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Operations Management and Organisational

Improvement: Session 4

Supply Chain Management 1
Professor David Oglethorpe
Logistics & Supply Chain Management

Core text for this session:
Slack, Chambers, Johnston and Betts, (2006), Operations and
Process Management, 1st edition, Pearson Education
Chapter 3,4,5 & 7
This is also a Reference source for many of the following slides



Session Aims
To appreciate the need for good supply chain
management;
To appreciate key SCM principles;
To begin to understand how to match demand and
supply chains;
To be introduced to supply chain strategies.
Diagnostic Question:
What is supply chain management?
Supply chain management is concerned with managing the flow of materials and
information between the operations that form the chains of a supply network
Supply chain management is concerned with the flow of information as well as the
flow of products and services
Your ability to manage supply will foremost depend
on your ability to respond to demand

Input supplier
Marketer/Merchant
Processor
Manufacturer
Primary Producer
Consumer
The Food Supply Chain
Distributor
E
x
p
o
r
t
s

I
m
p
o
r
t
s

Retailer Caterer
Demand
Chain
Supply
Chain
http://www.yourtechtv.com/viewVideo.php?vide
o_id=457&title=Ocado_Supply_Chain__part_
1_




http://www.yourtechtv.com/viewVideo.php?vi
deo_id=458&title=Ocado_Supply_Chain__
part_2_

Supply Chain Evolution
Successful Supply Chains evolve through a process of Co-
operation, Co-ordination, Collaboration and finally
Consolidation
Co-operation, Co-ordination, Collaboration,
Consolidation
S1
S2
S3
S4
S5
S6
S7
S8
2S1
2S4
2S2
2S3


R2




R1


Co-operation, Co-ordination, Collaboration,
Consolidation
1
st
Tier Suppliers
S1
S2
S3
S4
S5
S6
S7
S8
2S1
2S4
2S2
2S3


R2




R1


Co-operation, Co-ordination, Collaboration,
Consolidation
1
st
Tier Suppliers
S1
S2
S3
S4
S5
S6
S7
S8
2S1
2S4
2S2
2S3


R2




R1


Co-operation, Co-ordination, Collaboration,
Consolidation
1
st
Tier Suppliers
S1
S2
S3
S4
S5
S6
S7
S8
2S1
2S4
2S2
2S3


R2




R1


Co-operation, Co-ordination, Collaboration,
Consolidation
1
st
Tier Suppliers


SX
(S7, S8 relocate)


2SA
(2S4 relocates)



R2




R1




SY
(S1, S2, relocate)


2SB
(2S1 relocates)

Richard Wilding
E.g. Warburtons Supply Chain
E.g. Warburtons Supply Chain
E.g. Warburtons Supply Chain
E.g. Warburtons Supply Chain
Supply Chain Strategies
Supply chain strategies need to be set so that value is
added to product.
Where product is varied and differentiation is possible,
value can be in output;
Where product is homogenous, value is achieved
through streamlining, cost reduction and quality
management of inputs the value chain.
Key strategies to deliver the value chain are lean and
agile processes.
Lean Supply Chains
As the name suggests, lean systems are
ones with minimal waste;
The seven wastes:
Overproduction;
Waiting time;
Transportation;
Inappropriate or unnecessary manufacture;
Unnecessary inventory;
Unnecessary movement of goods;
Defective products.
Push versus Pull.
Agile Supply Chains
Mass production customised production
mass customisation;
Flexibility and responsiveness with
standardisation;
Leave final product specification to the latest
stage of production as possible
Postponement
E.g. Toyota, Citron & Peugeot:
Toyota Aygo, Citroen C1 and
Peugeot 107 all produced in a
purpose-built joint-owned
factory.
The 3 cars share 92% of the
same components.
P&C responsible for sourcing &
procurement, T for assembly.
Choice of SC Strategy
Long lead time
Lean, planning &
execution
(e.g. artificial
Christmas trees)
Leagile,
postponement
(e.g. Toyota, Citroen,
Peugeot)
Short lead time
Lean, continuous
replenishment
(e.g. Tesco fresh
produce)
Agile, quick
response
(e.g. Zara)
Predictable
demand
Unpredictable
demand
Typically
outsourced
Typically
in-house
Demand fluctuations become progressively amplified back up through the supply
chain bullwhip effect
EPOS systems used by many retailers can help up-stream operations see real-
time movements in market place Typical supply chain dynamics
Major Supply Chain Problems the bullwhip effect
Typical supply chain dynamics

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