Week 1:Week 1:IntroductionIntroduction

MIS 3580: Internet-Enabled Supply Chains

Prof. Sunil Wattal

IntroductionsIntroductions

Write on the index cards- Name- Major / Minor- Recent Internships / Industry

Experience- What brings you here?

Read introductions aloud

Have you ever wondered Have you ever wondered ……

How did Mattel toys get contaminated with lead paint?

How Team Obama achieved a record turnout in the elections?

How the milk tainted with melamine from China reached candy sold in the US?

Why did the employee at one of Apple’s suppliers commit suicide?

How does bin Laden release videos?

Have you ever wondered Have you ever wondered ……

How did Netflix become a dominant player in the DVD rental market?

Why makes Walmart one of the largest companies in the world?

How do products get shipped from China?

How do the ‘Dabbawallahs’ in Mumbai deliver 175,000 lunch boxes every day?

….. and many more!

What this course is about?What this course is about?Explain the concept of supply chains

and why they are important

Discuss the impact of information technology on supply chains

Ethics and challenges in supply chains

Organizational networks

Innovations in supply chains

Who should take it?Who should take it?MIS Majors / Minors

◦New opportunities (globalization)

Non MIS majors◦Understand competitive aspects of

supply chains

Course formalitiesCourse formalitiesSyllabus

Office Hours

Lecture slides

Evaluations

Group Work

Preparing for class

Learning ObjectivesLearning ObjectivesKey concepts in supply chains

Value chains

What is a Supply Chain?What is a Supply Chain?

Customer wantsdetergent and goes

to Jewel

Customer wantsdetergent and goes

to Jewel

JewelSupermarket

JewelSupermarket

Jewel or thirdparty DC

Jewel or thirdparty DC

P&G or othermanufacturerP&G or othermanufacturer

PlasticProducerPlastic

Producer

Chemicalmanufacturer

(e.g. Oil Company)

Chemicalmanufacturer

(e.g. Oil Company)

TennecoPackagingTenneco

Packaging

Paper Manufacturer

Paper Manufacturer

TimberIndustryTimber

Industry

Chemicalmanufacturer

(e.g. Oil Company)

Chemicalmanufacturer

(e.g. Oil Company)

Source: Sunil Chopra and Peter Meindl ‘Supply Chain Management’ Prentice Hall, 2006

What is a supply chain?What is a supply chain?Also known as a “logistics

network”Consists of

◦Suppliers◦Manufacturing centers◦Raw materials◦Work-in-process inventory◦Finished products◦Warehouses◦Distribution centers◦Retail Outlets

What constitutes a supply What constitutes a supply chain?chain?Flow of materials

Financial Flow

Flow of information◦ That’s where IT fits in

Technology in a supply chain◦ Hardware◦ Software◦ Networking◦ Communications / Extranets / VPN◦ Processes

Supply chain Supply chain managementmanagementA set of approaches utilized to

efficiently integrate suppliers, manufacturers, warehouses and stores

Goals◦To produce and distribute

merchandise at right quantities, to the right locations at the right time

◦Minimize system-wide costs while satisfying system-level requirements

Supply chain Supply chain managementmanagementDecisions about the structure of the supply

chain and what processes each stage will perform

Strategic supply chain decisions◦ Locations and capacities of facilities◦ Products to be made or stored at various

locations◦ Modes of transportation◦ Information systems

Supply chain design must support strategic objectives

Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

Source: Sunil Chopra and Peter Meindl ‘Supply Chain Management’ Prentice Hall, 2006

Knowledge CheckKnowledge Check• Form groups of 4-5 students and explain the following terms

• Cycle Time• Push/Pull Processes• Lead Time• Lot Sizing• Sourcing• Transportation• Distribution Network• Vendor Managed Inventory• Incentive Alignment• Demand Forecasting• Customization• Forecasting• Process & Capacity Planning• Contract manufacturing• Inventory Policies• Revenue Management

Why supply chains are Why supply chains are importantimportant Cost Efficiency

◦ (Walmart)

Agility ◦ (Gap)

Complexity◦ (Walmart)

Need for innovation◦ (iPhone APIs)

Blurred organizational boundaries◦ (Cisco)

Factors driving supply Factors driving supply chain chain Information technology

Global suppliers / customers / competition

Shorter product cycles / Clockspeed

Customized products

Need for collaboration

Trends in Supply ChainsTrends in Supply Chains Virtualization

Share the Supply Chain

Collaboration

Virtual sourcing ◦ Materials and manpower

Global Information Technology Standards

Increased Awareness◦ Sustainability◦ Product safety

Competing as value Competing as value chainschainsNew competitive dynamics

Operational excellence & continuous innovation◦ Companies increasingly partner with others

with proven operation excellence and a trail of innovation

◦ Demonstrated ability to think ahead and to exploit new ways to compete, and avoid being challenged head-on by competitors

◦ “partner-of-choice”

The costs in a supply The costs in a supply chainchain

Value chain Value chain competitivenesscompetitivenessExtend reach into customers and

suppliers◦Procurement and fulfillment processes

require visibility into the supply chain

◦Multi-level supply chain visibility and planning is the next frontier.

◦Older technologies: extend reach into customers and suppliers

◦New technologies: extend reach into customers’ customers and suppliers’ suppliers

Value chain Value chain competitivenesscompetitivenessCompress supply chain

◦Main goal: Eliminate waste in time and resources

◦Fewer physical assets; fewer people

◦With extended reach, organizations will learn to optimize the extended supply chain, leverage demand and supply planning and decision support

Value chain Value chain competitivenesscompetitivenessCreate market-level contingency

◦Main goal: To allow flexible response to the unexpected

◦Supply chain visibility leads to high levels of responsiveness

◦Requires building of an industry-level shared and controlled “safety stock” of resources

Value chain Value chain competitivenesscompetitivenessSupport organizational change

◦Main goal: Align people and culture with the requirements of the new business model

◦Motivate for high performance

◦Reward operational excellence, in order to achieve sustainable results

Areas of Supply Chain Areas of Supply Chain FocusFocusIn-Store Logistics: includes in-store

visibility, shelf-ready products, shopper interaction

Collaborative Physical Logistics: shared transport, shared warehouse, shared infrastructure

Reverse Logistics: product recycling, packaging recycling, returnable assets

Demand Fluctuation Management: joint planning, execution and monitoring

Shifts in Supply Chain Shifts in Supply Chain ManagementManagement Shift 1: From Cross-Functional Integration to Cross-

Enterprise◦ Old question: how do we get the various functional areas of our

company to work together to supply product to immediate customers?

◦ New question: how to record and activities across companies, as well as across internal functions, to supply product to the market?

 Shift 2: From Physical Efficiency to Market Mediation.◦ Old question: how do we minimize the costs our company incurs in

production and distribution of our products?◦ New question: how do we minimize the cost of matching supply and

demand while continuing to reduce the costs of production and distribution?

 Shift 3: From Supply Focus to Demand Focus.◦ Old question: how can we improve the way we supply product in

order to match supply and demand better, given the demand pattern?

◦ New question: how can we get earlier demand information or affect the demand pattern to match supply and demand?

Shifts in Supply Chain Shifts in Supply Chain ManagementManagement Shift 4: From single company, product design to

collaborative, concurrent product, process and supply chain design◦ Old question: how should our company design products to minimize

product cost (our cost of materials, production, and distribution)?◦ New question: how should collaborators designed the product,

process, and supply chain to minimize cost?  

Shift 5: From cost reduction to breakthrough business models.◦ Old question: how can we reduce our company's production and

distribution costs?◦ New question: what new supply chain and marketing approach would

lead to a breakthrough in customer value?  

Shift 6: From mass-market supply to tailored offerings.◦ Old question: how should we organize our company's operations to

serve the mass-market efficiently while offering customized product?◦ New question: how should we organize a supply chain to serve each

customer or segment uniquely and provide a tailored customer experience?

Next week…Next week…The impact of the Internet on

supply-chain strategies

From the “first click” to the “last mile”