Nigel Slack Chapter 13 Supply Chain Planning and Control

13.
Chapter 13
Supply chain planning and control
Pearson Education Ltd. Arnos Design
Slack, Chambers and Johnston, Operations Management, 6th Edition,

13.1
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.2
Operations
strategy
Design Improvement
Supply chain Planning and

planning and control control
The market requires…

specified time, quantity and
quality of products and
services
The operation supplies…
the coordinated delivery of
products and services

13.2
Key operations questions
13.3
In Chapter 13 – Supply chain planning and control – Slack

et al. identify the following key questions:
•What is supply chain management?

•What are the activities of supply chain management?
•What are the types of relationship between operations
in supply chains?
•How do supply chains behave in practice?
•How can supply chains be improved?

13.3
What is supply chain management?
13.4
‘Supply chain management is the management of

the interconnection of organizations that relate to
each other through upstream and downstream
linkages between the processes that produce
value to the ultimate consumer in the form of
products and services’.

13.4
13.5
…is concerned with managing the flow of materials and information between a
string of operations, that form the strands or ‘chains’ of a supply network
Flow between Supply network

processes management concerns
Flow between
flow between operations
processes
Flow between
Flow between
processes
processes
Flow between processes
Flow between
Flow between
processes
Supply chain processes
management concerns
flow between a string of
operations
13.5
13.6 Supply chains management is concerned with the flow of
information and the flow of products and services
•Long-term plans and requirements

‘Upstream’ flow of •Market research information
customer •Individual orders
•Payment
Requirements •Potential new products and services.
Flow between Flow between Flow between

processes processes processes
Consumer
Operation 1 Operation 2 Operation 3
•Products and services ‘Downstream’ flow of

•New products and products and services for
services
•Delivery information customer
•Payment request/Credit.
Fulfilment

13.6
13.7
Second tier First tier First tier Second tier End

supplier supplier customer customer customer
Supply side Demand

side
Purchasing and Physical distribution
Information supply management
flow management Logistics
Physical
flow Materials management
Supply chain management

13.7
13.8 Taking a customer perspective of supply performance
can lead to very different conclusions
Customer Customer
requirements satisfaction
100 N
8
20
Product/ N
Y
service 80 10 N
appropriate? 40
N
Y N Y
Product/
service 70 50 1 N
10 Y
available?
Y N 1
Meets price 9 Y
and delivery 20 10 8
requirements?
Customer Y N
orders? 10 Received
1
Produced as as
N
promised? 9 Y promised?
1
From the operation’s perspective
From the customers perspective 90% satisfaction Y
8% satisfaction 8

13.8
13.9 The purchasing function brings together the operation
and its suppliers
Suppliers Purchasing function The operation
Prepare Request
quotation for Requests
for Request for Demand
specification, quotations products and from
price, delivery, customers
etc. services
Liaison
Select between
supplier(s) purchasing
Quotations and the
operation
Produce Prepare Receive Supply to
Order customers
products and purchase products and
services order services
Deliver

13.9
Factors for rating alternative suppliers
13.10
Short-term ability to supply Longer-term ability to supply

•Range of products or services •Potential for innovation
provided
•Quality of products or services •Ease of doing business
•Responsiveness •Willingness to share risk
•Dependability of supply •Long-term commitment to supply
•Delivery and volume flexibility •Ability to transfer knowledge as
well as products and services
•Total cost of being supplied •Technical capability
•Ability to supply in the required •Operations capability
quantity
•Financial capability
•Managerial capability

13.10
Weighted supplier selection criteria for a hotel chain
13.11
Factor Weight Supplier A score Supplier B score

Cost performance 10 8 (8 x 10 = 80) 5 (5 x 10 = 50)
Quality record 10 7 (7 x 10 = 70) 9 (9 x 10 = 90)
Delivery speed 7 5 (5 x 7 = 35) 5 (5 x 7 = 35)
promised
Delivery speed 7 4 (4 x 7 = 28) 8 (8 x 7 = 56)
achieved
Dependability record 8 6 (6 x 8 = 48) 8 (8 x 8 = 64)
Range provided 5 8 (8 x 5 = 40) 5 (5 x 5 = 25)
Innovation capability 4 6 (6 x 4 = 24) 9 (9 x 4 = 36)
Total weighted score 325 356

13.11
Supply chain relationships
13.12
To… Business Consumer

Business to business (B2B) Business to consumer (B2C)
•Most common, all but the • Retail operations
last link in the supply chain • Catalogue operations, etc.
Business • E-commerce examples: •E-commerce examples:
– EDI networks
–Internet retailers
– Business information –Amazon.com, etc.
exchanges.
From…
Consumer to consumer (C2B) Consumer to business (C2B)
or ‘peer to peer (P2P)
•Consumers ‘offer’, •Trading ‘swap’ and
Consumer business responds auction transactions
• E-commerce examples: •E-commerce examples:

–Specialist ‘collector’ sites
– Some airline ticket operators
–Ebay.com, etc.
– Priceline.com, etc.

13.12
Types of supply relationship
13.13
The character of internal operations activity
everything Vertically
Do
integrated
operation
Traditional supply
management
everything
important
Do
‘Partnership’
supply
management
Virtual Long-term
nothing
spot virtual
Do
trading operation
Transactional – Close –
Type of inter-firm contact
many suppliers few suppliers

13.13
Elements of process partnership relationships
13.14
Trust Attitudes
Long-term Sharing
expectations success
Joint Multiple
learning points of
contact
Closeness of
relationship
Joint co- Few
ordination of relationships
activities
Joint problem Information

solving transparency
Dedicated
assets Actions

13.14
The effects of supply chain compression
13.15
Supply chain time compression
Schedule Forecasts New products

Defects are
changes impact made closer to and service
detected faster
market faster demand time faster to market
so fewer lost so reduced

so improved
sales from risk of
forecasts
so can delayed launch obsolescence
respond to so easier to
market changes improve quality
better
so less need for
safety stocks
so revenues
are maximized so reduced so less
so reduced so revenues
stockholding discounted
wastage costs are maximized
costs sales
Improved profitability

13.15
The bullwhip effect
13.16
ORIGINAL
D
D
AN
O 3rd LEVEL 2nd LEVEL 1st LEVEL EQUIPMENT
RI
M
SUPPLIER SUPPLIER SUPPLIER
PE
MFG.
DE
Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock
100 100 100 100

1 100 100 100 100 100 100 100 100
100
100 100 100 100
2 20 60 60 80 80 90 90 95 95
60 80 90 95
3 180 120 120 100 100 95 95 95 95
120 100 95 95
4 60 90 90 95 95 95 95 95 95
90 95 95 95
5 100 95 95 95 95 95 95 95 95
95 95 95 95
6 95 95 95 95 95 95 95 95 95
3 2 1 OEM
MARKET
ALL OPERATIONS HOLD ONE PERIODS STOCK

13.16
The bullwhip effect (Continued)
13.17
ORIGINAL
D
D
AN
O 3rd LEVEL 2nd LEVEL 1st LEVEL EQUIPMENT
RI
M
SUPPLIER SUPPLIER SUPPLIER
PE
MFG.
DE
Prodn. Stock Prodn. Stock Prodn. Stock Prodn. Stock
100 100 100 100

1 100 100 100 100 100 100 100 100
100
2 95
3 105
4 95
5 105
6 95
3 2 1 OEM
MARKET
ALL OPERATIONS HOLD ONE PERIODS STOCK

13.17
The bullwhip effect (Continued)
13.18
Manufacturer’s Wholesaler’s Store’s orders to Sales from

orders to its orders to wholesaler store
suppliers manufacturer
Orders
Orders
Orders
Orders
0 0 0 0
Time Time Time
Time
Manuf Whole Retail

Supplier Consumers
acturer saler store

13.18
Supply chain dynamics
13.19
Supply chains with different end

objectives need to be managed in
different ways

13.19
Matching the supply chain with market requirements
13.20
Nature of demand
Functional products Innovative products
Predictable – Unpredictable
Few changes – Many changes
Low variety – High variety
Price stable – Price markdowns
Long lead-times – Short lead-times
Low margin – High margins
times
throughput times
inventory
Deployed inventory
Responsive
suppliers
Flexible suppliers
Low throughput
Supply chain objectives
Lean supply
utilization
Low utilization
chain Mismatch
inventory –– Deployed
management
suppliers –– Flexible
cost –– Low
utilization –– Low
Minimum inventory
High utilization
cost suppliers
Low cost
Agile supply
Efficient
Low
Mismatch chain
Minimum
Low cost
High
management
Low

13.20
Where is the inventory?
13.21
Customer responsive supply
Depot
Information
Products
Supplier Manufacturer
Depot
Outlets

13.21
Where is the inventory? (Continued)
13.22
Efficient fast throughput supply
Depot
Products
Supplier Manufacturer
Information
Depot
Outlets

13.22

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13.

Supply chain planning and control

Pearson Education Ltd. Arnos Design

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Supply chain Planning and

The market requires…

Slack, Chambers and Johnston, Operations Management, 6th Edition,

In Chapter 13 – Supply chain planning and control – Slack

•What is supply chain management?

Slack, Chambers and Johnston, Operations Management, 6th Edition,

‘Supply chain management is the management of

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Flow between Supply network

Flow between processes

•Long-term plans and requirements

Flow between Flow between Flow between

Operation 1 Operation 2 Operation 3

•Products and services ‘Downstream’ flow of

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Second tier First tier First tier Second tier End

Supply side Demand

Supply chain management

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Suppliers Purchasing function The operation

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Short-term ability to supply Longer-term ability to supply

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Factor Weight Supplier A score Supplier B score

Slack, Chambers and Johnston, Operations Management, 6th Edition,

To… Business Consumer

• E-commerce examples: •E-commerce examples:

Slack, Chambers and Johnston, Operations Management, 6th Edition,

The character of internal operations activity

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Joint problem Information

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Supply chain time compression

Schedule Forecasts New products

so fewer lost so reduced

Slack, Chambers and Johnston, Operations Management, 6th Edition,

100 100 100 100

ALL OPERATIONS HOLD ONE PERIODS STOCK

100 100 100 100

ALL OPERATIONS HOLD ONE PERIODS STOCK

Manufacturer’s Wholesaler’s Store’s orders to Sales from

Manuf Whole Retail

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Supply chains with different end

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Customer responsive supply

Slack, Chambers and Johnston, Operations Management, 6th Edition,

Efficient fast throughput supply

Slack, Chambers and Johnston, Operations Management, 6th Edition,

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