Supply Chain Management and OM in business model cc tan (2015)

Use of Business Model Concept in Designing SCM, Logistics, and Operations Management RESEARCH BY DR. C .C . TAN SCHOOL OF MANAGEMENT MAE FAH LUANG UNIVERSITY

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Illustrate and explain supply chain management in business model structure and concept in the

dimensions of characteristics for sustainable competitive advantage, extended supply chain

architecture, operations strategy, inventory, operations structure, benefits structure that match

with operations strategy, outsourcing strategy, options to reduce risks, basis of competition, and

performance objectives. Demonstrate an example of alignment in supply chain management.

Extended SCM

Vision

Business

Strategy External analysis Internal analysis

CVP/VC Production/Operations Resources

Partnership CRM

Market Distribution Target Segment

Adapt

Alignment: coordination and collaboration, aligned with business strategy, customers’

needs, and power position (CVP/VC; brand-led, channel-led, supply-led)

Asset Networks Agile: Flexible and Responsive

Cost Revenue Streams Benefits to the organization

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Vision

Business



Partnership CRM


Adapt



Asset Networks Lean and Agile: Flexible and Responsive


Change:

Change

Frequency of

change

Profitable Growth Cost efficiency

Organizational learning

Organizational learning

characteristics to SCM:

Control and improvement

(stability and systems behavior

comprehension orientation)

Collaboration (teams orientation)

Focus, target (goals orientation)

Systems (systems orientation)

Knowledge repertoire

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Partnership CRM

Market Distribution

Logistics systems

Target Segment

SCM Vision and Mission, and Strategies

SCM Performance Objectives:

Delivery: on-time delivery, fill

rate, lead time, I = TXR

(Little’s Law)

Quality

Flexibility

Time (Speed):Time to market,

time to volume, on time, time

to cash

Cost

Extended

supply chain

partners and

customers

Fill Rate On-time

Lead time

Flexibility

Cash-to-cash cycle time = days

in inventory + days in accounts

receivable – days in accounts

payable.


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SCM

Configuration:

Continuous Re-

adaptation, Re-

alignment, Re-

agility

Decisions made by

Competitors:

A change in your basis of

competition: A new competitor has

emerged with a stronger

value proposition

Decisions made by you:

Decide to make a change in your scope of your

business: Offer new products or services

Target new markets or expand geographically

Thus, you need to expand your manufacturing capacity

Add new distribution capabilities

Develop new channels

Find new suppliers

Rethink your supply chain strategy

You need to change the type of service you offer to

increase market share

You want to compete in a new market that requires

faster delivery, greater flexibility, or higher quality.

Internal Rivalry

Any major change to your company’s basis of

competition should drive re-examination of your

supply chain strategy and business model

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Vision

Business



Partnership CRM


Adapt



Asset Networks

Agile: Lean, Flexible and Responsive


Change:

Change

Frequency of

change

Bargaining power

of suppliers Bargaining power

of Customers

Internal Rivalry

New entries threat

Substitutes threat

Operations

strategy

Marketing and

channels-mix

strategies

Mergers and acquisitions

DMAIC

Stay vigilant, keep continuous improvement

Asset networks (supply chain capabilities): System of activities make it difficult

to duplicate and thus improve competitive advantage.


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CVP/VC Production

Operations Resources

Partnership

CRM

Market

Distribution Target Segment

An

example of

alignment:

Freshness

Quality

Premium products

Express mail

Arrive faster and

fresher (quality)

Press to order

Organic product

supply

Ethical product

supply

Traceability

Consistency, reliability

Corporate social responsibility


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CVP/VC Production


Partnership

CRM

Market


Inventory:

Raw

materials

WIP FG

Producer’s lead time

in refiling inventory

Customer’s variance

in demand

Logistics lead time in

shipping the products

to the customers

Supplier’s lead

time

Safety stock

needed to

handle variance

in lead time and

demand 𝜎𝑑∙𝐿𝑇

Variation in

demand

WIP inventory is the most

controllable component of

inventory and is a function of the

company’s throughput time to

convert raw materials into

finished goods: I = TXR


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CVP/VC Production


Partnership

CRM

Market


Benefits

matching

operations

strategy:

Low

manufacturing

costs

Meeting

customer

demands

quickly

Customization Improved service

levels Reduced

inventory

MTS:

Standardized

products,

High volume

CTO: Variety

of products

MTO:

Customized

products,

infrequent

demand

Low

inventory

Wide range of

product options

Simplified

planning

(transforming

resources)

ETO: Complex

products to

meet unique

customer

needs

Responsive to

specific

customer

requirements


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CVP/VC Production


Partnership

CRM

Market


Channel

Mix

Operations

Structure:

Accounts volume

Profitability

Lower account turnover

Retention

Build loyalty

Repeat sales

Three network

models:

Global

Regional

Country

Customer service

strategy – Value-

added service

Tailor offerings to

customers’ specific

needs

CRM

Product

Life Cycle RBV

Better

understand

customers

Better

able to

segment

customers.

IT Systems – Order

capture, Order

fulfilment, and

invoicing must be

fast, consistent,

and trouble-free.

Real-time

monitoring

ABC / cost to serve


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CVP/VC Production


Partnership

CRM

Market


Operations

Structure:

Short fulfilment

time

Volatile market

demand

Long fulfilment

time More complex

engineering market

Process standardization

Efficiency-based KPIs Low-Price to attract Cost-sensitive buyers

Maintain share in a

community market.

New-revenue

generating services

Strong focus on

customers

Time to market

Time to volume

Customer-segment-

specific capabilities


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CVP/VC Production


Partnership

CRM

Market


Benefits

matching

operations

strategy:

Manufacturing

segment:

Key customer

requirements:

Reliability

Timeliness

Delivery directly

to assembly line

of the

customers

Reliability

Timeliness

Different market segments,

different supply chain design

Aligning with customer needs also means

identifying the particular requirements of

different market segments.

Optimize Front end

of the supply chain Optimize Back

end supply chain

Order management and

distribution


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CVP/VC Production


Partnership

CRM

Market


Category

Killers

Price

premium

Operations

Structure: Innovation

NPD

Time for NPD

Design chain

partnership

Co-participation

Unparalleled

Marketing

New Services

Gain First-move

advantage:

Speed

Volume

(Meet the

demand

created by

NPD) time

Innovation + Cost Performance is possible:

Shorter time to market

Higher revenue

Fewer markdowns

Logistics cost reduction


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CVP/VC Production


Partnership

CRM

Market


Ramp up

or down

production

or service

quickly

Manage

inventory

levels

Outsourcing

Strategy:

Build new products Reposition

themselves

in the

marketplace

Market

expansion

Ensure the supply chain configuration supports

competitive lead times (time)

Outsourced partners already

master product or process

technological expertise

Scale: Provide services more

cheaply

Scope: outsourcing allows

geographic expansion Outs

ourc

ed

part

ners

hip

str

ength

:


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CVP/VC Production


Partnership Target Segment

To outsource

or not:

Evaluation

dimensions

Your source of

differentiation

CRM

Market

Distribution

Your operating

scale

Your power

position: Supply-led

Bargaining

power of

suppliers

Brand-led

Channel-led

Logistics efficiency:

packaging

innovation and

flexibility

Shelf’s space

Clout with retailers

Bargaining power

of customers

Uniqueness of your operations

Supports competitive

customer lead time

CVP/VC

Scale matters

Scale is relative:

Segment

Focus

Consolidate

Partner to

leverage


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CVP/VC Production


Partnership

CRM

Market


Manufacturing flexibility Options to

reduce risks:

Low-cost

manufacturing

base closer to

target segment

Min. Distance

In-market

postponement:

CTO &

Packaging


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CVP/VC Production


Partnership

CRM

Market


Basis of

Competition: Innovation: Brand and unique technology

Cost: Cost-efficient operations leads to

lowest prices in the product category

Service: Superb service

Quality: safest, most reliable product

Time to market

Time to volume

Designed from

customer in

Tailored to

meet

customer-

specific needs

Supply chain excellence

and quality control

Traceability: Example:

Organic products, ethical

products principles

(deontology)

Bases of Competition

Intensity of Competition

Value-Curve (CVP)


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Supply Chain Management and OM in business model cc tan (2015)

Leadership & Management

Transcript of Supply Chain Management and OM in business model cc tan (2015)