How strategic fit is achieved in scm

Study Unit 1 The Context and Scope of Supply Chain Management Chapter 1: Introduction Chapter 2: Supply Chain Drivers and Metrics LOG201 Supply Chain Management Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition Learning Outcomes 1. Explain the role of supply chain decisions on the success of a firm. 2. Discuss the process views of a supply chain. 3. Describe the supply chain macro processes in a firm. 4. Explain how a company achieves strategic fit between its competitive and supply chain strategies. 5. Discuss the issues that affect a company’s strategic fit. 6. Explain the major drivers of supply chain performances (facilities, inventory, transport, information, sourcing and pricing). 7. Discuss the impact of the supply chain drivers on supply chain performances. 2 Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition Chapter 1: Introduction Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition What is a Supply Chain? • Consists of all stages involved, directly or indirectly, in fulfilling a customer request – May include manufacturers, suppliers, transporters, warehouses, retailers, and customers.  Products, information and funds flow along each stage of the supply chain in both directions Stages in a Supply Chain 4 Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition A typical Supply Chain Network 6 Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition Objective of a Supply Chain Maximize overall value generated Supply Chain Surplus = Customer Value – Supply Chain Cost  Customer the only source of revenue  Sources of cost include flows of information, products, or funds between stages of the supply chain  Effective supply chain management is the management of supply chain assets and product, information, and fund flows to grow the total supply chain surplus  Success should be measured by total supply chain profitability, not profits at an individual stage. 7 Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition Importance of Supply Chain Decisions • Wal-Mart, $1 billion sales in 1980 to $469 billion in 2013 • Seven-Eleven Japan, ¥1 billion sales in 1974 to ¥1.9 trillion in 2013 • Webvan folded in two years • Borders, $4 billion in 2004 to $2.8 billion in 2009 • Dell, $56 billion in 2006, adopted new supply chain strategies Successful supply chain management requires many decisions relating to the flow of information, product, and funds → Each decision should be made to raise the supply chain surplus. 8 Source: Supply Chain Management: Strategy, Planning, and Operation, Sixth Edition Decision Phases in a Supply Chain  Decisions fall into three phases, depending on the frequency of each decision and the time frame during which a decision phase has an impact: 1. Supply Chain Strategy or Design How to structure the supply chain over the next several years 2.