24 Questions
What is the primary goal of supply chain planning?
To maximize supply chain surplus given established constraints
What is a key consideration in supply chain design decisions?
Market uncertainty
What is the time horizon for supply chain operation decisions?
Weekly or daily
What is a key aspect of supply chain operation decisions?
Allocating orders to inventory or production
What is a strategic supply chain decision?
Outsourcing supply chain functions
What is a consideration in supply chain planning decisions?
Demand uncertainty
What is the goal of supply chain operation decisions?
To handle incoming customer orders effectively
What is a mid-term task in supply chain planning?
Master production scheduling
What is the design-to-sales cycle time for Zara's peer group?
6 months
Why does Zara source products with uncertain demand from local manufacturers?
To respond quickly to uncertain demand
What is the advantage of Zara's replenishment strategy of multiple times a week?
Responding quickly to changing demand
Why did Toyota shift from equipping plants only for local production to enabling plants to supply every market?
To improve supply chain flexibility
What is the risk of having high commonality in parts production, as experienced by Toyota?
Higher risk of recalls
What is the key benefit of having a responsive supply chain, as demonstrated by Zara?
Responding quickly to changing demand
Why did Zara maintain manufacturing capacity in Europe despite lower costs in Asia?
To improve supply chain flexibility
What is the advantage of having a global distribution network, as seen in Zara's eight distribution centers?
Faster delivery times to global markets
What is the main objective of a supply chain?
To maximize overall value generated
What is the source of revenue in a supply chain?
The customer
What is the significance of effective supply chain management?
To grow the total supply chain surplus
Why is it important to adapt to changing technology and customer expectations in supply chain management?
To stay competitive
What is the significance of supply chain design, planning, and operation decisions?
They play a significant role in the success of a firm
What is the relationship between supply chain cost and supply chain profit?
Supply chain cost reduces supply chain profit
What is the importance of managing supply chain assets and product, information, and fund flows?
To grow the total supply chain surplus
What is the impact of supply chain decisions on a firm's revenue?
Supply chain decisions can both increase and decrease a firm's revenue
Study Notes
Zara's Supply Chain
- Design-to-sales cycle time in peer group: 6 months, but Zara's is 4-6 weeks.
- Combination of flexible and quick sources in Europe (Portugal, Spain) and low-cost sources in Asia.
Distribution Strategy
- Global distribution was run via eight distribution centers in Spain in 2009.
- Delivery times: 24 hours in Europe, 48 hours in America and Asia.
- Shipments from DCs to stores several times a week.
Toyota's Supply Chain
- Global strategy: open factories in every market it serves.
- Two extremes: equip plant only for local production/market or enable plant to supply every market.
- Parts production: global or local?
- Goal: increase commonality in parts, but risky when parts have to be recalled (e.g., 12 million cars recalled in 2009).
Supply Chain Strategy or Design
- Decisions about configuration of the supply chain, allocation of resources, and what processes each stage will perform.
- Strategic supply chain decisions include outsourcing, facility locations and capacities, products to be made or stored, modes of transportation, and information systems.
- These decisions are long-term and expensive to reverse, and must consider market uncertainty.
Supply Chain Planning
- Definition: a set of policies governing short-term operations.
- Fixed by the supply configuration from strategic phase.
- Goal: maximize supply chain surplus given established constraints.
- Starts with a forecast of demand in the coming year.
Supply Chain Operation
- Time horizon: weekly or daily.
- Decisions regarding individual customer orders.
- Goal: handle incoming customer orders as effectively as possible.
- Allocate orders to inventory or production, set order due dates, generate pick lists, allocate orders to shipments, and set delivery schedules.
Objective of a Supply Chain
- Maximize overall value generated.
- Supply Chain Surplus = Customer Value – Supply Chain Cost.
- Example: customer purchases a wireless router from Best Buy for $60 (revenue) minus supply chain costs (information, storage, transportation, etc.) is the supply chain profit.
Importance of Supply Chain Decisions
- Significant role in the success or failure of a firm (e.g., Wal-Mart, Seven-Eleven Japan, Webvan, Borders, Dell).
- Supply chains must adapt to changing technology and customer expectations to stay competitive.
Learn about Zara's efficient supply chain management, which enables the company to design and deliver products quickly, with a design-to-sales cycle time of just 4-6 weeks. The quiz covers Zara's use of flexible and quick sources in Europe and low-cost sources in Asia, as well as its global distribution network.
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