DIPLOMA IN LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

SUPPLY CHAIN AND OPERATION STRATEGY

Y/618/1233

Ruvini Tharanga Ruberu MBA, ESBM, GDPSM, HDQ&P

CMILT, WiLAT, MISMM, HLA (UK)
Procurement Manager – Pee Bee Management Services Pvt Ltd
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 GROUND RULES

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 THOUGHT OF THE DAY

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 LEARNING OBJECTIVES

▪ Critically discuss the key drivers of effective supply chain management.

▪ Explain how Intra and Inter organizational benchmarking can help

organizations improve their supply chain and operation management
efficiency.

▪ Assignment discussion.

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 KEY DRIVERS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT

Supply chain capabilities are guided by the decisions you make regarding the five supply
chain drivers. Each of these drivers can be developed and managed to emphasize
responsiveness or efficiency depending on changing business requirements. As you
investigate how a supply chain works, you learn about the demands it faces and the
capabilities it needs to be successful. Adjust the supply chain drivers as needed to get
those capabilities.

The five drivers provide a useful framework for thinking about supply chain capabilities.
Decisions made about how each driver operates will determine the blend of
responsiveness and efficiency a supply chain is capable of achieving. The five drivers are
illustrated in the diagram below:

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 KEY DRIVERS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT

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 1. PRODUCTION

This driver can be made very responsive by building factories that have a lot
of excess capacity and use flexible manufacturing techniques to produce a
wide range of items. To be even more responsive, a company could do their
production in many smaller plants that are close to major groups of
customers so delivery times would be shorter. If efficiency is desirable, then
a company can build factories with very little excess capacity and have
those factories optimized for producing a limited range of items. Further
efficiency can also be gained by centralizing production in large central
plants to get better economies of scale, even though delivery times might
be longer.
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 2. INVENTORY

Responsiveness can be had by stocking high levels of inventory for a wide

range of products. Additional responsiveness can be gained by stocking
products at many locations so as to have the inventory close to customers
and available to them immediately. Efficiency in inventory management
would call for reducing inventory levels of all items and especially of items
that do not sell as frequently. Also, economies of scale and cost savings can
be gotten by stocking inventory in only a few central locations such as
regional distribution centers (DCs).

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 3. LOCATION

A location decision that emphasizes responsiveness would be one where a

company establishes many locations that are close to its customer base.
For example, fast-food chains use location to be very responsive to their
customers by opening up lots of stores in high volume markets. Efficiency
can be achieved by operating from only a few locations and centralizing
activities in common locations. An example of this is the way e-commerce
retailers serve large geographical markets from only a few central locations
that perform a wide range of activities.

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 4. TRANSPORTATION

Responsiveness can be achieved by a transportation mode that is fast and flexible

such as trucks and airplanes. Many companies that sell products through catalogs
or on the Internet are able to provide high levels of responsiveness by using
transportation to deliver their products often within 48 hours or less. FedEx and
UPS are two companies that can provide very responsive transportation services.
And now Amazon is expanding and operating its own transportation services in
high volume markets to be more responsive to customer desires. Efficiency can
be emphasized by transporting products in larger batches and doing it less often.
The use of transportation modes such as ship, railroad, and pipelines can be very
efficient. Transportation can also be made more efficient if it is originated out of a
central hub facility or distribution center (DC) instead of from many separate
branch locations.
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 5. INFORMATION

The power of this driver grows stronger every year as the technology for collecting and
sharing information becomes more wide spread, easier to use, and less expensive.
Information, much like money, is a very useful commodity because it can be applied
directly to enhance the performance of the other four supply chain drivers. High levels
of responsiveness can be achieved when companies collect and share accurate and
timely data generated by the operations of the other four drivers. An example of this is
the supply chains that serve the electronics market; they are some of the most
responsive in the world. Companies in these supply chains, the manufacturers,
distributors, and the big retailers all collect and share data about customer demand,
production schedules, and inventory levels. This enables companies in these supply chains
to respond quickly to situations and new market demands in the high-change and
unpredictable world of electronic devices (smartphones, sensors, home entertainment
and video game equipment, etc.).
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 SUPPLY CHAIN DRIVERS TOWARD RESPONSIVENESS OR EFFICIENCY

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INTRA AND INTER ORGANIZATIONAL

 Intra Organizational - being or occurring within an organization. This is

internal environment in the organization.
 Inter Organizational - occurring between or involving two or more
organizations. This is external environment in the organization.
ORGANIZATIONAL ENVIRONMENT
BENCHMARKING
 Benchmarking is a process of measuring the performance of a
company's products, services, or processes against those of
another business considered to be the best in the industry, aka “best in
class.” The point of benchmarking is to identify internal opportunities for
improvement.
 Definition: Benchmarking is the process of continually improving the
business or the organization by evaluating the scope for improvement,
comparing the current position with that of the previous one or with the
business practices of the relevant competitors, thereby establishing
standards to be achieved.
WATCH A VIDEO
ADVANTAGE OF BENCHMARKING
 Improves Learning Methodology: Benchmarking paves the way for
idea generation and sharing of proven business practices which can be
seen as a learning experience for the companies.
 Initiates Technological Upgradation: Through this strategy, the
companies get to know about the new technology and techniques
which have been adopted by the market leaders. The companies can
accordingly plan for up-gradation of its technology to sustain the
competition.
 Improve Company’s Standards: The company analyzes and studies
the standards of the competitors. This facilitates the company to raise
its standard of production and products accordingly.
ADVANTAGE OF BENCHMARKING
 Enhances Work Quality: It leads to organizational growth since it
improves the overall quality of the output and reduces the chances of
errors due to the standardization of business operations.
 Cope Up with Competition: Knowing about the competitors’ business
and their strategy, helps the company to design its strategies
efficiently. It also facilitates the company to be updated with the recent
developments and technology, hence beating the market competition.
 Improves Efficiency: The overall efficiency of the employees increases
with this practice since standardization of work motivates them to
perform better without making many mistakes.
ADVANTAGE OF BENCHMARKING
 Increases Customer Satisfaction: Through benchmarking, the
company collects sufficient data on customer’s needs and wants
through customer feedback. This information helps the company
to enhance the customer experience and satisfaction level.
 Help Overcome Weaknesses: These strategies help the company
in finding out its shortcomings and working over them to get the
desired results.
DISADVANTAGE OF BENCHMARKING
 Lack of Information: Sometimes, the company is unable to gather
adequate information for benchmarking. This leads to an improper or
inadequate comparison of the company’s performance with that of its
competitors.
 Increases Dependency: The companies tend to depend on other
companies’ strategies to become successful. In this process of following
the market leaders, they sacrifice their individuality and uniqueness and
starts following the path shown by others.
 Lack of Understanding: At times, companies adopt benchmarking for the
sake of doing so, rather than finding out the necessity of it. It fails to
understand its weaknesses while keeping an eye on the functioning of its
competitors.
DISADVANTAGES OF BENCHMARKING
 Copying Others: Some organizations don’t understand the actual
purpose of this strategy and start copying their competitors in every
aspect. This may even lead to a downfall of the business.
 Incorrect Comparison: It demands a comparison between two or more
companies belonging to the same industry and competes with each
other. But sometimes, the companies make irrelevant comparison
resulting in poor benchmarks.
 Costly Affair: It requires a team of experienced personnel who have
excellent analytical skills and expertise in the area. Thus, increasing the
administrative expenses of the company. Even the implementation of
the changes involves capital expenditure at times.
LEAN SUPPLY CHAIN
 A lean supply chain is a supply chain operating at its very best: it supplies
the goods or products to the end customer in the most efficient manner
possible, with minimal waste, loss, and with enough flexibility that it can
adapt to unexpected delays.
 A lean supply chain is one that produces just what and how much is needed,
when it is needed, and where it is needed. The underlying theme in lean
thinking is to produce more or do more with fewer resources while giving the
end customer exactly what he or she wants.
 Lean is a way of thinking about creating needed value with fewer resources
and less waste. And lean is a practice consisting of continuous
experimentation to achieve perfect value with zero waste. Lean thinking and
practice occur together.
BENEFITS OF LEAN SUPPLY CHAIN
 Manage Team/Process Complexity.

 More Efficient Business Processes.

 Better Management of Changing Priorities.

 Better Project Visibility at the Team Level.

 Increased Team Productivity.

 Reduced Lead Time.

 Increased Team Morale.

 Improved Visibility to Stakeholders.

BENEFITS OF LEAN SUPPLY CHAIN
 Manage Team/Process Complexity.

 More Efficient Business Processes.

 Better Management of Changing Priorities.

 Better Project Visibility at the Team Level.

 Increased Team Productivity.

 Reduced Lead Time.

 Increased Team Morale.

 Improved Visibility to Stakeholders.

WASTE IN LEAN MANAGEMENT
 Transport. The transport waste is defined as any material movement that
doesn't directly support immediate production or consumption
 Inventory.

 Unnecessary Motion.

 Waiting.

 Overproduction.

 Over-processing.

 Defects.

 Unutilized talent
ASSIGNMENT DISCUSSION
 Evaluatethe concepts and principals f operations and supply chain
management
 Critically discuss the key drivers of effective supply chain management

 Asses how effective operations and supply chain management can enhance
competitiveness
 Critically evaluate key decisions made by the business to improve their supply
chain and operation
 Critically review the application of different strategic approaches to supply chain
and operations management in the organization
ASSIGNMENT DISCUSSION

▪ Asses the relevance of performance measurement within supply chain and

operations management
▪ Evaluate various financial and non financial and single and multi factor
performance measures applicable to organizations such as Intel.
▪ Evaluate the selection and application of Key performance indicators for
effective supply chain and operations management at Intel.
▪ Explain how intra and inter organizational benchmarking can help organizations
like Intel to improve their supply chain and operations management efficiency.
READING LIST
▪ Christoper M (2016) Logistics and Supply Chain Management 5th Edition FT
Publishing International
▪ Chopra S (2019) Supply Chain Management Strategy, Planning and Operation
Global Edition. Pearson
▪ Slack N and Brandon Jones A (2019) Operations Management 9th Edition Pearson

▪ Loeng G and Tan K C (2017) Principals of Supply Chain Management A Balanced

Approach 5th Edition Cengage
▪ Krajewski L J, Malhothra M K and Ritzman L P (2018) Operations Management and
Supply Chain, 12th Edition, Pearson
 SUPPLY CHAIN VIDEO

• https://www.youtube.com/watch?v=lZPO5RclZEo&t=18s

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THANK YOU!