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Designing and Managing the Supply Chain: Concepts,

Strategies, and Case Studies, David Simchi-Levi Philip
Kaminsky Edith Simchi-Levi

Article · March 2001

DOI: 10.1002/j.2158-1592.2001.tb00165.x


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Paul Larson
University of Manitoba


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Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies
David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi
Irwin McGraw-Hill, New York, 2000.
ISBN: 0-07-235756-8 (hardcover)
321 + xxii pages

The reviewer planned to use this book as a text for his Supply Chain Management (SCM)
course last Spring (2000) at the University of Nevada. He completed the college bookstore book request
form, using the ISBN (0-07-028594-2) found in the usual place, just inside the front cover. Several
days before class began, a student visited the reviewer, anxiously inquiring: "Is Thomas H. Court-
ney's Mechanical Behavior ofMaterials, 2"" edition really the text book for SCM?" An investigation
soon discovered the publisher's error—Courtney's ISBN was printed where Simchi-Levi's should
have been. With time running out, and copies of the former (Spring 1999) text still available in the
bookstore, adoption of the book currently under review was aborted.
Simchi-Levi, et al. define SCM 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 systemwide costs while
satisfying service level requirements" (p. 1). Note their supply chain, a.k.a. "logistics network," ends
at the retail outlet. This neglects new, business-to-consumer (B2C) supply chains, which bypass
retail stores and dramatically alter the logistical role of end consumers. It is also important to note
that the authors are re-labelers,' since they "do not distinguish between logistics and supply chain
management" (p. 3). In fact, their definition of SCM closely corresponds to the CLM definition of
logistics management.
Chapters 2 and 3 cover quantitative modeling of warehouse location and inventory control, respec-
tively. The Simchi-Levi, et al. warehousing model concentrates on number, location and size of ware-
houses, along with matching products to customers. While this treatment of strategic warehousing
decisions is excellent, it is also distinctly quantitative. There is little mention of qualitative factors,
such as quality of life and environmental issues. Meanwhile, the inventory chapter is dominated by
"a single warehouse inventory example," with presentations of the economic order quantity (EOQ)
and re-order point (ROP) models. The reviewer was surprised tofindnothing on distribution require-
ments planning (DRP) at this point, since DRP addresses the issue of echelon inventory in a supply
In Chapter 4, the authors diagram their supply chain, consisting of factory, distributor, whole-
saler and retailer. Again, this supply chain excludes the household or end-consumer stage. This is despite
the book's downstream or forward focus, and de-emphasis on upstream issues between manufacturers
and their suppliers. The highlight of this chapter—and perhaps the entire book—is its treatment of
the bullwhip effect, which "suggests that variability in demand increases as one moves up in the supply

chain" (p. 107). Simchi-Levi, et al. quantify the bullwhip effect and outline the following methods
of coping with the effect: reducing (forecast) uncertainty by sharing information, reducing demand
variability, lead time reduction and forming strategic partnerships. To further demonstrate and
explore the bullwhip effect, the book offers a "computerized beer game," described in Appendix A
and available on a companion CD.
Chapter 5 discusses additional ideas and issues in downstream SCM. The three authors iden-
tify "three distinct outbound distribution strategies," as follows: direct (to retailer) shipment, ware-
housing, and cross-docking. Direct delivery to consumers is not included. This chapter also contrasts
push- vs. pull-based supply chains. In Chapter 8, the only one in the book on upstream SCM, push
vs. pull is developed much further. The authors use the push-pull boundary concept to explain post-
ponement (a.k.a. delayed product differentiation) and mass customization. They also introduce
"design for logistics" (DFL), a set of tools for designing inventory and transportation considerations
into products. Finally, this chapter also includes a brief discussion on "supplier integration into new
product development." It is surprising to see so little strategic purchasing content in an SCM book,
since purchasing and SCM have considerable commonalities. Perhaps purchasing is a casualty of the
logistics re-labeling perspective on SCM, i.e. logistics = SCM.
Chapters 6,7 and 9 cover strategic alliances, intemational issues and "customer value," respec-
tively. Simchi-Levi, et al. select the "three most important types of supply chain-related strategic
alliances" for detailed discussion—retailer-supplier partnerships (RSP), third-party logistics (3PL),
and distributor integration (DI). Once again, the book's downstream SCM focus is evident. The inter-
national chapter includes some important material on regional differences in logistics, such as cul-
tural differences, infrastructure, information systems availability, and human resources. The highlight
of Chapter 9, on dimensions and measures of customer value, is a cameo appearance by the Supply
Chain Operations Reference (SCOR) model.
The last two chapters, 10 and 11, are on SCM information technology (IT) and decision-sup-
port systems (DSS). Simchi-Levi, et al. present IT as "an important enabler of effective" SCM (p. 221).
They describe IT developments for communication, e.g. electronic data interchange (EDI), e-mail,
extranet—and for systems integration, e.g. enterprise resource planning (ERP). Chapter 10 includes
an interesting section on e-commerce. However, the authors appear to mis-state the purpose of the
SCOR model, as an "attempt at standardizing processes for e-commerce" (p. 238). Actually, the SCOR
model is focused on SCM rather than e-commerce. Under DSS for SCM, a.k.a. advanced planning
and scheduling (APS) systems, Simchi-Levi, et al. discuss demand planning or forecasting, distri-
bution resource planning (DRP), and material requirements planning (MRP).
Simchi-Levi, et al. offer Designing and Managing the Supply Chain as a text for MBA-level logis-
tics and SCM courses, and as a reference book for SCM educators, consultants and practitioners.
Despite its downstream-only focus, re-labeling (SCM is logistics) perspective, and $67.56
price tag, this reviewer recommends the book as a reference. Moreover, though the reviewer selected
an altemative text for his University of Nevada SCM course, he recently used Designing and

Managing the Supply Chain during a week-long SCM seminar conducted in Canada for the Athabasca
University executive MBA program.
'Arni Halldorsson and Paul D. Larson, "Wanted SCM! A Search for Elements of SCM
in Logistics Education and Research," in Bemard J. La Londe and Terrance L. Pohlen, eds., Proceedings of the 29"' Transportation and Logistics Educators Confer-
ence (Oak Brook, IL: Council of Logistics Management, 2000), pp. 216-241.
Paul D. Larson, Ph.D.
University of Nevada
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