CheptexI Spply Chan Mant

e CovTnalien all dpply ham

aclintis muvotmd nban in
Cuk tmL Value.

Subplier Mauadurer>Distibuh lholaseler

CtoeA Retaile
SCM objechve
Stnhune Supply dhuin to maKimi se
Cwmpetiive advantaqe A Lenei s
The ultimatz Cen&udr.
/ou always have
Csoferaluon o ack playe
e
6uhply cham frachu evine Sucee

Exa-ble Awa2om operlin am P26 warehorue

&6tue
Nofe Supphy chain Sannys tow drect t
botom line R feneral, it u mae mdent
Shmink Cupply, chancoss fhan to increade
Sales reNtaua
eatainin
 S'C Peadim.
Table II2. How Corporata SthRynpactt

ims be-rre deuckingn Snpply chain, should

dleerde h an a e or Bu
OutEourcte

6 Sourunsg Strteges
Many, Suppliers Brdder (Louestqets the ordeT
Bardan on
Spplar t looate cost, uatY
teus Suppliera efc

nong m Ralahbnskeps is preferred here

JCreate yalue by allbuoi Suppies
hare ecohomies 6 SCale Gnd
leasnuag Cuwwe ieldu Loe Tramaalian

isadwontage Cos 6f chang parhne u hugt

De penderdärq
Trade Secrdts leskout Schwia Biyck
Gon Manu. Cemlo
8 Vestial Snlegatuon
Derelopint rvduce Gords o Sets
puahafed
niowy admall
pplin
 TABLE 11.2 How Corporate Strategy Impacts Supply Chain Decisions*

LOW-coSTSTRATEGY RESPONSESTRATEGY DIFFERENTIATION STRATEGY

Primary supplier Cost Capacity .Product development skills
selection criteria Speed Willing to share information
.Flexibility Jointly and rapidly develop
products

Suppiy chain Minimize inventoryto .Use buffer stocks to Minimize inventory to avoid
hold down costs ensure speedy supply product obsolescence
inventory
Fast transportation .Gather and communicate
Distribution Inexpensive market research data
network transportation .Provide premium
Sell through discount CUstomer service Knowledgeable sales staff
distributors/retailers

Product design Maximize performance Low setup time Modular design to aid
characteristics Minimize cost Rapid production product differentiation
ramp-up

Right Suppiy Chain for Your Product?"

*See related table and discussion in Marshall L. Fishe, "What Is the
Harvard Business Review (March-April 1997): 105.
 Supdiers aeeHoresh
lasomalouad
BL CAi pmacg lp ma

fepsi Apple nernah bna

Paper
FT
atul endOs
&tores o p e Conegitnm
Gfnishud
osAs)
,
Customoes

( JV CJoin Vestüe)
ha ppeh Tech Skils
fr: Peoueas.
frmduct
Collabosabon
ecuve supply Cos Red
rakmec Damle- Bmw

Keiek Nehwrk Suppliy oe.come. pon 5

Compan CDalbbm,

Virtual Centaui@
Compais That sau GY d vametu

sutplir elatuenhipk to provioe

Sestces on damand.
 TABLE 11.3 Supply Chain Risks and Tactics

RISK RISK REDUCTION TACTICS EXAMPLE

betore its
Supplier failure Use multiple suppliers McDonald's planned its supply chain 6 years
meat, chicken,
to deliver effective contracts with opening in Russi. Every plant-bakery,
monitored to ensure strong
penalties, subcontractors on fish, and lettuce-IS closely
retainer; preplanning links.
extensive controls,
Careful supplier selection, Darden Restaurants has placed
Supplier quality on supplier processes
and
failures training, certification, and including third-party audits,
logistics to ensure constant monitoring and reduction
monitoring
of risk.
in China to
chicken farm production
Take over production; provide Tyson took over related to
Outsourcing and safety concerns

or pertorm the service mitigate product quality

using independent farmers.
yourself
trucking fleet and
nurmerous
Walmart, with its own
the U.S., finds
Logistics delays Multiple/redundant distribution centers located throughout
or damage transportation modes routes bypassing problem
and warehouses, secure alternative origins and delivery

packaging;effective contracts areas

with penalties
its dealers around the
world, invoking
trains
Careful selection, monitoring. Toyota Production System to help
Distribution principles of the Toyota
and effective contracts with service, used-car logistiCS,
dealers improve customer
penalties
and body and paint operations.
state-of-the-art international
databases; secure Boeing utilizes a
information loss Redundant
communication system that transmits engineering,
IT systems; training of supply Boeing facilities and
or distoruon scheduling, and logistics data to
chain partners on the proper suppliers worldwide.
interpretations and uses of
information
and
Political risk insurance, Hard Rock Café reduces political risk by franchising
and
Political cross-country diversification; licensing, rather than owning, when the political
Cultural barriers seem significant.
franchising and licensing

to combat exchange Honda and Nissan are moving more manufacturing

Economic Hedging out of Japan as the exchange rate for the yen
makes
contracts
rate risk; purchasing
fluctuations Japanese-made autos more expensive.
that address price
Insurance; alternate sourCing Toyota, experience with fires, earthquakes, and
atter its
Natural cross-country diversification tsunamis, now attempts to have at least two suppllers,
catastrophes each in a ditterent geographical region, tor each
Component.

nsurance; patent protection; Domestic Port Radiation Initiative: The U.S.

Theft, vandalism,
and terrorism security measures including government has set up radiation portal monitors that
RFID and GPS; diversification Scan nearly all imported containers for radiation.
 Table U3 s
Spp ply Chain Riuks 2 Taeties.

SSeusunp hybrd echn ique e 2

Splr a ch rd a d i f e e n t ernponank
but They noure
Capab h
oducn each others
Cowne.ent ach
ike a

oblems wtt dtregratad Juppluy Choun

(1 ocol bptinizah on.
Incenties like ty Disc./ Krrmehòra/@ut)
Large Lots

BullWhip Ektec he im Creasin uctuohbn

odrs
that ckTen oc Cus as orcdeis
move houak SuprrChauu
BWE Vasiance o Orcdes placed by Pelailer Sensing
dimord
aian te 6 emand (Acthal Sales
buwE1 It s
pre Sent
 purtu SC

Accrai Data. (YoStnto

(2) Lot size Peduchbn redatad b02

O Econona cak Shipme o lem than Truektoad Lofs

( Give DisC ov Tofal Amu v. neron Lndindual
shipmerd
Keducig Coa oforde (Standi ord
(2) lectroni
Puchasi
SpleStag.e Conhsrt kaplarushun
(Stops Bull wlp Efeet

Vende- Managed Jovenhy

CPER Cslaoaive Plom feCastth -
eplenishet
t auka{ft freduse
mewbes Shore i
hain cost
Oie urtheee
TBlaketordan :
a uhpe
delie eA
be heleakes
 Standar dis abbn
ompol Ltandaneliped
ges Me
Pavchafes Dnundt

oSt pone menl OY CRTbmu gatb

wodfation
peluying qn
as lone as posbla
a brrdult
prog
in e roduetow

itiy
Pere Cord LPvc.
H
tunds Taafer
(10) Aertromc Ordes
Dre to onguer
( Drop ShPPig pro Spp

Negohathon Stros In SC

Cst Pnce Medel

Based
ugf open s bonka tt purchasc
Suple t
2 Maytet Bsed Pnu Macel:
Poa age d bn
puushed, auulieny thelay

Cowbelufi ve biddn
 shiSMarage
An apprud fhat seeks effia enuy Of- ofeca hond
hrouan ntegatiow o all madinal
Cunol 8 tzaaag e
C Ctisi lo NOveinnN
acctiihes
S . of Cos huf Proeuuca
Truckine, Railkoade, Arfreiqht, hiaterys
piplna 2 Mulh Modal

Na osn 8-10 7. o Cest sf Prduut

Store quDds
imany lua pose
Acs a3 Conaslidaim cntar
Breat- (bulk hunchbn
Auts a
D o c i na
n eih

Channe Assembly stporamest

MeasinR SC Efosrance

Inventboyluobvea ost o Goaxds Sotol

Avenge Jiventyrwehnevnk

Wecks Su S2. Hee Ann tal CoGSs

Lnventooy lmov-eA Consdeed
 SC Benchmay ki ng (CH-.
(D ScOR Modo
Supply Cha1n Operatons Refeenca Mocde
PLAN et Supply lannslgnt
MAKE Manaq e Proc execahbn, Teshy acde f
SaKLE Tden fy, Selet, Monage & asses soures
DELIVER: Tnroice Warekouse ran spo 2Tg tell
ReTU RN a matenad /finsn

PLAD
SovRLE MAKE DELIVER

TURD PETUAN
seuoet.) Cfindadgoe)