Supply Chain Cost
 The Objective of a Supply
Chain
 Example: a customer purchases a wireless router from
Best Buy for $60 (revenue)
 Supply chain incurs costs (information, storage,
transportation, produce components, assembly, etc.)
 Difference between $60 and the sum of all of these costs
is the supply chain profit
 Supply chain profitability is total profit to be shared
across all stages of the supply chain
 Success should be measured by total supply chain
profitability, not profits at an individual stage
The Objective of a Supply
Chain
 Customer the only source of revenue
 Sources of cost include flows of
information, products, or funds between
stages of the supply chain
 Effective supply chain management is the
management of supply chain assets and
product, information, and fund flows to
grow the total supply chain surplus
 Importance of
Supply Chain Decisions
 Wal-Mart, $1 billion sales in 1980 to $469 billion
in 2013
 Seven-Eleven Japan, ¥1 billion sales in 1974 to
¥1.9 trillion in 2013
 Webvan folded in two years
 Borders, $4 billion in 2004 to $2.8 billion in 2009
 Dell, $56 billion in 2006, adopted new supply
chain strategies
Key Points for supply chain
managers

Supply chain design, planning, and

operation decisions play a significant
role in the success or failure of a firm.
To stay competitive, supply chains
must adapt to changing technology
and customer expectations.
Decision Phases in a Supply Chain
1. Supply chain strategy or design
How to structure the supply chain over the
next several years.
2. Supply chain planning
Decisions over the next quarter or year
3. Supply chain operation
Daily or weekly operational decisions
 Supply Chain Strategy or Design
 Decisions about the configuration of the supply chain,
allocation of resources, and what processes each stage
will perform
 Strategic supply chain decisions
 Outsource supply chain functions

 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
Supply Chain Planning
 Definition of a set of policies that
govern short-term operations
 Fixed by the supply chain configuration
from strategic phase
 Goal is to maximize supply chain
surplus given established constraints
 Starts with a forecast of demand in the
coming year
 Supply Chain Planning
 Planning decisions:
 Which markets will be supplied from which locations
 Planned buildup of inventories
 Subcontracting
 Inventory policies
 Timing and size of market promotions
 Must consider demand uncertainty, exchange
rates, competition over the time horizon in
planning decisions
 Supply Chain Operation
 Time horizon is weekly or daily
 Decisions regarding individual customer orders
 Supply chain configuration is fixed and planning policies
are defined
 Goal is to handle incoming customer orders 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)
 Key Points for Supply Chain
Decision-Makers
Supply chain decision phases may be
categorized as design, planning, or
operational, depending on the time
frame during which the decisions made
apply. Design decisions constrain or
enable good planning, which in turn
constrains or enables effective
operation.
Supply Chain Management
Issues
Sl. No. Supply Chain Issues and Problem Solving
Related Problems Approaches

1 Distribution network Network flow optimization

configuration
2 Supply contracts Global optimization
3 Supply chain integration and CPFR (Collaborative
strategic partnering Planning, Forecasting and
Replenishment)
4 Inventory control Forecasting and inventory
management
5 Distribution strategies Warehousing and
transportation cost
management
6 IT and decision support system ERP implementation and
decision support system 35
Supply Chain Management
Issues
Sl. No. Supply Chain Issues and Problem Solving
Related Problems Approaches

7 Outsourcing and procurement Managing risks, pay-off/trade-

strategies off with outsourcing vs. buying
8 Customer value SPC (statistical process
control), TQM, and service
level maximization

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Supply Chain Management
Issues

Fig. An example of distribution network configuration

(Mohamed et al., 2019)
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 Examples of Supply Chains
 Gateway and Apple
 Zara
 W.W. Grainger and McMaster-Carr
 Toyota
 Amazon
 Macy's
Gateway and Apple

1. Why did Gateway choose not to carry any finished-

product inventory at its retail stores? Why did Apple
choose to carry inventory at its stores?
2. Should a firm with an investment in retail stores carry any
finished-goods inventory? What are the characteristics of
products that are most suitable to be carried in finished-
goods inventory? What characterizes products that are
best manufactured to order?
3. How does product variety affect the level of inventory a
retail store must carry?
4. Is a direct selling supply chain without retail stores always
less expensive than a supply chain with retail stores?
5. What factors explain the success of Apple retail and the
failure of Gateway country stores?
 Zara
1. What advantage does Zara gain against the competition by having
a very responsive supply chain?
2. Why has Inditex chosen to have both in-house manufacturing and
outsourced manufacturing? Why has Inditex maintained
manufacturing capacity in Europe even though manufacturing in
Asia is much cheaper?
3. Why does Zara source products with uncertain demand from local
manufacturers and products with predictable demand from Asian
manufacturers?
4. What advantage does Zara gain from replenishing its stores
multiple times a week compared to a less frequent schedule? How
does the frequency of replenishment affect the design of its
distribution system?
5. Do you think Zara’s responsive replenishment infrastructure is
better suited for online sales or retail sales?
 W.W. Grainger and McMaster-
Carr
1. How many DCs should be built and where should they
be located?
2. How should product stocking be managed at the DCs?
Should all DCs carry all products?
3. What products should be carried in inventory and what
products should be left with the supplier to be shipped
directly in response to a customer order?
4. What products should W.W. Grainger carry at a store?
5. How should markets be allocated to DCs in terms of
order fulfillment? What should be done if an order
cannot be completely filled from a DC? Should there be
specified backup locations? How should they be
Toyota
1. Where should the plants be located, and what
degree of flexibility should be built into each? What
capacity should each plant have?
2. Should plants be able to produce for all markets or
only for specific contingency markets?
3. How should markets be allocated to plants and how
frequently should this allocation be revised?
4. How should the investment in flexibility be valued?
 Amazon
1. Why is Amazon building more warehouses as it grows?
How many warehouses should it have and where should
they be located?
2. Should Amazon stock every product it sells?
3. What advantage can bricks-and-mortar players derive
from setting up an online channel? How should they use
the two channels to gain maximum advantage?
4. What advantages and disadvantages does the online
channel enjoy in the sale of shoes and diapers relative
to a retail store?
5. For what products does the online channel offer the
greater advantage relative to retail stores? What
 Macy's

1. Should online orders be filled from stores or

fulfillment centers?
2. How should store inventories be managed in an
omni-channel setting?
3. Should returns be kept at a store or sent to a
fulfillment center?
References
 Chopra,S., Meindl.P. (2001). Supply Chain management. Strategy,
Planning and Operation. Pearson Education Asia.
 Mohamed, I. Ben, Klibi, W., & Vanderbeck, F. (2019). Designing a
Two-Echelon Distribution Network under Demand Uncertainty.
European Journal of Operational Research.
https://doi.org/10.1016/j.ejor.2019.06.047
 Simchi-Levi, D., Kaminsky, P. & Simchi-Levi, E. (2003). Designing and
Managing the Supply Chain: Concepts, Strategies, and Case Studies.
McGraw-Hill, New York.

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