1

Chapter 1 - Supply Chain Management

1. Definition of Supply Chain Management (s.11)
Supply Chain Management is a set of approaches to efficiently integrate suppliers,
manufactures, warehouses and stores, so that merchandise is produced and distributed
2. Benefit of Supply Chain Management (s.13)
- Reduce cost, increase profit;
- Improve service level, shorten lead-time;
- Expand market share;
- Create higher customer value.

3. The risk and uncertainty relative to suppliers (s.19)

- Fluctuations of Inventory and Backorders throughout the Supply Chain
- Forecasting is not a solution
- Demand is not the only source of uncertainty
- Recent trends make things more uncertain

 + Lean manufacturing

 + Outsourcing
 + Offshoring
4. What are conflict in supply chain
Objective conflict: manufactures need the fast delivery but the supplier has many
customers or manufactures other them, so the suppliers cannot provide at the same
time for all manufactures.
Difference between the development chain and the supply chain (s.15)

Development
chain: is the set of
activities and
processes
associated with
new product
introduction. It
includes: product
plan/ design
sourcing decisions
production plans.
Supply chain:
is a network of
organizations –
their facilities,
functions, and
activities - that
are involved,
through upstream
and downstream
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linkages in the
different
processes and
activities, in
producing and
deliver a product
or service print
the hand of the
ultimate consumer. It
includes: supply produce
__
Picture: The development and supply chains interact at the production point

5. Why is Global Optimization Hard?

(s.16)
- Geographically distributed complex network
- Conflicting objectives of different SC actorsDynamic system
• Variations over time
• Matching demand-supply difficult
• Different levels of inventory and backorders distribute sell _
- Recent developments have increased risks: Lean production/Off-shoring/Outsourcing
6. An example showing the complexities of a supply chain: National
Semiconductors
- Production:

• Produces chips in six different locations: four in the US, one in Britain and one in
Israel
• Chips are shipped to seven assembly locations in Southeast Asia.
- Distribution

• The final product is shipped to hundreds of facilities all over the world
• 20,000 different routes
• 12 different airlines are involved
• 95% of the products are delivered within 45 days
• 5% are delivered within 90 days.
- Competitors:

• Motorola Inc.
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• Intel Corp
7. What are conflicting supply chain objectives?
- Purchasing (supplier) -

• Stable volume requirements - Warehousing

• Flexible delivery time • Low inventory

• Little variation in mix • Reduced transportation costs
• High quality replenishment capability
• Large quantities - Customers

- Manufacturing • Short order lead time

• Long run production • High in stock
• High quality • Enormous variety of products
• High productivity • Low prices
• Low production cost
- Inventory and back-order levels • Yields
typically fluctuate widely across
the supply chain. • Transportation times

- Demand is not the only source of • Natural Disasters

uncertainty: • Components Availability
• Lead times
8. Why is uncertainty hard to deal with?
- Matching supply and demand are difficult.
- Forecasting doesn't solve the problem
9. Key supply chain management issues (s.22)
Global Managing
Optimization Risk and
Chain Uncertaint
y
y
Distribution Network Supply
Configuration
Inventory Control Supply
Production Sourcing Supply
Supply Contracts Both
Distribution Supply
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Strategies
Strategic Partnering Development
Outsourcing and Development
Offshoring
Product Design Development
Information Supply
Technology
Customer Value Both
Smart Pricing Supply
Chapter 2 - Inventory Management
1. Why does a centralized system have a lower average inventory than a
decentralized system?
In a CS, demand volatility will be lower standard deviation lower  average inventory
is lower than a DS
2. Centralized system VS Decentralized system
What is a centralized supply chain?
A centralized supply chain is the traditional supply chain model, featuring a central
headquarters and warehouse based in a single location. From a supply chain
management standpoint, a centralized supply chain operation is typically managed at
the headquarters – which handles all up and downstream decisions.

What is a decentralized supply chain?

In a decentralized supply chain, operations are spread out over a series of warehouses
in a network. Often these are small offices and warehouses, designed to be located
closer to the organization's end customer. Decisions in a decentralized supply chain
are often given a degree of autonomy to be able to manage their own unique business
requirements. Typically, this will involve the purchasing of supplies and distribution
of goods, and may include some strategic autonomy depending on how different the
warehouses' locations are to head office.
7. What is inventory (s.3)
- Stock of items kept to meet future demand;
- One of the most expensive assets of many companies represents as much as
50% of total investments capital;
- Operations management must balance inventory investment and customer
service;
6. When we switch from a decentralized system to a centralized system:
- Safety stock usually said, leading to decrease in average inventory level and
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therefore reduction in inventory holding cost.

- The magnitude of the increase depends on the standard deviation (SD) and/or
coefficient of variation (CV) and the correlation between the demand from the
different markets.
- Service level increases and the magnitude of the increase depends on the
SD/CV and the correlation between the demand from the different markets.
- Overhead costs said as there are more economies of scale.
- Customer lead time becomes longer.
- Transportation costs increase on the outbounds and discuss on the inbounds.
The net impact on total transportation cost is not immediately clear.
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Advantages of a centralized supply chain

Advantages of a decentralized supply
1. Limited operational costs chain
2. Easier to standardize 1. Potential for lower costs at the local level
3. Easy to make improvement 2. increase flexibility
4. High availability of products 3. Better customer service: shipping times
5. Decisions made centrally 4. Test new products at a smaller scale
6. Potential for lower shipping costs 5. Ability to stock greater inventory amounts
upstream of a centralized supply chain
6. Reduced disaster risk
1. Potentialfor higher shipping costs
downstream benefits of a decentralized supply chain
1. Increased operational costs
2. Limited flexibility to move into new
markets 2. Potential to increase inbound costs
3. Limited disaster planning 3. Potentially less control

Chapter 3 - The Value of Information

1. Definition of Bullwhip Effect (s.7)
The bullwhip effect is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies.
It refers to increasing swings in inventory in response to shifts in customer demand as one move further up the
supply chain.
2. How can centralized demand information reduce the bullwhip effect (s.28)
- Centralizeddemand information within a supply chain: Provide each stage of supply chain with complete
information on the actual customer demand;
- Creates more accurate forecasts rather than orders received from the previous stage
- Creates more accurate forecasts rather than orders received from the previous stage
How can the following factor eliminate the bullwhip effect ?
E-Commerce and the Internet : Allow suppliers to have access to more accurate demand information. It
mitigates the Bullwhip Effect by preventing distortion and miscommunication of demand information and
reducing the lead time in order processing.
Express Delivery: Reduces lead times and the associated demand variance. Note that the variability of
demand is proportional to the lead times in the system
Vendor-managed inventory: Allows the supplier to monitor downstream demand and to make a well-informed
decision about how much to keep on hand and how much to ship to customers. Thus, the supplier doesn't have
to rely on order data to forecast demand -> reducing the Bullwhip Effect.
Collaborative forecasts: Help all stakeholders in the supply chain to arrive at a common, agreed-upon forecast
of end-customer demand and reduce the bullwhip effect.
Everyday low pricing: Through Everyday Low Pricing, demand fluctuations can be prevented, alleviating the
bullwhip effect. Periodic promotions create artificial demand peaks and bottoms and increase the variance in
customer demand which amplifies the bullwhip effect.
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How can collaborative forecasts have you to reduce the bullwhip effects?
In the collaborative forecast that means the forecast with the participant of many supply chain actors
including the retailers. So the retailers help you to have the correct customer demand for your forecasting.
Quantifying the Bullwhip (s.23)
Consider a two-stage supply chain:
 Retailer who observes customer demand
 Retailers place an order to a manufacturer.
- Retailer faces a fixed lead time
 Order placed at the end of period t
 Order received at the start of period t+L.
- Retailer follows a simple periodic review policy
 Retailer reviews inventory every period
 Place an order to bring its inventory level up to a target level.
 The review period is one
- Ways to Cope with the Bullwhip Effect (s.33)
- Reducing uncertainty
• Centralizing demand information
• Bullwhip inherent in use of various forecasting techniques
- Reducing variability: Use of EDLP (Everyday Low Pricing) strategy (Payless)
- Lead time reduction
• Order lead time (time to produce and ship)
• Information lead time (time to process order)
• Efficient network distribution design
- Strategic partnership
• Vendor managed inventory (VMI);
• Sharing of customer information;
• Collaborative forecasting
Charter 4 - It and Business Process
1. Level I: Disconnected Processes (s.9)

- Many independent processes.

- Organized functionally with no or low degree of integration.
- Supply chain planning typically done for each site independently of other sites.
- Characteristics:

• Functional (silo) strategies.

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• Lack of clear, consistent supply chain management processes.

• No measurements, or measurements not aligned with company objectives.
2. Level II: Internal Integration (s.10)

- Organized functionally, with a high degree of integration.

- Decisions made through the integration of key functional areas.
- Common forecasts applied throughout the organization.
- Characteristics:

• Integration of some functional information.

• Documented processes followed across the entire organization.
• Key measurements that are used departmentally.
3. Level III: Intra-Company Integration and Limited External Integration (s.11)
• Cross-functionally organized.
• Involves key suppliers and customers in decision making processes.
• Characteristics:
• Decisions optimized across the internal supply chain.
• Sophisticated processes that involve all affected internal organizations.
• Key suppliers and customers are included in supply chain planning.
4. Level IV: Multi-Enterprise Integration (s.12)
• Multi-enterprise processes
• Common business objectives/extensive knowledge of the suppliers and customers business environments.
• Collaboration links trading partners and enables them to operate as one virtual corporation.
• Characteristics:
• Collaboration across the entire supply chain.
• Internal and external collaborative supply chain management focus on key service and
financial goals.
• Measures directly link supply chain results to company goals.
1. Four Categories of IT Systems (s.13)

Level I Level II
- Batchprocesses, independent systems and - Shared data across the supply chain.
redundant data across the organization.
- Decisions made using planning tools
- Focus on spreadsheet and manual
manipulation of data for decision making.
Level III Level IV
- Complete visibility of internal data - Data and processes are shared
internally and externally.
- Key suppliers and customers have access
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to some of this data

- Processes are also shared across the
supply chain
2. Understand the business process and IT system as well as their relationship. Explain box Ah, B, C,
EASY (s.22-24)

- Immature business processes and IT systems.

- Below average business performance. Box RED
- Mature business processes and immature systems.
- Perform significantly better than those who did not
invest in either processes or systems, but they leave
a lot on the table.
OLD BOX
- Mature systems and processes.
- Enjoy significant improvements in operational
performance. EASY Box
- Mature IT systems but not processes.
- Performance even worse than those with immature
systems and processes.
- IT infrastructure is typically expensive and requires
significant investment accompanied by support
staff.
- IT provides only information

CHAP 5: PROCUREMENT & OUTSOURCING STRATEGIES

1. Definition of Outsourcing (s.4,5)

Outsourcing is "the process of contracting with the most suitable expert third party service provider". It is the
operational transfer of one or more business processes from an origin company to an external provider who
then becomes accountable for the outcome of the agreed tasks.
Example: Some industries have been outsourcing for an extended time, such as fashion industry (Nike – all
manufacturing outsourced) and electronics industry (Cisco, Apple)
Taiwanese companies now design and manufacture most laptops sold around the world.
Brands such as Hewlett-Packard and PalmOne Collaborate with Asian suppliers on the design of the PDAs.
 10

2. Outsourcing benefits and risks (s.7 to s.11)

** Benefits:
 Economies of scale: Aggregation of multiple orders reduces costs, both in purchasing and in
manufacturing
 Risk pooling: Demand uncertainty transferred to the uncertainty suppliers and Suppliers reduce through
the risk-pooling effect
 Reduce capital investment: Capital investment transferred to suppliers AND Suppliers' higher shared
between customers.
 Focus on core competency: Buyer can focus on its core strength and Allows buyer to differentiate from
its competitors
 Increased flexibility: The ability to better react to changes in customer demand and The ability to use
the supplier's technical knowledge to accelerate product development cycle time and the ability to gain
access to new technologies and innovation.
** Risks:
 Loss of competitive knowledge: Outsourcing critical components to suppliers may open up
opportunities for competitors. Besides, it implies that companies lose their ability to introduce new
products based on their own agenda rather than the supplier's agenda. Outsourcing the manufacturing of
various components big different suppliers may prevent the development of new insights, innovations,
and solutions.
 Conflicting objectives:
o Demand issues: Print a good economy, the demand is high and the conflict can beige addressed by
buyers who are willing big make long-term commitments to purchase minimum quantities specified
by a contract. On the contrary, in a slow economy, decline in demand and long-term commitments
entails financial risks for the buyers.
o Product Thiết kế issues: The buyers insist on flexibility, they would like big solve Thiết kế
problems as fast as possible. While the suppliers focus on cost reduction and imply responsiveness
to design changes.
1. Kraljic's Supply Matrix (s.26 to s.31)
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CHAPTER 6: STRATEGIC ALLIANCES

** Definition: 3PL is a strategic partnership, long-term commitment, multi-function arrangement and process
integration in an organization's use of third-party businesses to outsource elements of its distribution,
warehousing, and fulfillment services. It includes the operations of warehousing and transportation services
that can be scaled and customized to customers' needs, based on market conditions, to meet the demands and
delivery service requirements for their products.
** Advantages (s.11,12,13)
 Focus on core strengths: allow a company to focus on its core competencies.
 Provides technological flexibility: Technological advancements are adopted by better 3PL providers.
3PLs can be adopted in a way that is faster, more cost-effective, and capable of meeting the needs of a
company's potential customers.
 Provides other flexibility: in geographic locations, in service offerings, in resource and workforce size.
** Disadvantages (s.14,15)
 Loss of control inherent in outsourcing a particular function: Outbound logistics 3PLs interact with a
firm's customers. Many third-party logistics firms work very hard big address these concerns. For
instance, painting company logos on the sides of trucks, dressing 3PL employees in the uniforms of the
hiring company, and providing extensive reporting on each customer interaction.
 Logistics is one of the core competencies of a firm: Makes no sense to outsource these activities to a
supplier who may not be as capable as the firm's in-house expertise, for example Wal-Mart –
pharmaceutical pharmaceutical companies.
1. Retailer – Supplier Partnership (RSP)

** Definition (s.23)
RSP is a cooperative relationship between suppliers and retailers to use one another's knowledge. In which,
the suppliers have better knowledge of lead times and production capacities and the retailers have better
knowledge of demands.
** Types of RSP: 3 types (s.24,25,26)
 (1) Quick Response Strategy: Suppliers receive POS data from retailers. They use this information for
 12

forecasting and scheduling and to reduce lead time as well as synchronize their production and
inventory activities with actual sales. Retailers still prepare individual orders.
 (2) Continuous Replenishment Strategy (also called rapid replenishment): Suppliers receive POS data
and use this data to prepare shipments at previously agreed-upon intervals big maintain specific levels
of inventory. Besides, the suppliers may fight decreased inventory levels at the retail store or
distribution center as long as service levels are met.
 (3) Vendor Managed Inventory (VMI) system: Supplier decides on the appropriate inventory levels and
the appropriate inventory policies to maintain these levels and their suggestions initially approved by
retailers. The goal of many VMI programs is to eliminate retailer oversight on specific orders. For
example, Wal-Mart and Procter & Gamble VMI Partnership began in 1985, and has improved P&G's
on-time deliveries to Wal-Mart while increasing inventory turns.
=> Similar: the supplier will receive Point of Sale data from the retailer.
=> Different:
● A retailer is the person who makes decisions about inventory management, ordering.
● retailer and supplier will sign the decision cùng
● supplier is the final decision maker on ordering and inventory management.
Criteria → Decision maker Inventory New skills employed
Ownership by vendors
Type
Quick response Retailer Retailer Forecasting skills
Continuous Contractually Either party Forecasting and
replenishment agreed-to levels inventory control
Advanced Contractually Either party Forecasting and
continuous agreed-to and inventory control
replenishment continuously
improved levels
VMI Vendor Either party Retail management

** Advantages (s.34)
 Better knowledge the supplier has about order quantities: an ability to control the bullwhip effect
 A variety of side benefits: provides a good opportunity for the reengineering of the retailer–supplier
relationship, such as eliminate redundant order entries, automate manual tasks that can beige
automated, reassign tasks for better efficiency and eliminate unnecessary control steps.
** Disadvantages (s.35,36)
● Needary to employ advanced technology, which is often expensive.
● Essential to develop trust in what once may have been an adversarial supplier– retailer relationship.
● Supplier often has much more responsibility charcoal formerly: may force the supplier big add personnel to
meet this responsibility.
● Expenses at the supplier often increase as managerial responsibilities increase.
● Consignment arrangement may increase inventory costs for the supplier.
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● Float: Retailers practiced waiting 30 to 90 days to pay for goods may now have to pay upon delivery.
1. Distributor Integration (DI)

** Definition (s.41)
Distributors are important partners in the supply chain, they have a wealth of information about customer
needs and wants. Successful manufacturers use this information when developing new products and product
lines. Distributors typically rely on manufacturers to supply the necessary parts, expertise and inventory
located at one distributor is available to the others.
Distributor Integration creates risk-pooling opportunities across the various distributors and enable different
distributors to develop different areas of expertise.
** DI relationship requirements (s.47)
 a large commitment of resources and effort for the manufacturer
 a long-term alliance.
 trust among the participants.
 pledges and guarantees from the manufacturer to ensure distributor commitment.
** Types of DI (s.44,45)
 Addresses both inventory-related and service-related issues
– Inventory pooling across the entire distributor network
– Each distributor checks inventories of other distributors to locate a needed product or part.
– Dealers are contractually bound to exchange the part under certain conditions and for agreed-upon
remuneration: lowers total inventory costs and increased service levels.
 Can meet a customer's specialized technical service requests
– Steer special requests to the distributors best suited to address them
– Centers of Excellence

CHAP 7: SUPPLY CHAIN INTEGRATION

** Definition: In a push-based supply chain, products are pushed through the channel from production up to
the retailers. This means that production happens based on demand forecasts. Production and distribution
decisions are based on long-term forecasts about the demand of orders received from the retailer's
warehouses.
Example: Beach umbrellas for beach chairs are pushed to retailers a month before the summer season starts in
anticipation of a spike in demand, relative to the winter and spring season.
 Push system accept the inventory (based on historical data)
 Bullwhip effect in Push system: higher transportation costs, more emergency production changeovers, leads
to inefficient resource utilization, wrong planning and forecasting, obsolescence of inventory (higher
inventory levels and/or higher manufacturing costs,
effect pull strategy)
1. Pull-Based Supply Chain

** Definition: In a pull-based supply chain, procurement, production, and distribution are demand-driven
rather than based on predictions. Production and distribution demand driven, coordinated with true customer
demand rather than forecast demand. Goods are produced in the amount and time needed. The firm does not
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hold any inventory and only responds to specific orders.

An example of the world famous car maker Toyota, which is typical of a pull production strategy, but usually
they do not manufacture to order. They follow the “supermarket model”, which restricts inventory and
replenishes once a product is consumed. Classic Kanban is a pull system. The number of kanban sets a fixed
limit for the number of products in production.
 Pull system Minimize inventory (to meet the demand for direct orders from customers)
1. Push – Pull strategy

** Definition (s.14)
The Push-Pull strategy is likely to employ a postponement approach where a part of the product is made to
stock – a generic product.
It's usually suggested for products with high demand uncertainty and high importance of economies of scale.
Some stages of the supply chain operated in a push-based manner:
- Typically the initial stages
- Remaining stages employ a pull-based strategy.
- Interface between the push-based stages and the pull-based stages is the push–pull boundary. For
example:
Dell pre-orders and stocks up on raw materials and components. However, from this point on, they do not
produce their computers until an order is actually placed. They initially “push”, but then switch to “pull” in
the production and assembly process.
Amazon is one of the biggest online retailers in the world. Push and Pull logistics are a big part of their
inventory management. Use a push strategy for the products stored in warehouses because it is based on the
downstream demand forecast. Use a pull strategy when it sells the products from third-party sellers to
minimize risk for unsold inventory.

Comparis Push Strategy Pull Strategy

on
Lead time Long Short
Complexit High Low
y
Processes Supply chain planning Order fulfillment
Focus Resource allocation Responsiveness
Objective Minimize cost Maximize service level
Enough product to meet customer Eliminates the excess of inventory
brand Just in time solution
Have time to prepare orders Ideal when producing low value items
Direct contact with customers. Reduced lead times through the ability to
Bigger profits because no discount is better anticipate incoming orders from the
Benefits needed. retailers.
 15

Ideal for high priced products. Less variability in the system

Decreased inventory at the manufacturer due
to the
reduction in variability.
Focus on time, not customer Goods not arrive on time
Inability to meet changing demand Unexpected demand can overcome the
patterns. stocking ability
Obsolescence of supply chain Often difficult to implement when lead times
Drawback inventory as demand for certain are long and more difficult to take advantage
s products disappears. of economies of scale
Variability of orders received much
larger than the variability in customer
demand due
to the bullwhip effect.

** Benefits of Push-Pull Strategy

– Low uncertainty
– Service level is not an issue.
– Focus on cost minimization.
– Long lead times.
– Complex supply chain structures.
– Cost minimization achieved by better utilizing resources
such as production and distribution capacities.
– Short cycle time.
– Achieved by deploying a flexible and responsive supply chain.
– Order-fulfillment processes are applied.
– Explain the diagram in Slide 15 & 24

Box I: with high customization, high demand uncertain and can be said that economies of scale in production
and distribution are not important, such as the computer industry. Therefore, the framework suggestion is a
pull-based strategy.
Box II: with high demand uncertainty, high economies of scale and high delivery costs. Furniture retailers
have quite similar products and are just distinguished by shapes or colors. In addition, for bulky furniture
products, the delivery costs are very high, while the demand uncertainty is also high. Thus, the pull–push
strategy is applied here. In this case, the production strategy has to follow a pull – based strategy because we
cannot forecast this product's demand for the long – term; the distribution strategy is suitable for push – based
strategy because firms need to take advantage of economies of scale in order to reduce delivery cost.
Box III: represent products in the grocery industry that have low demand uncertainty and high economies of
scale. Demand for these products is quite stable while reducing transportation costs by shipping full
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truckloads is critical for controlling supply chain costs. In this case, a push-based strategy is recommended
because managing inventory based on long–term forecasts does not increase inventory holding costs while
delivery costs are reduced by leveraging economies of scale.
Box IV: represent products that both uncertainty and economies of scale are low. Lower demand uncertainty
should be used as a push-based strategy, and pull-based strategy will be applied in case economies of scale
are low. However, in this case, a more careful analysis is required because traditional retail push strategies
may be also appropriate, depending on the specific costs and uncertainties.
 17

Box A: Items with short supply lead time & high demand uncertainty: a Pull strategy should be applied as
much as possible.
Box B: Items with long supply lead time & low demand uncertainty: Push strategy is most appropriate.
Box C: Items with short supply lead time & highly predictable demand: a demand driven (Continuous)
replenishment strategy is preferred. Suppliers receive POS data and use this data to prepare shipments at
previously agreed-upon intervals. A pull strategy is employed at the production and distribution stages and
push strategy at the retail outlets.
Box D: Items with long supply lead time & unpredictable Demand: inventory is critical in this type of
environment. Inventory should be strategically positioned in the supply chain.
CHAPTER8: DISTRIBUTION
STRATEGIES
1. Definition of Cross – docking (s.14,15)
Cross – docking is a logistics procedure where products from a supplier or manufacturing plant are distributed
directly to a customer or retail chain with marginal to no handling or storage time. Warehouses function as
inventory coordination points rather than as inventory storage points. Goods have very little time in storage at the
warehouse, often less than 12 hours and limits inventory costs and tell lead times.
An example of cross-docking is when freight from incoming trucks is wheeled across the shipping dock and loaded
directly on outbound trucks without entering a warehouse. In reality, cross-docking as a supply chain strategy is
generally more complicated; for instance, outbound trucks can be delayed. As a result, there is usually at least some
allowance for short-term storage in a supply chain model that relies on cross-docking.
** Issues with Cross – docking
– Require a significant start-up investment and are very difficult to manage
– Supply chain partners must be linked with advanced information systems for coordination
– A fast and responsive transportation system is necessary
– Forecasts are critical, necessitating the sharing of information.
– Effective only for large distribution systems
2. Inventory Pooling = Risk Pooling in Chapter 2
3. Definition of Transshipment (s.28)
Shipment of items between different facilities at the same level in the supply chain to meet some immediate
need , occurs mostly at the retail level. Can be achieved: with advanced information systems, shipping costs are
reasonable and the retailers have the same owner
4. Summary of the Distribution Strategies

Strategy → Direct shipment Cross-docking Inventory at warehouses

Attribute
Risk pooling Take advantage
Transportation Reduced inbound Reduced inbound costs
costs costs
Holding costs No warehouse No holding costs
cost
Allocation Delayed Delayed
CHAP 9: GLOBAL LOGISTICS & RISK MANAGEMENT
1. Definition of Risk Management (s.14)
Outsourcing and offshoring imply that the supply chain is geographically more diverse and therefore more
exposed to various risks. Recent trends toward cost reduction, lean manufacturing and just-in-time imply that in a
progressive supply chain, low inventory levels are maintained. Print the event of an unexpected disaster,
adherence big this type of strategy could result in a shutdown of production lines because of lack of raw material
or parts inventory.
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2. Source of risks
 19

Known - unknowns are risks that can be reasonably identified and planned for. Only the probability of an
occurrence for an event or its likely consequences is known.
An example is the risk of an ocean shipment being delayed due to inbound customs intervention. The
probability of this occurrence by country and port can be identified from records of previous shipments and
custom broker knowledge. However, the consequences (delays, additional payments, rejection) are unknown,
requiring actions to reduce the effect.
** Unknown – Unknown uncontrollable
Unknown - unknowns are risks to the project that fall outside the scope of normal possibility. The probability
of occurrence and possible
consequences of an event cannot be foreseen. It is not only difficult to predict, but also difficult to control.
Examples of unknown unknowns include natural disasters, political risk, etc.
Factors impacting exposure to risks (s.15)
– Customer reactions
– Competitor reactions
– Supplier reactions
– Government reactions
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Value chain?

Phân tích Hoạt động chính và phụ của value chain?

Dự báo trong SC ? Vai trò, ưu nhược điểm (C3)

VMI là gì? Vì sao DN chọn, bất lơi

Case: EOQ đơn lẻ

CHAPTER 1:

1/ Definition

1. SCM: a system of suppliers, production, transportation, distribution and evaluation of available

resources from raw materials to products to the final consumer.

Supply chain management is a set of practices that effectively and efficiently use suppliers,
manufacturers, warehouses and stores to deliver manufactured goods to the right locations. with
the right quality requirements, with the aim of minimizing system-wide costs while satisfying
service level requirements. SCM=SC+M

SC: production chain.

M: HR/Capital/Infrastructure/IT....

2. SC is also understood as a network of organizations, including upstream linkages and

downstream linkages, through processes and activities aimed at creating value for the products
and services provided to the final NID.

Dowstream: supplier to customer

Upstream flows (return flows): customer to supplier → recycling, waste, repair, empty packing.

3. SC through three main flows are:

Physical Flow: From material -> make

Information Flow: 2-way Material <-> make

Money Flow: From material <- make.

Seven right:

1. Product

2. Store

3. Price: True price-> target market-> cost structure-> smart price.

4. Quantity
 21

5. Customer

6. Time

7. => higher profit

Process: made up of one or more operations that make input to output

• Planning: the processes required to strategically operate a SC. How to predict demand response
with available resources? Determine demand → ptich → forecast=> balance supply= demand.

• Sourcing: the selection and construction of a mqh with suppliers that will provide the goods and
services needed to create the company's product.

• Production: the main product produced or the service provided.

Design the production process -> Calculate the production capacity -> Production plan -> Operating
Procedure Control → standard, quantity, quality management.

• Delivery: logistics processes.

• Returning: the process of getting old, damaged and redundant products back from customers and
providing support for customers who have problems with the delivered product.

Key: Sales & Operation Planning.

Purpose:

1. Optimizing the total cost of the system

2. Satisfy the needs of customers.

3.- Reduce costs, increase profits

4. - Improve responsiveness and customers

5. - Reduce operating costs; expand market size

6. Improve cash flow

7.- Create higher customer value

Value chain?

• Inbound logistics. These activities involve receiving, storage and moving inputs into products,
such as raw materials management, warehousing, inventory control, vehicle scheduling, and product return
to suppliers.

• Manufacture. Activities corresponding to converting inputs into finished products, such as

machining, packaging, assembly, equipment maintenance, inspection, printing and manage facilities.

• Outbound logistics: These are activities associated with the collection, storage, and physical
distribution of goods and products to buyers, such as warehouse management for finished products,
 22

management of finished products, and inventory management. materials management, vehicle management,
order processing, and scheduling

• Marketing and Sales: These activities involve advertising, promotion, channel selection, channel
member relationship management, and pricing.

• Customer service: Activities related to the provision of services to increase or maintain the value
of the product, such as installation, repair and maintenance, training, provision of replacement equipment.
and product adjustment.

Support activities are grouped into four categories

• Procurement: related to the function of purchasing input materials used in the company's value
chain. This includes raw materials, suppliers and other equipment as well as assets such as machinery,
laboratory equipment, office and factory. These examples illustrate that purchased inputs can be related to
primary as well as complementary activities. This is why Porter classifies procurement as a complementary
activity rather than a primary activity

• Technological development: “Technology” has a very broad meaning in this context, because in
Porter's view, all activities are associated with technology, be it know-how, procedures or technology.
technology used in the process or product design. Most value activities use one technology that combines a
large number of different sub-technologies related to different scientific fields.

• Human resource management: is the activities related to the recruitment, recruiting, training,
developing and managing remuneration for all employees in the organization, valid for both main and
support activities.

• Infrastructure: The company generally considers the customers of these activities. They do not
support just one or more key activities, but instead support the entire organization. Examples of these
activities are administration, planning, finance, accounting, regulatory compliance, quality management, and
facilities management. In large enterprises, which often include many operating units, we may find that
these activities are split between the headquarters and the operating companies. Infrastructure is the most
talked about topic of why it changes so often.

The importance of SCM:

1. Satisfy customer needs; Shorten Lead time -> short product life -> no need to store goods -> no
holding cost; increase profits.

2. Reduce production costs, expand market size

3. Good cash flow control

4. Create higher customer value

The meaning of supply chain management is shown:

• Ensure smooth and continuous production.

• Create conditions to raise the technical level of production, stimulate creative activities, apply new
techniques, create new production capacities
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• Create conditions to improve product quality and reduce product costs.

• Create conditions to improve the efficiency of production and business activities of the unit.

2/ What is the value chain model?

Are all activities related to activities that add value at each step in the process including: design,
production, marketing and distribution

- Help businesses optimize costs, reduce waste and increase profit.

- Make it easy for businesses to determine where good value lies with customers to extend value, save costs
and improve production.

- Help customers get good products with reasonable cost.

Value chain approach

- Cost advantage: is the cost that is determined after the business identifies the main activities and auxiliary
activities. If an activity requires a lot of labor resources to participate, there can be many types of costs such
as salary costs, other costs for work, etc. Businesses should also determine the relationship between
activities to cut unnecessary costs.

- Differentiation advantage: businesses need to determine which activities bring the most value to customers
and then evaluate strategies to improve value. Focus on customer service, upgrade product features to
improve value. Enterprises should determine the difference to maintain and add more value.

Steps to take to develop an upgrade strategy:

Step 1: Agree on a vision and strategy to upgrade the value chain

• Increase the chain's income (higher output, better price...)

• Income of Chain Operators (Retains Value)

Step 2: Analysis of Pros & Cons

Step 3: Set operational upgrade objectives

Step 4: Identify actors involved in implementing the upgrade strategy

Step 5: Forecast of the impact of the chain upgrade

Purpose:

bring new value -> bring services to customers / At the same time do not increase costs too high.

Value Chain Supply Chain

Defination is a series of activities that The unification of

help add value to the activities, people and
product through each step businesses through which
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of the process, until it products are moved from

reaches the consumer one place to another

Ingredient 2 activities: main and Suppliers, producers,

support activities distributors, retailers,
customers,…

origin From business from administrative

administration activities

Core activities Create value for the Cooperate to transport

product, make the product products from one place to
more outstanding and another and to customers
different
Supplier => manufacturing
=> distritution => retailers
=> customer

order Starting from the originating from the

customer's requirements,
ending with the finished
product created along with
the value that the customer
is still willing to pay for
requirement of the product
and ending when the
product reaches the user

CHAPTER 3:

1. Forecasting in supply chain management, the role of forecasting in the supply chain?
What are the advantages and disadvantages of forecasting?

Forecasting in supply chain management is the process of estimating and predicting the future about
important factors such as customer demand, market trends, supply fluctuations and other factors in the
supply chain. response. The goal of forecasting is to provide accurate and reliable predictive information
to support decisions about inventory management, manufacturing, shipping, planning, and supplier
selection.

Forecasting in supply chain management plays an important role as follows:

- Satisfying customer needs: Forecasting helps determine the level of customer demand in the future so
that the supply chain can prepare and respond in time, with the right quantity and quality of customer
requirements.

- Optimize inventory management: Accurate forecasting helps to adjust inventory levels so that they are
enough to meet customer needs, avoid shortages or excess inventory, thereby reducing inventory costs
and investment optimization.
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- Production and shipping planning: Demand forecasting helps determine production levels and plan
shipping efficiently, avoiding shortages or overlaps during production and shipping.

- Strategic direction and business decisions: Forecasts provide the information needed to shape business
strategy, make decisions about expanding, restructuring or repositioning supply chains to take advantage
of opportunities. and minimize risks in the business environment.

Advantages of forecasting in supply chain management:

- Increased flexibility and quick response to market fluctuations

- Minimize storage costs and excess inventory

- Increase production and transportation efficiency.

- Forecasting helps to consider the choice of supply chain management methods

- Forecasting helps optimize planning and resources

Disadvantages of forecasting in supply chain management

- Forecast error: Forecast cannot achieve absolute accuracy, so forecast error may occur. This error can
lead to inaccurate planning and decisions, causing shortages or excesses in the supply chain.

- Difficulty in data collection. Forecasting requires the collection and analysis of data from a variety of
sources, including information from customers, suppliers, market indicators, and other external factors.
This data collection and processing can be difficult and time consuming and labor intensive

- The impact of the element of surprise. Some unexpected factors such as market fluctuations, policy
changes, natural disasters can affect forecasts and cause large deviations between forecast and reality.
This requires flexibility in planning and decision making in the supply chain management process

- Supply chain complexity. A supply chain can include many stakeholders from suppliers to
manufacturers, distributors and end customers. Factors such as shipping delays, complex manufacturing
processes, and product quality issues can increase forecasting and supply chain management complexity.

- Cost and resources: Performing the forecasting process requires investment in technology, software and
human resources. In addition, the analysis and interpretation of forecast data also requires a high level of
training and expertise, which creates a financial and human burden on the organization.