Professor Bowon Kim

KAIST Business School

Supply Chain Management
A Learning Perspective
Lecture 1
Coursera KAIST: SCM101
1
What is Supply Chain Management
Why does a firm exist?
A firm exists to earn profit. In turn, the firm maximizes its profit
by creating value for the market.
Value creation by providing products and services to the customers
through optimally managing processes, resources, and capabilities
Supply chain management is about creating value by
coordinating various activities, functions, and participants
Value =
Utility
Cost
2
Value Creation Hierarchy
Profitability
Value Creation
Product/Service
Resource Process
Capabilities
Value-Chain Perspective
Inter-firm coordination
Supply Chain Management
Fundamental
Building blocks
Capability
Process Resource
3
What is Value Chain
Value Chain (Porter 1985)
Infrastructure
Human Resources
Technology, R&D
Procurement
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Market,
Customers
Sources
Supportive
Activities
Primary
Activities
Upstream Activities Downstream Activities
4
Supply Chain
1
st
-tier supplier
(e.g., engine)
1
st
-tier supplier
(e.g., tire)
1
st
-tier supplier
(e.g., car seat)
1
st
-tier supplier
(e.g., windows)
1
st
-tier supplier
(e.g., electronics)
Carmaker: assembly car
Consumer
Dealer
2
nd
-tier supplier
(e.g., steel,
aluminum)
2
nd
-tier supplier
(e.g., plastic,
Rubber)
2
nd
-tier supplier
(e.g., bolts,
nuts)
2
nd
-tier supplier
(e.g., electronic
parts)
2
nd
-tier supplier
(e.g., auto glass)
Multi-tier suppliers Manufacturer Distributor
Value Chain/Supply Chain System
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Supply Chain
6
Value through Supply Chain Management
Value
S M D C
Supplier/vendor
Service
supporter
Manufacturer
Service
creator
Distributor
Service contact
/provider
Customer
Supply Chain System
Efficiency-driven
value more relevant
Responsiveness-driven
value more relevant
Value =
Utility
Cost
Responsiveness Efficiency
7
Supply Chain A Focal Company
S M D C
Supplier/vendor
Service supporter
Manufacturer
Service creator
Distributor
Service contact
/provider
Customer
INTEL
LGD
Microsoft
DELL BestBuy
Circuit City
WALMART
End Customer
Part suppliers
Raw materials
INTEL
Third-party
Logistics Companies
DELL
HP
CJ
(a food company)
EMART
(a major supermarket chain)
Individual
Retail Stores
End customer
Farm
(farmers, growers)
CJ
Third-party
Logistics Companies
EMART
Writers
Actors
Filmmaking
(film producers)
CGV
(a multiplex movie theater)
End consumer
(movie goers)
Focal company
Approach the SCM issues from Ms perspective
Supply Chain System
Various suppliers,
vendors
(for foods, laundry, )
Ritz-Carlton Hotel
(ladies and gentlemen serving)
Internal customer contact points
External contact points
(e.g., on-line sites)
End consumer
(hotel guests)
8
Value Life Cycle
Value Life Cycle
Integration of new product innovation and SCM
New product innovation
Essential condition for sustainable competitive advantage
But, until very recently
Lack of identity
Treated as a separate issue, and dispersed research
Supply chain management
Traditionally focused on existing products/services
Coincided with traditional PLC (product life cycle)
Integration of NPI and SCM
Looking at the entire value cycle from the new product/service
conception to the end of the product/service life (and starting recycling)
Firm must understand it to achieve competitive advantage in the global
market
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Value Life Cycle
Product Life Cycle
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NPD-Process Knowledge
Product-specific Knowledge
(Design, R&D, Marketing, Quality, Mfg, Procure.)
Initial
Ramp-up
Production
New Product Innovation
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Ramp-up Quality
I mprovement
On-going
Production
Value Life Cycle
Cumulative Sales ($)
# of Alternative
Concepts/Designs
PLC
NPC
(New Product Cycle)
10
SCM101 Course Syllabus
Course Objectives
As human beings, we all consume products and/or services all the time. Consider fresh
strawberries. In order for the strawberries to be on your breakfast table, there must be
numerous functions, activities, transactions, and people involved in planting, cultivating,
delivering, and consuming strawberries. Moreover, all of these functions, activities,
transactions, and people are connected as an integral chain, through which physical
products like strawberries themselves and virtual elements such as information and
communication flow back and forth constantly. By grouping related functions or activities
systematically, we have a supply chain, which is comprised of four primary functions such as
supplier, manufacturer, distributor, and finally consumer. A supply chain is essentially a value
chain. In this course, we want to understand fundamental principles of value creation for the
consumers or the market. We answer questions like how the product or service is made,
how the value-creating activities or functions are coordinated, who should play what
leadership roles in realizing all these, and so on. We approach all of these issues from a
learning perspective, which is dynamic in nature and emphasizes long-term capability
building rather than short-term symptomatic problem solving.
Grading Policy
The final grade is based on eight quizzes and biweekly assignments.
To receive a Statement of Accomplishment, you are expected to obtain more than or equal
to 60% of the maximum possible score. To receive a Statement of Accomplishment with
Distinction you are expected to obtain more than or equal to 80% of the maximum possible
score.
11
SCM101 Course Syllabus
Main Topic Sub Topic Video length
week1
Introduction to value, value
creation, and supply chain
management
1.1 Value, value creation, supply chain management 20 min
1.2 Efficiency-driven and responsiveness-driven value 20 min
1.3 Focal company in supply chain management 15 min
1.4 Value life cycle 15 min
Quiz/Assignment Quiz Sub-total: 70 min
week2
Management capabilities
2.1 Definition of management capability 15 min
2.2 Controllability, flexibility, and tradeoff between capabilities 20 min
2.3 Integrating capability 20 min
2.4 Dynamic changes of capability 15 min
Quiz/Assignment Quiz, Assignment Sub-total: 70 min
week3
Learning perspective
3.1 Definition of learning, learning capability 15 min
3.2 Double-loop and single-loop learning 20 min
3.3 Cause-and-effect diagram 20 min
3.4 Learning propensity model 15 min
Quiz/Assignment Quiz Sub-total: 70 min
week4
Quality management
4.1 Quality is free? 15 min
4.2 Dimensions of quality 20 min
4.3 Order-qualifying versus order-winning attributes 10 min
4.4 Assignable versus common causes 10 min
4.5 Principles of statistical process control 15 min
Quiz/Assignment Quiz, Assignment Sub-total: 70 min
12
SCM101 Course Syllabus
week5
New product innovation
5.1 Sequential new product development process 15 min
5.2
Flexible or cross-functional new product development
process
20 min
5.3 Implementation strategy 20 min
5.4 Integration with supply chain management 15 min
Quiz/Assignment Quiz Sub-total: 70 min
week6
Supply chain strategy I:
structural and
infrastructural dimensions
6.1 Structural dimension 25 min
6.2 Infrastructural dimension 20 min
6.3 Minimization of mismatch between supply and demand 10 min
6.4 Information quality 15 min
Quiz/Assignment Quiz, Assignment Sub-total: 70 min
week7
Supply chain strategy II:
coordination for value
creation
7.1 Supply chain coordination 15 min
7.2 Bullwhip effect 15 min
7.3 Postponement 20 min
7.4 Vendor-managed inventory (VMI) 20 min
Quiz/Assignment Quiz Sub-total: 70 min
week8
Supply chain globalization
and sustainability
8.1 Global supply chain management 20
8.2 Scale, scope, and speed in global SCM 15
8.3 Sustainable SCM 20
8.4 Calculus, creativity, and commitment 15
Quiz/Assignment Quiz, Assignment Sub-total: 70 min
Total Quiz: 8 times; Assignments: 4 times Total: 560 min