EEC 231

2
COURSE LEARNING OUTCOMES
At the end of the module, you should
be able to:
1. Promote the Louisian core values
in making sound supply chain
management decisions.
2. Discuss fundamentals of supply
chain management as they
pertain to sustainable
relationships among various
industry players
3. Apply supply chain and
distribution management
concepts, principles, processes
SUPPLY CHAIN and strategies in case analysis
MANAGEMENT and practical business decision
making situations
4. Critique supply chain drivers and
supply chain operations
5. Integrate concepts/techniques
learned through application in
the preparation of a
comprehensive distribution plan
6. Evaluate alternative solutions to
supply chain issues, trends, and
transformations related to the
dynamics of the environment

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 No matter how prepared you are, there will always be times when things don’t do to plan. The key is to
prepare as well as you can, but at the same time train yourself to adapt to change and be solution-
focused in the moment.

Once you have momentum, fight to keep it. Fight for it with everything you can because it’s one of the
hardest things to create. When you have it, you can ask for things that you never could have without
it.

– Daniel Flynn

COURSE INTRODUCTION
Enterprising individuals and organizations face the unprecedented challenges of the
current economy. Having the competency to make objective choices, rational decisions
and a resilient attitude are necessary to sustain business operations.
In practice, supply chain managers need to be well-versed in process management
and development to ensure maximum product offerings and optimal shipments that
guarantee business client’s order specifications and customer order requirements.
This course intends to equip you with the necessary competencies of a supply chain
manager to facilitate beneficial interdependencies among diverse industries. You are
expected to be able to examine via observation and synthesis the general concepts of
supply chain management to develop a comprehensive purview of the logistical processes
linking the whole supply chain networks. This will enable you to have an ethical perspective
and attitude towards supply chain decision making with a clear focus on value-laden
relationships while maintaining a balance of responsiveness and efficiency leading to the
development and crafting of strategies that emphasize on the philosophy of sustainable
business enterprises. Given the vital role of supply chain managers, this three-unit course
hopes to nurture your potential in decision making relevant to supply chain management.
Supply chain management course covers a comprehensive study of the concepts,
processes and strategies used in the management of supply chains with particular emphasis
on the interrelationships of logistics among diverse industries vis-à-vis the value laden
relationships among the supply chain participants. Moreover, key strategic business
principles relative to channel management or logistics management will also be covered.
Physical distribution as a functional area within the firm and its interface with channel
intermediaries will be analyzed emphasizing on the inter-organization management of the
relationship of these institutions. Specific topics include the supply chain drivers and supply
chain operations that stresses on the systems-approach to managing the entire information
flows, financial flows and materials and services from raw materials suppliers to the end-users.
Current trends and issues in the global perspective will also be introduced to aid you with
competency in supply chain management decision making in the perspective of a supply
chain manager.

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 MODULE 2. SUPPLY CHAIN DRIVERS (Production)

After the completion of this module you should be able to:

a) Describe the production process as one of the supply chain drivers
b) Illustrate the various activities in manufacturing and service organizations
c) Interpret production as a basis of an organization’s competency

ENGAGE:
Reflect on knowledge and skills in product design and development.

Read the business model canvas below. License: CC BY-SA 3.0 Foundry
PowerPoint implementation by: Neos Chronos Limited
https://neoschronos.com). www.businessmodelgeneration.com/canvas

INSTRUCTION for the Business Model Canvas:

Read the notes herein. Consequently, try to fill in the template through the source provided
below based on the questions below.

Designed by: The Business Model Foundry (www.businessmodelgeneration.com/canvas).

Word implementation by: Neos Chronos Limited (https://neoschronos.com). License: CC BY-
SA 3.0

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 The business model canvas (source: strategyzer.com/canvas/business-model-canvas). The
business model canvas was created by Alexander Osterwalder of Strategyzer. It is a great
tool to help you understand your business model. It will lead to insights about the customers
you serve, what value propositions are offered through what channels, and how your
company makes money.

– Key partners: who are your key partners who are your key suppliers? Which key
resources are you acquiring from partners? Which key activities do partners perform?
• Motivations for partnerships: optimization and economy, reduction of risk and
uncertainty, acquisition of particular resources and activities
– Key activities: what key activities do your value propositions require? Your distribution
channels? Customer relationships?
• Categories: production, problem solving, platform/network
– Key resources: what key resources do your value propositions require? Your distribution
channels? Customer relationships?
– Value propositions: what value do you deliver to the customer? Which one of your
customer’s problems are you helping to solve? What bundles of products and services
are you offering toe each customer segment? Which customer needs are you
satisfying?
• Characteristics: newness, performance, customization, getting the job done,
design, brand/status, price, cost reduction, risk reduction, accessibility,
convenience/usability
– Customer relationships: what type of relationship does each of your customer
segments expect you to establish and maintain with them? Which one have you
established? How are they integrated with the rest of your business model? How costly
are they?
– Channels: though which channels do your customer segments want to be reached?
How are you reaching them now? How are your channels integrated? Which ones
work best? Which ones are most cost-efficient? How are you integrating them with
customer routines?
– Customer segments: for whom are you creating value? Who are your most important
customers? Is your customer base a mass market, niche market, segmented,
diversified, multisided platform?

EXPLORE:
Assess various activities necessary in the production and operations of
organizations.

Supply Chain Driver (Production)

Production involves building factories and warehouses and refers to the capacity of a supply
chain to make and store products. This activity includes the creation of master production
schedules that consider plant capacities, workload balancing, quality control, and
equipment maintenance. It addresses what products the market wants and how much of
which products should be produced and by when?

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 The two main approaches to manufacturing are:

✓ Product focus – performs the range of different operations required to make a given
product line from fabrication of different product parts to assembly of these parts. A
product approach tends to result in developing expertise about a given set of
products at the expense of expertise about any particular function. It is a continuous
process characterized by high volume and low variety process resulting to high facility
utilization.
Example: tissue rolls, light bulbs, beer

✓ Functional focus – concentrates on performing just a few operations such as only

making a select group of parts or only doing assembly applied to making many
different kinds of products. A functional approach results in expertise about particular
functions instead of expertise in a given product. The functional focus on equipment,
layout or supervisions that creates low volume and high variety products.
Example: office process like sales and payroll, departments for welding or painting

The demand of consumers is at its peak such that more and more products being driven in
the market requires more warehouse space. As warehousing and transportation contribute
to a major cost in operations, they need to be carried out in the most efficient ways possible.

Three approaches to use in warehousing:

✓ Stock Keeping Unit (SKU) storage refers to an approach where all of a given type of
product is kept together for ease and efficiency.
– SKU is an item that is unique because of some characteristics such as brand, size,
color, and model which must be stored and accounted for separate from other
items.
– An SKU is a code typically used by businesses and stores to keep track of how
much a product is on hand and/or how much of it has been used. They are often
unique to individual organizations. They are generally used for record-keeping
purposes inside the business, rather than for outside purposes like pricing.
– In general, a string of letters and/or numbers, or a combination thereof, makes up
an SKU. The method for creating this code may vary by organization. Some may
use a standardized method such as using a model number, model name or the
number associated with the Universal Product Code (UPC). Others may use a
randomly assigned code. For example, one big box retailer could sell the same
gadget as another, but have a totally different SKU attached to it. This is because
the SKU is usually used for internal purposes only. The code doesn’t have to mean
anything to another business or store. This is one of the key differences between
SKUs and UPCs, the latter of which are generally the same for a given item,
regardless of the company that sells or keeps it in inventory.

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 ✓ Job lot storage - all the different products related to the needs of a certain type of
customer or related to the needs of a particular job are stored together for efficient
picking and packing operation but usually requires more storage space.
– It is a very simple form wherein the warehouse keeps what the particular customer
needs. A portion of the warehouse can be rented out to other entities. Thus, the
warehouse space can be divided on the basis of products for individual
companies.

✓ Cross docking – product is not actually warehoused in the facility. Instead the facility
is used to house a process where trucks from suppliers arrive and unload large
quantities of different products. Large lots are then broken down into smaller lots.
Smaller lots of different products are recombined according to the needs of the day
and quickly loaded onto outbound trucks that deliver the products to their final
destination. It is one of the most efficient forms of warehousing for larger companies
although it requires a lot of storage space.
– In cross docking, the products are stored in loose quantities such that they can be
mixed and matched as per the order received. For example, soaps may be
transported in huge bulk, but they are broken down to smaller bulks at the
warehouse and transported to each branch as per requirement where they are
broken down to individual units.

EXPLAIN:
Analyze production capability and capacity of organizations.

The supply chain drivers are a basis for decision making to determine the entities (individuals
or organizations) capabilities and capacity to face the challenging market demands.

The decision on how the production supply chain driver operates requires the balance
between responsiveness and efficiency. Responsiveness pertains to the ability of the supply
chain participant to be relevant to the needs of customers. It stems from empathizing with

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 the customer to appropriately present solutions. Efficiency is seen from the perspective of
the supply chain participant focused on the rational choice to prioritize productivity and
cost-efficiency in operations.

Responsiveness in production could result to excess capacity, flexible manufacturing, and

many smaller factories. The growing demand of customers can be addressed by producing
more goods and services that will be made available when needed. This can be done by
putting up more manufacturing plants or opening more stores to increase customer access.
Manufacturing plants can adjust to the customer order specifications by creating products
that are customized to the needs of buyers. Building smaller satellite factories can
decentralize operations and extend customer reach.

Responsiveness has to consider both the needs of the organization and the needs of the
customers. To deliver customer satisfaction, the organization has to deliver quickly and be
flexible in accommodating changing sales volumes or alterations in customer’s orders.

Efficiency in production could results to little excess capacity, narrow focus, and few central
plans. Production efficiency occurs when operations are set to optimal operations,
producing only that which is ordered. The production is centralized in a single site to gain
economies of scale and emphasize economies of scope. Tolerance to long delivery lead
times is necessary if efficiency is opted.

Efficiency can be healthy to the organization’s bottom-line. This could mean optimizing
shipping routes, warehouse locations, personnel and infrastructure. Customer satisfaction is
achieved when the organization has the right balance of inventory and partners who value
transparency and has proven track record.

In line with this, Bas van Velzen, a Senior Business Analyst at Innovation (2014) said, “as
responsive as required, as efficient as possible.”

ELABORATE:
Record observations on production competencies.

To enhance your knowledge on the production supply chain driver, you

may watch the following YouTube videoclips:

a) Pinas Sarap: Kara David, nagluto ng higanteng chicharon.

https://youtube/vUjwLV4MBVc
b) Gardenia Stories Corporate Video 2016HD.
https://youtube.be/gemFTj3YfX0
c) The Making of Mega Sardines.
https://youtube.b/-mR08SEAYhU
d) The largest oil rig in the world.
https://youtube.be/eMX8BEWMtlw
e) A Day at Mrs. Baker’s Restaurant and Pastry Shop Vizcaya.
https://youtube.be/UcY2f3anDPg

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 EVALUATE:
Formulate basis for decision-making in production.

In a separate sheet, enumerate three characteristics/criteria when to be

efficient and when to be responsive in each of the six areas of concern.

Area of Concern Responsiveness Efficiency

1 Education
2 Health and Welfare
3 Food and Beverage
4 Travel
5 Leisure
6 (add one more here…)
Example: • Can carry VARIETY of goods for sale
• QUICK RESPONSE to market demand
• Significant market population to be served
or a WIDE MARKET SEGMENT
• Can offer COMPLEX and UNIQUE goods • PREDICTABLE DEMAND
and services • Knowledge of COST of raw materials and
Retail selling prices

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