Framework for Structuring Drivers of Supply Chain Performance

We provide a visual framework for supply chain decision making in Figure 3-1. Most companies begin with a competitive strategy and then decide what their supply chain strategy ought to be. The supply chain strategy determines how the supply chain should perform with respect to effi­ciency and responsiveness. The supply chain must then use

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Facilities in the Supply Chain

In this section, we discuss the role that facilities play in the supply chain and critical facility- related decisions that supply chain managers need to make. 1. Role in the Supply Chain Firms can increase responsiveness by increasing the number of facilities, making them more flexible, or increasing capacity. Each of these actions, however,

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Inventory in the Supply Chain

In this section, we discuss the role that inventory plays in the supply chain and how managers use inventory to drive supply chain performance. 1. Role in the Supply Chain Inventory exists in the supply chain because of a mismatch between supply and demand. This mismatch is intentional at a steel manufacturer, where it

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Transportation in the Supply Chain

In this section, we discuss the role that transportation plays in the supply chain and key transpor­tation-related decisions that supply chain managers must make. 1. Role in the Supply Chain Transportation moves product between different stages in a supply chain and affects both responsiveness and efficiency. Faster transportation is more expensive but allows a

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Information in the Supply Chain

In this section, we discuss the role that information plays in the supply chain, as well as key information-related decisions that supply chain managers must make. 1. Role in the Supply Chain Good information can help improve the utilization of supply chain assets and the coordination of supply chain flows to increase responsiveness and

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Sourcing in the Supply Chain

In this section, we discuss the role that sourcing plays in the supply chain and key sourcing- related decisions that managers need to make. 1. Role in the Supply Chain Sourcing is the set of business processes required to purchase goods and services. Managers must first decide whether each task will be performed by

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Pricing in the Supply Chain

In this section, we discuss the role that pricing plays in the supply chain. 1. Role in the Supply Chain Pricing is the process by which a firm decides how much to charge customers for its goods and services. Pricing affects the customer segments that choose to buy the product, as well as influ­encing

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The Role of Distribution in the Supply Chain

Distribution refers to the steps taken to move and store a product from the supplier stage to a customer stage in the supply chain. Distribution occurs between every pair of stages in the supply chain. Raw materials and components are moved from suppliers to manufacturers, whereas finished products are moved from the manufacturer to

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Factors Influencing Distribution Network Design in the Supply Chain

At the highest level, performance of a distribution network should be evaluated along two dimensions: Value provided to the customer Cost of meeting customer needs Thus, as it compares different distribution network options, a firm must evaluate the impact on customer service and cost. The customer needs that are met influence the company’s reve­nues,

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Design Options for a Distribution Network in the Supply Chain

In this section, we discuss distribution network choices from the manufacturer to the end con­sumer. When considering distribution between any other pair of stages, such as supplier to manu­facturer or even a service company serving its customers through a distribution network, many of the same options still apply. Managers must make two key decisions

Online Sales and the Distribution Network in the Supply Chain

In this section, we use ideas discussed earlier in the chapter to see how the Internet has affected the structure and performance of various distribution networks. The goal is to understand what drove the successful introduction of online sales in some networks and not others, and how these networks are likely to evolve. Similar

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Distribution Networks in the Supply Chain in Practice

The ownership structure of the distribution network can have as big an impact as the type of distribution network. The bulk of this chapter deals with different types of physical net­works and subsequent flows to distribute products successfully. However, equally important is who owns each stage in the distribution network. Distribution networks that have

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Distribution network of Blue Nile and Diamond Retailing

A customer walks into your jewelry store with printouts of diamond selections from Blue Nile, a company that is the largest online retailer of diamonds. The list price for the customer’s desired diamond is only $100 above your total cost for a stone of the same characteristics. Do you let the customer walk, or

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The Role of Network Design in the Supply Chain

Supply chain network design decisions include the assignment of facility role; location of manu­facturing-, storage-, or transportation-related facilities; and the allocation of capacity and mar­kets to each facility. Supply chain network design decisions are classified as follows: Facility role: What role should each facility play? What processes are performed at each facility? Facility location:

Factors Influencing Network Design Decisions in the Supply Chain

In this section we examine a wide variety of factors that influence network design decisions in supply chains. 1. Strategic Factors A firm’s competitive strategy has a significant impact on network design decisions within the supply chain. Firms that focus on cost leadership tend to find the lowest cost location for their manufacturing facilities,

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Framework for Network Design Decisions in the Supply Chain

The goal when designing a supply chain network is to maximize the firm’s profits while satisfy­ing customer needs in terms of demand and responsiveness. To design an effective network, a manager must consider all the factors described in Section 5.2 and those discussed in Chapter 4. Global network design decisions are made in four

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Models for Facility Location and Capacity Allocation in the Supply Chain

A manager’s goal when locating facilities and allocating capacity should be to maximize the overall profitability of the resulting supply chain network while providing customers with the appropriate responsiveness. Revenues come from the sale of product, whereas costs arise from facilities, labor, transportation, material, and inventories. The profits of the firm are also affected

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Making Network Design Decisions in the Supply Chain in Practice

Managers should keep the following issues in mind when making network design decisions for a supply chain. Do not underestimate the life span of facilities. It is important to think through the long­term consequences of facility decisions because facilities last a long time and have an enduring impact on a firm’s performance. Managers must

Managing Growth at SportStuff.com

In December 2008, Sanjay Gupta and his management team were busy evaluating the performance at Sport- Stuff.com over the previous year. Demand had grown by 80 percent. This growth, however, was a mixed blessing. The venture capitalists supporting the company were very pleased with the growth in sales and the resulting increase in revenue.

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Designing the Production Network at CoolWipes

Matt O’Grady, vice president of supply chain at Cool- Wipes, thought that his current production and distribu­tion network was not appropriate, given the significant increase in transportation costs over the past few years. Compared to when the company had set up its produc­tion facility in Chicago, transportation costs had increased by a factor of

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