Supply Chain Management

Road Map to Excellence….

Supply Chain Management

UNIT 10
Supply Chain Management
Road Map to Excellence….

Designing a Supply Chain Network

In designing a supply chain, we need to

consider how all supply chain drivers
should be used together to support the
competitive strategy of a company and
maximize supply chain profits
Corporate Strategy

Competitive Strategy

Supply Chain Strategy

Responsiveness Efficiency

Facilities Inventory Transportation Information Sourcing Pricing

Supply Chain Management
Road Map to Excellence….

From Strategy to Decisions

Corporate Strategy

Competitive Strategy

Supply Chain Strategy

Responsiveness Efficiency

Facilities Inventory Transportation Information Sourcing Pricing

Logistical drivers Cross functional drivers

Supply Chain Management
Road Map to Excellence….

To understand how a company can

improve supply chain performance in
terms of responsiveness and efficiency
we must examine (and make decisions
about) the logistical and cross-functional
drivers of supply chain performance
Supply Chain Management
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The Role of Distribution in the Supply

Chain
• What is distribution?
– Distribution refers to the steps taken to move and store
a product from the supplier stage to the customer
stage in a supply chain
• Distribution-related cost
– Make up about 10.5% of the US economy
– Make up about 20% of the cost of manufacturing

Distribution can achieve supply chain objectives from

low cost to high responsiveness
Supply Chain Management Faisal Jalal
Road Map to Excellence…. faisaljalal@hotmail.com
Supply Chain Management Faisal Jalal
Road Map to Excellence…. faisaljalal@hotmail.com
Supply Chain Management
Road Map to Excellence….

The Role of Distribution in the Supply

Chain
• What is distribution?
– Distribution refers to the steps taken to move and store
a product from the supplier stage to the customer
stage in a supply chain
• Distribution-related cost
– Make up about 10.5% of the US economy
– Make up about 20% of the cost of manufacturing

Distribution can achieve supply chain objectives from

low cost to high responsiveness
Supply Chain Management
Road Map to Excellence….

SCND – ?

SCND is all about

the art of balancing
our relationship with
all elements of SC
keeping SC Drivers
in MIND
Supply Chain Management
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SCND – ?

“Supply chain network design is the

disciplined process of determining the
optimal location and size of facilities and
the flow of products using a
mathematical modeling approach.”
Supply Chain Management
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SCND – On Agenda - Why

Supply Chain Management
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SCND ensures a competitive supply chain

The strategic value of network design

network design is the strategic planning process for evaluating alternative
structures for a supply chain, and selecting the one that maximizes profitability and
helps to improve performance at each link in the supply chain.
Supply Chain Management
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Key characteristics of today´s competitive

markets
Supply Chain Management
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SCND – Company's Performance

If delivered successfully, SCND improves a company’s supply chain

performance in a variety of areas:
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SCND affects the whole supply chain

network design decisions impact on all levels of supply chain management

Supply Chain Management
Road Map to Excellence….

Example: opening up a new production plant triggers

various decisions at all decision levels
Supply Chain Management
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Different drivers for SCND

Supply Chain Management
Road Map to Excellence….

Typical business questions answered

through SCND
Supply Chain Management
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Key strategy dimensions that affect

network design
As high performance in each
dimension would be typically neither
economically justified nor even
feasible, it is crucial to align network
design with the optimal strategy
regarding products and markets, and
to carefully investigate the potential
trade-offs between the different
performance dimensions. When
designing a supply chain, it is
therefore critical to understand the
different requirements of the various
product or customers segments. For
example, innovative, high margin
products might require a different
strategic positioning than less risky
but low margin commodity products.
Supply Chain Management
Road Map to Excellence….

Key strategy dimensions that affect

network design

example for different strategic requirements that need to be considered in network design
Supply Chain Management
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Objectives pursued through SCND

Supply Chain Management
Road Map to Excellence….

Reference models for SCND