What is Integrated Supply

Chain Management?

Rev. 3/15

Definition, example
Flows - material, information, finance
Improvement at nodes & across chain
Push/Pull Decoupling Point
Life Cycle Differences
Functional Views
Inventory/Service Tradeoff
Summary

Warren H. Hausman

What is a Supply Chain?

A network of facilities including:

material supply from suppliers and their

suppliers ...
transformation of materials to semi-finished
and finished products
distribution of finished products to customers
and their customers ...

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Consumer Durable Product

Supply Chain

Supplier

Supplier

Supplier

ASIC

PC
Board
Subassy

FAT

Supplier

US DC

Customer

Euro DC

Customer

Far East
DC

Customer

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Supply Chain Flows

Downstream:
material
information
finance
Suppliers

Manufacturers

Distributors

Customers

Upstream:
material
information

finance

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Supply Chain Management

Challenges

complex supply chain network

complex product structure
decentralized control/organizational silos
multiple sources of uncertainties
increasing pressure for customer service and
asset utilization

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Each Node in the Chain

Work in Progress

Raw Materials

Suppliers

Finished Goods

Manufacturing

Customers

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Improve a Given Chain

Initially, Focus on Single Nodes

Emphasize Stocking & Service Levels
Reduce Variability
Tighten up Operations

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Control Knobs at a Node

Service Target
Average supplier lead time
Variability of supplier lead time
Review period
Process Average Cycle Time
Process Variability
Demand variability / Forecast error
Capacity
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Push vs. Pull - Where?

McDonalds: We do it all for you!

Burger King: Have it your way!
Build to stock / forecast to some level
Build to order from there
Where do you change from push to pull?

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Push vs. Pull Decoupling

Point Alternatives
D
Component

C
Subassy

B
Factory
F.G.

A
F.G. in
Field

Active Learning: 2 minutes, nearest neighbor

Name one example of each alternative A, B, C, D

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Factors Influencing
Push/Pull Point:

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Product Life Cycle

Ongoing

Ramp-up

End of Life

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Life Cycle Differences

Rampup

Ongoing

Role of Inventory

Usual

Cost of Shortage

Usual

Cost of Overage

Usual

End of Life

... Implications?
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Functional Interfaces Traditional Goals

R&D

Manufacturing

Marketing

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Views of the World

R&D

Mfg/Dist.

Marketing

R&D

Manufacturing/
Distribution
Marketing

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Reasons for
Differing Views

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How to Change
Views?

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Inventory/Service Tradeoff Curve

High

Inventory
Goal

Low

Poor

Service

Good
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Summary

Definition, example
Flows - material, information, finance
Improvement at nodes & across chain
Push/Pull Point & Forces for Change
Life Cycle Differences
Functional views
Inventory/Service Tradeoff

Warren H. Hausman