Fundamentals

of
Supply Chain Management
Business Strategies & Supply chain
 Maximizing the value

The Right To The Right At The Right At The Right In The Right In The Right At The Right
Product Customer Time Place Quantity Condition Cost

The Right Strategy

Through The With The Using The
From The
Right Right Right
Right Source
Channels Paperwork Technology
What is Strategy?
Strategy is a general plan to achieve one or more long-term or over all
goals under uncertain conditions.

• Strategy is important because the resources available to achieve these

goals are usually limited.

• Strategy generally involves setting goals, determining actions to

achieve the goals, and mobilizing resources to execute the actions.

• The Strategy reflects the reason of existence of any firm and often
helps in creating competitive edge from their rivals.
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Survival of the fittest
Porter’s Generic Strategies
Competitive Advantage
Competitive Scope
Broad Cost
Differentiation
Target Leadership

Narrow Cost Differentiation

Target Focus Focus

5
CREATING CUSTOMER VALUE
• To win tomorrow’s
competitive battles, you
must grasp the nature
of these value
dimensions and build
the systems to create
and deliver them.

Dimensions of value creation

Adopted from CSCMP
What does CSCMP mean?

• Council of Supply Chain Management Professionals (CSCMP)

members are the backbone of the supply chain management and
logistics industries.

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Total Order Performance—A Synergistic
Approach
• To help you prioritize decisions regarding value creation, you will want to remember
three rules:
 Get into the game—Across most purchase decisions, cost and quality are the critical
value dimensions. If you want to be taken seriously as a potential supplier, you have to
perform well in these areas. Cost and quality thus tend to be order qualifiers.
 Differentiate yourself—If your cost and quality positions are good enough to get you
consideration as a supplier, you need to differentiate yourself along the lines of one of
the other dimensions. That is, customers must view your delivery, responsiveness,
and/or innovation as an order winner.
 Avoid disqualification—You must meet minimum requirements across all five value
dimensions. Even if you rate well on cost, quality, and a differentiating characteristic,
you could still disqualify yourself via unacceptable performance elsewhere. Your
customers are keeping score.
 Porter’s Five Forces
Business Strategy Model

PESTEL ANALYSIS

SWOT Analysis
Creating Strategic Fit
• Know your Customers and product uncertainties
• Know your supply chain
• Create Strategic Fit

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 Fundamentals
of
Supply Chain Management
Supply Chain Strategies – efficient
and Responsive
Efficient supply chains Responsive supply chains
Efficient supply chains Responsive supply chains
 Fundamentals
of
Supply Chain Management
Supply Chain Planning Road-Map
 Supply chain Planning Road Map
Competitive Strategy

Supply Chain Strategy

Efficient Responsiveness

Supply Chain Structure

Supply Chain Drivers

Facility Inventory Transportation

Information Sourcing Pricing

Adopted from book
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 Fundamentals
of
Supply Chain Management
Supply Chain drivers
Drivers of Supply Chain Performance
• Transportation
• moving inventory from point to point in a supply chain
• combinations of transportation modes and routes

• Facilities
• places where inventory is stored, assembled, or fabricated
• production sites and storage sites

• Inventory
• raw materials, WIP, finished goods within a supply chain
• inventory policies

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Drivers of Supply Chain Performance
• Information
• data and analysis regarding inventory, transportation,
facilities throughout the supply chain
• potentially the biggest driver of supply chain performance
• Sourcing
• functions a firm performs and functions that are
outsourced
• Pricing
• Price associated with goods and services provided by a
firm to the supply chain

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 Fundamentals
of
Supply Chain Management
Risk and uncertainties in Supply
Chains
Supply chain Complexities

• Globalization
• Increasing variety of products
• Fragmentation (Division) of supply chain ownership
• Decreasing product life cycles
• Increasingly demanding customers
• Implied Uncertainty

By: Waqar Ahmed

By: Waqar Ahmed
The Five Sources of Risk

Environmental Risk

Supply-Side Risk Process Risk Demand-Side Risk

Network/Control
Risk
The five sources of supply chain risk

Supply Risk Process Risk Demand Risk

• Dependency on key suppliers
• Consolidation in supply markets
• Quality and management issues
arising from off-shore sourcing
• Potential disruption at 2nd tier level
• Length and variability of
replenishment lead-times
• Manufacturing yield variability
• Lengthy set-up times and
inflexible processes
• Equipment reliability
• Limited capacity/bottlenecks
• Outsourcing key business
processes
• Loss of major accounts
• Volatility of demand
• Concentration of customer
base
• Short life cycles
• Innovative competitors

Network/Control Risk Environment Risk

• Asymmetric power relationships • Natural disasters
• Poor visibility along the pipeline • Terrorism and war
• Inappropriate rules that distort demand • Regulatory changes
• Lack of collaborative planning and forecasts • Tax, duties and quotas
• Bullwhip effects due to multiple echelons • Strikes