Supply Chain

Management
TEXT

A N D CASES

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Janat Shah
Indian Institute of Management Bangalore

PEARSON.

Education
Chennai Delhi Chandigarh
Upper Saddle River Boston London
Sydney Singapore Hong Kong Toronto Tokyo

CONTENTS

Part I: Introduction and a Strategic View of Supply Chains

The Role of Supply Chain Management in

Economy and Organization
Introduction
What Is Supply Chain Management?
Evolution of Supply Chain Management
Key Concepts in Supply Chain Management
Decisions in a Supply Chain
The Importance of the Supply Chain
Enablers of Supply Chain Performance
Improvement in Communication and IT
Entry of Third-party Logistics Providers
Enhanced Inter-firm Coordination Capabilities
Supply Chain Performance in India
Challenges in Maintaining a Supply Chain in India
Supply Chain Challenges for the Indian FMCG Sector

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Supply Chain Strategy and Performance

Measures

23

Introduction
Customer Service and Cost Trade-offs
Order Delivery Lead Time
Supply Chain Responsiveness
Delivery Reliability
Product Variety
Supply Chain Performance Measures
Benchmarking Supply Chain Performance Using Financial Data
Linking Supply Chain and Business Performance

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Contents

A.

Enhancing Supply Chain Performance

37

Supply Chain Optimization

Supply Chain Integration
Supply Chain Restructuring

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Outsourcing: Make Versus Buy

o

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Introduction
Make Versus Buy: The Strategic Approach
Identifying Core Processes
The Business Process Route
The Product Architecture Route

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Market Versus Hierarchy

48

Economies of Scale
Agency Cost
Transaction Cost
Incomplete Contracts
Integrative Framework of Market Versus Hierarchy

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The Make-Versus-Buy Continuum

Tapered Integration
Collaborative Relationship

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Sourcing Strategy: Portfolio Approach

Reconfiguration of the Supply Base

Impact of the Internet on Sourcing Strategy

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Part II: Managing Material Flow in Supply Chains

67

i_____

Inventory Management

69

Introduction
Types of Inventory
Cycle Inventory
Safety Stock
Decoupling Stocks
Anticipation Inventory
'
Pipeline Inventory
'
'
Deadstock
Inventory-related Costs
Ordering Costs
Inventory-carrying Costs
Stockout Costs
Computing Inventory-related Costs .
Managing Cycle Stock
Cycle Stock Inventory Model
:
Managing Safety Stock
Capturing Uncertainty
Impact of Service Level on Safety Stock
Managing Seasonal Stock
Planning for Seasonal Demand

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Contents

Supply Side Cost Data

Strategic Role of Units in the Network
,
Strategic Role Framework
Role Evolution Within a Network
Location of Service Systems
Locating Retail Outlets
Locating Public Service Systems
Designing Aftermarket Service System Network
Incorporating Uncertainty in Network Design

Part III: Managing Information Flow in Supply Chains

Demand Forecasting
Introduction
The Role of Forecasting
Characteristics of Forecasts
Time Horizon for Forecasting
Qualitative Forecasting Methods
The Delphi Approach
Market Research,
Life Cycle Analogy
Informed Judgement
Quantitative Methods
Time-series Method
Causal Models
.
Forecast Error
Time-series Forecasting Models
Case 1: Forecasting Level Form
Case 2: Forecasting the Trend Form
Case 3: Forecasting Seasonality
Case 4: Forecasting Combination of Seasonality and Trend
Data Preparation for Building Time-series Models
Behavioural Issues in Forecasting

Information Technology in Supply Chain

Management

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Introduction ,
Enabling Supply Chain Management Through Information
Technology

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IT in Supply Chain Transaction Execution

IT in Supply Chain Collaboration and Coordination
IT in Supply Chain Decision Support
IT in Supply Chain Measurement and Reporting
Strategic Management Framework for IT Adoption in Supply
Chain Management

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Contents

Supply Chain Management Application Marketplace

Future Trends

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203

Part IV: Supply Chain Innovations

211

Supply Chain Integration

JO

213

Introduction
Internal Integration

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215

Centralized System
Decentralized System
Hybrid System
External Integration
Increase in Demand Volatility While Moving Up the Supply
Chain
.
Impact of Buyer Practices on Demand Distortions Across
the Buyer-Suppliertink
Impact of Supplier Practices on Demand Distortions Across
the Buyer-Supplier Link
'
Bullwhip Effect: Demand Volatility and Information
Distortions Across Supply Chains
Remedial Strategies to Counteract Demand Distortions
Across Supply Chains
.
Barriers to External Integration
Building Partnership and Trust in a Supply Chain
Steps in Building Successful Relationships
Effect of Interdependence on Relationships
Supply Chain External Integration: Industry-level Initiatives
Vendor-managed Inventory
Efficient Customer Response
CPFR

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Supply Chain Restructuring

Introduction
Supply Chain Mapping
Value-addition Curve
Customer Entry Point in the Supply Chain
Point of Differentiation
.
Supply Chain Process Restructuring
Postpone the Point of Differentiation
Postponement Case Studies
Postponement for Reducing Transportation Cost
Problems with Implementing the Postponement Strategy
Changing the Shape of the Value-addition Curve

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Contents

Advance the Customer Ordering Point: Move from MTS

to CTO Supply Chain
Altering Customer Offering Bundle
Illustrative Case Studies
Moving from MTS to CTO: Alternative Approaches
Moving from the MTS to the CTO Model: The Role of
Innovations and Experimentations
.
Restructuring the Supply Chain Architecture
Restructure Flow in the Chain: Hindustan Unilever Case
Restructure Placement of Inventory in the Chain

_^__

Agile Supply Chains

Introduction
Supply Chains for High Demand Uncertainty Environment
Forecast Updating
Responsive Supply Chain: Optimal Use of Dual Sources of Supply
Illustration of Responsive Supply Chain Approach
^\ Speculative Approach
Responsive Approach
Impact of Negatively Correlated Demand Structure
Sources of Supply Chain Disruptions and Its Impact on Business
Sources of Supply Chain Disruptions
Consequences of Supply Chain Disruptions
Methodologies for Handling Disruptions
Multi-location Sourcing
Location of the Secondary Source
.

Pricing and Revenue Management

Introduction
Pricing
Law of Demand and Optimal Pricing Decision
Case of Non-linear Demand Curve
Revenue Management for Multiple Customer Segments
Pricing Under Capacity Constraint for Multiple Segments
Revenue Management Under Uncertain Demand and
Limited-capacity Situations
Capacity Allocation Among Multiple Segments
Forward Market Versus Spot Market
Overbooking
Revenue Management for Inventory Assets: Markdown
Management
Innovative Pricing

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Contents

Part V: Supply Chain Cases

Kurlon Limited
Vehicle Routing at Baroda Union
PC International Division
Supply Chain Initiative at APR Limited
Managing Tendupatta Collection Operations
Supply Chain Management at Dalmia Cement Ltd
Power Equipments (India) Ltd
The Global Green Company
Marico Industries: my SAP Supply Chain Management
Subhiksha: Managing Store Operations

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Brand and Company Index

433

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Subject Index

437

VTT

AV-