Pages: 32

This chapter provides an overview of supply chains in their environmental context. Supply chains systems are part of a wider system linking the physical world with the social world in which we live. Politics, economics, social change, technology, ecology, environment and legal factors impact supply chain strategies. Supply chains are networks that integrate activities to move goods and services from where they are produced to markets where they are sold. Supply chain strategies are demand driven and must be customer focused to add value to the organization. They can be local, national, cross-border or global, crossing international boundaries and may be volatile, uncertain, complex and ambiguous in nature. Geopolitics plays a big part in how cross-border and global supply chains work which determines efficiencies and effectiveness. Supply chains exist in every business, not-for-profit organizations, public services, government and the military. They span extractive industries, agriculture, manufacturing, services, wholesale and retail. They serve customers who may be other businesses and consumers. Supply chains are part of the circular economy and a greater emphasis on sustainability means that consumers and businesses need to find ways to reduce waste and recycle, reuse and repurpose end-of-life products. People, places and technologies are key elements in formulating supply chain strategies.

Pages: 25

This chapter focuses attention on supply chain risk. There are two types of risk, firstly those that are generated within the supply chain system itself, and secondly those that arise from external sources. The first type of risk is known as endogenous, and the second type is exogenous. Risk is defined and differentiated from uncertainty with risk being calculable, and uncertainty not. Examples of the different types of supply chain risk are then identified and discussed. Risk and value are inexorably linked. Value is determined by seizing opportunities to increase sales value and volumes and reducing cost of supply. Risk mitigation is necessary to ensure value is retained in the supply chain and it is also a means to lower cost by reducing the impact of potential risks. A central thrust of ensuring value creation is to focus on the customer and satisfy their needs profitably. The 7V framework is a means to focus on the customer through a lens that examines value creation and risk by examining variables that influence both. The 7Vs are volatility, volume, velocity, variability, variety, visibility and virtuality. The 7V framework is applied to illustrate the source of risk and identify potential strategies to address and mitigate risk. All risk has the potential to disrupt supply chain operations.

Pages: 33

This chapter introduces several different strategic conceptual frameworks and different approaches to strategic planning and strategic management and their impact on supply chain strategies. All organizations need supply chain strategies to deliver the customer promise by being customer focused and market driven. Strategy is a path to the future firms want to achieve. Key questions are where are we now, where do we want to be and how do we get there. They do so by having a clear understanding of the environments in which they are situated. By having clarity of purpose, planning and implementation. Strategies build on strength minimize weakness and are shaped to take advantage of opportunities whilst minimizing threats. Supply chain strategies must fit with corporate strategies. Supply chain strategies follow the same principles, use the same concepts and tools like any strategic planning process. In this chapter, you will become familiar with strategic concepts and how they relate to the market driven and customer focused supply chain. Identify differences between strategic planning and strategic management, descriptive and prescriptive approaches and different levels of strategy discussed in the literature and how these underpin supply chain strategies. Understand that strategy is both process and content. The different levels determine the context. For example, supply chain strategies are carried out at business unit level and at organizational level. Understand that realized strategies are consequences of both planned and unplanned (emergent) strategy processes.

Pages: 33

In this chapter, we identify and discuss the chronological developments that have led to the emergence of supply chain management as a separate practice and discipline. To know and apply the underlying supply chain concepts recognising existing supply chain complexities and to develop appropriate supply chain strategies. We discuss contemporary supply chain issues and their influence in developing appropriate strategies. Evaluate a range of supply chain strategies, relationships and structures in contemporary organizations in different organizational contexts. It will also help professionals focus on key areas of interest and provide readers with ideas to locate and develop their own understanding and research agenda in this field.

Pages: 28

In this chapter, we look at what it means to have supply chain strategies that are demand driven and customer focused. A demand-driven, customer-focused supply chain strategy is a supply chain management method that focuses on building supply chains in response to demand signals. Demand signals pull goods and services through the supply chain from suppliers. Suppliers respond to demand signals by aligning resources in the total supply chain to deliver goods and services to customers. In order to have a customer-driven strategy, it is important to share data in an open environment, which in turn allows organizations to mutually solve supply chain challenges. We identify and discuss the differences between manufacturing and service industries and implications for demand driven, customer focused supply chain strategies. Understand service dominant logic, the difference between operand and operant resources and implications for creating service systems supply chains. Recognising that different supply chain strategies are applied to manufacturing and service businesses. The approach is lean and agile optimising supply chain performance by reducing cost, lowering average inventory holding, avoiding waste in the system and providing service to customers by focusing on their requirements. We examine tools and techniques that have been developed to support responsive, agile and resilient demand driven, customer focused supply chain strategies. And explain why and how strategic thinking supports the development of demand driven, customer focused supply chain strategies.

Pages: 23

The aim of this chapter is to introduce you to a number of important concepts involving sourcing and procurement decisions. Supplier sourcing procurement and evaluation are three ways to build supply chain strategies that lower cost, drive efficiency, achieve customer satisfaction and improve performance. First of all, we need to identify key issues, understand concepts and apply appropriate tools to source and procure supplies. Making appropriate selection of tools and techniques to develop strategies to improve performance in these areas. Generating appropriate metrics to evaluate and manage these activities is key to understanding how to employ strategies that drive successful outcomes. They also help understand ethical and environmental issues. In particular these metrics help with environmental, sustainability and governance goals for the organization (ESG). Adapting existing or developing appropriate tools to analyze key variables and make choices between global and local sourcing, supplier selection and procurement decisions such as single or multiple sourcing strategies.

Pages: 28

Supply chain structures follow strategies being pursued (Chandler, 1962). Structures come first and relationships are then developed between organizations and parts of the organization where strategies exist as people interact, communicate and exchange information, ideas and insights. Structures are shaped by purchasing and procurement decisions and the nature of those activities, for example, purchasing frequency, distances and locations of suppliers. Different types of purchasing decisions and the characteristics shape structures and relationships. Understanding key purchasing decisions and characteristics id a first step in evaluating the supply chain structures and relationships in place. Evaluating the nature of the relationships points a way to develop existing relationships or provides opportunities to change them. A number of tools and techniques can be employed to do so. Relationships can take different forms. Relationships can be equal, or one party may have power and control in a relationship, as we shall see. Much of the research carried out early focused attention on buyers and suppliers and treated them as didactic. Very few supplier-buyer relationships are now what we consider to be didactic, they take place in a more complex and layered approach. In this chapter we examine types of supplier relationship such as: Those that co-ordinate, co-operate, collaborate or control arrangements. The full spectrum of relationships examines arm’s length, didactic, partnerships, networks and strategic alliances.

Pages: 30

This chapter examines supply chain technologies supporting supply chain strategies. We begin emphasising the importance of market driven customer focused supply chains. Customers are the raison d’être for supply chains. Supply chains are demand driven. Responsive, agile, flexible, resilient supply chain strategies rely on technologies to connect all parts of the supply chain. Recognising the importance of supply chain integration and how it is enabled through information and communication technologies we identify supply chain strategies. Technology creates opportunities for synchronization, collaboration, joint product developments, improved information flows, moving goods fast, efficiently and effectively through the supply chain system with better service to supply chain partners and customers. It is essential to have a forward window that predicts future demand. Technology improves forecasting and real-time data solutions providing timely, accurate information to manage supply chains. Integrating technologies that bridge processes between customers and suppliers across the total supply chain create efficiencies and synergies. Digital transformation is key to making supply chains efficient and effective. Virtual supply chains (VSC) offer better understanding of processes, their interactions and how to improve service in the supply chain. Cloud based technology solutions offer real-time solutions. Simultaneously connecting organizations to an ecosystem to leverage value.

Pages: 39

The aim of this chapter is to introduce a number of key measures which are both financial and non-financial to evaluate different aspects of supply chain cost, value and performance. There are a number of concepts that need to be understood relating to performance measures, measurement and purpose which are discussed. Some of those concepts discussed in detail are value, cost, profit, total acquisition cost, budgetary control, variances and standard cost, total cost of ownership, post ownership cost, activity based costing and direct product profitability. Different types of key performance indicators (KPI) are discussed along with benchmarking, value systems and value streams. Additionally, concepts such as best practice, world-class, benchmarking and balanced scorecards are introduced. New contexts always create new measures of performance recent examples include ESG, sustainable supply chains, Industry 4.0 and the circular economy.

Pages: 25

In this chapter the focus is on important key elements that determine the customer experience, effectiveness and the efficiency of the supply chain. Service levels determine standards that customers can expect from any supply chain. Explaining why inventory management is an important determinant of service levels and how it impacts the customer experience. Managing inventories is both a strategic and operational concern. Business and supply chain processes have to be synchronized to reduce inventories and provide the agreed levels of service to customers. Identifying strategies to achieve this is key to meeting the objectives. This reduces inventory holding within the organization supply chain and in the total supply chain which can be optimized. There are a number of important tools and techniques that can be applied to plan and control inventories which include: ABC/Pareto analysis, EOQ, VMI, collaborative planning, TQM, kanban, JiT, LP, MRP, MRPII, DRP, ERP and BRP. Understanding the part that lean, agile and resilient strategies have and their impact on the customer, service levels, synchronization and business processes is part of the strategic thinking necessary to achieve optimum strategic outcomes. Service dominant logic (SDL) and its key role in establishing supply chain strategies by focusing on the customer are also examined.

Pages: 15

The purpose of this chapter is to review key business issues relating to supply chain profitability, quality management and the construct of world-class organizations. Recognize the importance of supply chain profitability and how it is achieved. We begin with the notion of the world-class organization examining what it means to be world-class. Some of the key principles employed in this assessment are time to market, quality improvements and innovation. Quality improvement has an impact on both cost and profitability which are explored in the chapter. There is also a brief summary of major achievements of the quality gurus that have influenced supply chain thinking over time. Different approaches to quality management are briefly discussed and some key concepts are explained including the use of statistical process control charts and the development of international standards. Six Sigma and zero defects are explained as are quality function deployment and the house of quality.

Pages: 30

This chapter examines logistics and fulfilment strategies. This involves choice of modes of transport, for example, trucks, trains, ships and planes; warehousing and storage facilities employed and locations of facilities. The first step recognizes the importance of logistics and fulfilment and the supply chain strategies necessary to satisfy customer demand. The second step evaluates the appropriateness of outsourcing in a given context, for example, use of “third party logistics” (3PL or 4PL). The third step is to achieve competitive advantage adopting digital solutions and computerized systems to gain visibility. The fourth step is to keep up to date adopting practices that can improve performance such as backhauling, cross-docking and innovations. Finally, recognize the strategic importance of storage and distribution in fulfilling the marketing promise to the customer.

Pages: 25

Supply chain futures are about choices we make as individuals, as teams at work, organizations, governments, consumers and the choices others make too. There are many challenges ahead that must be carefully negotiated. All those challenges need to be managed to create the supply chain future we desire. It is not easy. There is increasing uncertainty, a trend towards protectionist policies in world trade, there are deglobalizing supply chains, notions of friend shoring and resilience replacing lean and just-in-time approaches and we are experiencing more frequent disruptions. Securing critical assets in the new order is of paramount importance such as defence, energy, food and water as well as minerals, rear earth metals and materials required for future innovations and technology as we transition from fossil fuels to green energy. Climate change impacts are pressing and require urgent action. Sustainability is critical to preserving scarce resources as is the circular economy. Ethics and human rights above and beyond legal requirements are needed in supply chains to ensure human rights, fairness and decent working conditions. Technologies such as AI, Machine learning, blockchains and transformations to digital processes is a necessary condition to improve the future of supply chains. Supply chains where data replaces inventory as the key to resilience.

Pages: 11

In this concluding chapter we take a look at perhaps the biggest change driving global shifts in supply chains and shaping future world trade patterns. In doing so it synthesizes many of the ideas discussed in the book focusing attention on what I call the big transition. The world is currently undergoing a transition towards electric energy and transportation. This shift is being driven by a combination of environmental concerns, technological advancements and changing consumer demand. As the cost of renewable energy and electric vehicles continues to fall, more and more people are making the switch to electric power. The switch is being nudged by governments offering a mix of tax incentives and regulation. This transition is having a significant impact on supply chains and global trade patterns, as demand for certain materials and components accelerates. The shift towards electric energy and transportation has the potential to transform our future for the better, but it also presents challenges that must be addressed. It is increasing the intensity of geopolitics as nations compete for resources to secure their future place in the world economy. These tensions are played out in trading arrangements, supply chain policies and plans that will shape all of our futures.