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Global Supply Chain Management

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Introduction to Global Supply Chain NetworksPart1
N. Viswanadham
Indian Institute of Science
Bangalore -560 012

Global Supply Chain Management

l  Introduction

to Supply Chain Networks
l  Some examples
l  Integrated Supply Chain Networks
l  Best practices In supply Chain Networks



Viswanadham .Global Supply Chain Management Introduction to Supply Chain Networks N.

Pharma. l  Network coordination is important . located in different countries.etc. the network is fully owned by one company (Ford) l  Currently.g. Components may be sourced from several countries. l  –  E.Global Supply Chain Management What are Supply Chain Networks? Behind Every Product there is a Supply Chain l  Earlier. manufacture & delivery to customers. Auto. apparel . and distributed to the customers all over the world. involved in product design. electronics. food. it is a network of companies. computer. l  . assembled in another country. aerospace.

Global Supply Chain Management Integrated Manufacturing & Service Network N.Viswanadham .

Global Supply Chain Management Some Examples .

Global Supply Chain Management Industry Supply Chain Customer Configured Order Order Processing System Website Estimated Time of Delivery Warehouse Suppliers Global Transportation & Logistics Logistics Service Providers Assembler N.Viswanadham .

Global Supply Chain Management The Plough-Plate Food Supply Chain Currently no one orchestrate the relationship among the supply chain actors. .

Viswanadham Retail .Global Supply Chain Management Global Supply Chain Network China Manufacturin g hub Inventory hub China USA InBound Logistics Eastern Europe India Demand USA Outbound Logistics Korea Europe Suppliers Europe Assembly Distributio n N.

l  l  The basic difference between the two is –  Horizontal integration always occurs at the same stage on the supply chain –  Vertical integration always occurs at different stages of the supply chain. firms locate different stages of production in different countries.Global Supply Chain Management Horizontal & Vertical Globalization In Horizontal FDI. l  In vertical FDI. . MNCs duplicate the same activities in multiple countries.

The molds & paints for decorating the dolls are from US. overheads & profits. The export value of the dolls at Hong Kong is $2 . marketing.S. . wholesale and retailing in U. Assembly in low-cost locations Indonesia. China supplies only cotton cloth for dresses and the labor. The doll sells for $10 in the US: 1$ for Mattel & the rest covers transport.Global Supply Chain Management Disintegration of Production : Barbie doll l  l  l  l  l  l  The plastic and hair sourced from Taiwan & Japan. Malaysia & China. 65 cents of materials & rest for transport. 35 cents of Chinese labor.

DC: National Academies Press.Viswanadham . N.. 1998. Adapted from Lambert et al. Surviving supply chain integration: strategies for small manufacturers. Washington.Global Supply Chain Management Multi Tier Supply Chain Network Source: National Research Council Staff (2000).

Global Supply Chain Management Integrated Supply Chain Networks N. Viswanadham .

Viswanadham 14 .Global Supply Chain Management Integrated Supply Chain Networks Information Network Enterprise System or Web-site Supply Network Demand Network Manufacturer Supplier Distributor Logistics Network Logistics Hub Supplier Service Network Retailer Service Provider Financial Network Banks N.

Global Supply Chain Management Three (Material .Information & Financial) Flows Logistics network provides a streamlined material flow between all partners. l  . letters of credit and Insurance. l  Communications network provides information integration between companies of supply chain network l  Financial network connects all institutions providing Funds. reducing lead time and cost.

Financial Institutions and Freight forwarders. l  Service sub-network: connects consumer with suppliers & manufacturers after sales service centers. Perfect delivery is important . logistics and finance.Global Supply Chain Management Three Sub Networks •  Demand sub-network: consists of manufacturing. l  Supply sub-network : B2B network consisting of suppliers. . distribution. retailing . manufacturers. inbound logistics.

transportation and warehousing. Options include direct shipping or outsourcing to third parties.Global Supply Chain Management The Three Business Processes Procurement: Sourcing raw materials and components from the suppliers : Vendor & logistics provider selection. l  . l  Distribution & Retail: consists of packaging. l  Manufacturing: Could be in a single location or geographically distributed. Delivery scheduling & Inventory management.

Viswanadham .Global Supply Chain Management The Financial Supply Chain Movement of Documents & Goods Supplier Movement of Documents & Money Manufacturer Retailer / Distributor Customer Goods Supply Chain Financial Supply Chain Just-in-time-manufacturing Demand Forecasting Just-in-time-cash Cash Flow Forecasting N.

Global Supply Chain Management The Six Dominant Players l  Suppliers l  Logistics Players: B2B and B2C l  Contract manufacturers l  Original Equipment Manufacturers l  Distributors l  Retailers They are independent companies globally distributed & highly connected .

(Inbound logistics) –  Movement of Spare parts from manufacturers to the customers via dealers (Spare part logistics) –  Movement of Used goods from consumer to the manufacturers (Reverse logistics) 191206 N.Viswanadham .Global Supply Chain Management Life-cycle-based Logistics l  Logistics depends on the product life cycle –  Movement of Semi finished items from one machine shop to another (Manufacturing logistics) –  Movement of Finished products from end of the production line to the consumer (Outbound logistics) –  Movement of Raw materials from source of supply to the beginning of the production line.

l  –  Airports and Seaports as capacity providers are also categorized as 2PLs l  3PLs provide total value added logistic solutions –  Own some assets such as distribution centers and rent assets available 2PLs. l  2PLs are basic transportation and storage providers such as truckers.Global Supply Chain Management 1PL. 2 PL and 3 PLs Most manufacturers handle all logistics functions including trucking and warehousing (1PL). warehouses and container lines and have high levels of asset intensity but low barriers to entry. –  Freight management &Contract logistics 191206 N.Viswanadham .

Viswanadham .Global Supply Chain Management Best Practices in SCN N.

consolidated and loaded onto outbound trucks l  .Global Supply Chain Management Best Practices in SCN-1 Supply hubs: Third Party maintains inventory for the suppliers at the manufacturer site. l  Cross docks: Transshipment facilities where goods are sorted. l  Modularization: Design of component modules that can be used in multiple products l  Standardization: specifying common parts for use in multiple products and models.

Forecasting & Replenishment combines the collaborative intelligence of multiple trading partners in planning and fulfillment of customer demand l  .Global Supply Chain Management Best Practices in SCN-2 Postponement: Final assembly done adding customer specific features such as labeling garments. packaging with customized manuals based on the customer order l  Merge-in-transit: Components shipped from different production units & warehouses are assembled during transit l  Collaborative Planning.