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Instruction :

1. A Minor Assignment, to be submitted by the end of week 6 (10%). Submit the solutions/answers to the following Topic activities: Topic 1: Short Answer Questions (SAQs) 1 and 7 Topic 2: SAQs 3 and 5 Topic 3: SAQs 1, 2 and 5 Topic 4: SAQs 4 and Problem 2

You can submit your solutions as separate documents or as one document. Make sure that you include an assignment cover sheet. Upload your documents in the area below. Available from: Monday, 6 June 2011, 07:00 AM Due date: Sunday, 28 August 2011, 11:55 PM
Questions :

Topic 1
1. Explain the three decision phases (categories) that must be made in a successful supply chain. 7. In what way do supply chain flows affect the success or failure of a firm like Amazon? List two supply chain decisions that have a significant impact on supply chain profitability.

Topic 2
3. List and discuss the abilities/factors that should be considered in supply chain responsiveness.

5. Consider a high-end department store: How would you characterize its competitive strategy? What are the stores likely characteristics in terms of customer and supply chain uncertainty? Where would you place the demand faced by the store on the implied demand uncertainty spectrum? Why? What level of responsiveness would be most appropriate its supply chain? What should the supply chain be able to do particularly well?

Topic 3
1. Explain the measures of customer service that are influenced by the structure of the distribution network. 2. Explain how the design of a distribution network affects the cost of the four supply chain drivers. 5. A distributor has heard that one of the major manufacturers it buys from is considering going direct to the consumer. What can the distributor do about this? What advantages can they offer the manufacturer that the manufacturer is unlikely to be able to reproduce?

Topic 4
4. Consider a firm like Dell with very few production facilities worldwide. List the pros and cons of this approach and why it may or may not be suitable for the computer industry.

Problem 2 : Attempt the following Problems ( answers provided below)

Answer :

Topic 1
2. Explain the three decision phases (categories) that must be made in a successful supply chain.
Successful supply chain management requires many decisions relating to the flow of information, products and funds, depending on the frequency of each decision and the time framne over which a decision phase has an impact. The development and operations of a supply chain maybe devided into 3 categories or phases :

1. Supply Chain Strategy and Design 2. Supply Chain Planning 3. Supply Chain Operation

1. Supply Chain Strategy and Design

During this phase a company decides how to structure the supply chain over the next several years. It decides what the chains configuration should be, how resources will be allocated, and what process each stage will perform. An organization must ensure that the supply chain design and configuration supports its strategic objectives and that it increases the supply chain profitability. Strategic decisions made by the company include :

Whether to perform a supply chain function in house or outsource The location and the capacities of production and warehousing facilities The product to be made or stored at various locations The modes of transportation to be made available along different shipping legs The type of information system to be used

2. Supply Chain Planning

For decisions made during this phase, the time frame considered is a quarter to a year. In this phase, the supply chains configuration determined in the strategic phase is already fixed. This configuration establishes constraint within which planning must be done. Companies start the planning phase with a forecast for the coming year of demand in different markets. Planning includes decisions regarding :

Location and market identification

Demand forecasting & aggregate planning Subcontracting and or back up location Inventory policies to be followed Timing and size of marketing promotions

3. Supply Chain Operation

The time horizon here is weekly or daily, and during this phase companies make decisions regarding individual customer orders. At the operational level, supply chain configuration is considered fixed and planning policies are already defined. The goal of supply chain operation is to handle incoming customer orders in the best possible manner. During this phase, organizations :

Allocate orders to inventory or production Set order due dates Generate warehouse pick lists Allocate shipment Set delivery schedules Place replenishment orders under time horizon of weekly or daily

7.In what way do supply chain flows affect the success or failure of a firm like Amazon? List two supply chain decisions that have a significant impact on supply chain profitability. The success or failure of a company like Amazon is decided by the effective function of its supply chain. The flow of products from publisher to distributors to customer must be rapid and reliable in order to satisfy customers. The flow of information back through the supply chain allows all members to coordinate efforts. The flow of money allows all sully chain member to coordinate efforts, The flow of money allows all supply chain members to maintain operations. Supply chain profitability is influenced by sourcing, promotion, and fulfillment decisions.

The success or failure of a company like Amazon is decided by the effective function of its supply chain. The flow of products from publishers to distributors to customers must be rapid and reliable in order to satisfy customers. The flow of information, products and fund, depending on the frequency of each decision and the time frame over which a decisions phase has an impact. In a firm like Amazon case, the flow of information, products are the most important factors that need to be considered, because it is an online website business or e-commerce, the customer likely to pay the products by upfront money through credit card or pay pal most likely, and willing to wait for the product. Therefore the delivery and the availability of the product become very important as a measure of the customer satisfaction.

The two supply chain decisions below t have a significant impact on supply chain profitability

Supply Chain Strategy and Design

During this phase a company decides how to structure the supply chain over the next several years. It decides what the chains configuration should be, how resources will be allocated, and what process each stage will perform. An organization must ensure that the supply chain design and configuration supports its strategic objectives and that it increases the supply chain profitability. Strategic decisions made by the company include :

Whether to perform a supply chain function in house or outsource The location and the capacities of production and warehousing facilities The product to be made or stored at various locations The modes of transportation to be made available along different shipping legs The type of information system to be used

Supply Chain Planning

For decisions made during this phase, the time frame considered is a quarter to a year. In this phase, the supply chains configuration determined in the strategic phase is already fixed. This configuration establishes constraint within which planning must be done. Companies start the planning phase with a forecast for the coming year of demand in different markets. Planning includes decisions regarding :

Location and market identification Demand forecasting & aggregate planning Subcontracting and or back up location Inventory policies to be followed Timing and size of marketing promotions

Topic 2
3. List and discuss the abilities/factors that should be considered in supply chain responsiveness.
Understanding supply chain is to understand how the firm can best meet demand in an uncertain environment. Understanding the supply chain capabilities is important for a company to understand what its supply chain is designed to do well, since each type of supply chain is designed to perform different task depending on what uncertainties they have. Creating strategic fit is all about creating a supply chain strategy that best meets the demand a company has targeted given the uncertainty it faces. Supply chain performance can be determined by its :

Responsiveness : comes at high cost (low efficiency) Cost efficiency : comes at low responsiveness Respond to wide ranges of quantities demanded

Supply chain responsiveness includes a supply chains ability to do the following :

Meet short lead times Handle a large variety of products Build highly innovative products Meet a very high service level Handle supply uncertainty To respond to a wider range of quantities, capacity must be increased, and this leads to a cost increase. Supply chain efficiency is the cost of making and delivering a product to the customer. For every strategic choice to increase responsiveness, there are additional cost that lower efficiency.

Responsiveness, however, comes at a cost for instance:

5.Consider a high-end department store: How would you characterize its competitive strategy? What are the stores likely characteristics in terms of customer and supply chain uncertainty? Where would you place the demand faced by the store on the implied demand uncertainty spectrum? Why? What level of responsiveness would be most appropriate its supply chain? What should the supply chain be able to do particularly well?

How would you characterize its competitive strategy?

In this case I will characterize David Jones as an example of high-end department store that targeting middle to high class earning customer as their main target. Its competitive strategy is built around providing the customer with convenience, availability, and responsiveness. With this focus on responsiveness David Jones doe not compete based on low price. They also sell the product with both a catalog and a webs site, and off course a luxury convenience store at the shopping mall in the strategic suburb .

Factors that contribute to competitive strategy in Davis Jones case :

Level of quality is aiming from the middle to high class product Price in not a first issue, as they try to sell more expensive and exclusive products

Standard product or customization is more feasible today because of advances in manufacturing technologies that have improved sellers manufacturing flexibility. We first develop a model of product customization and flexible pricing to incorporate the salient roles of the Internet and flexible manufacturing technologies in reducing the costs of designing and producing tailored consumer goods. We show how a monopoly seller may earn the highest profits by producing both standard and custom products and can raise prices for both types of products as customization and information collection technologies improve. Delivery time also crucial as David Jones promises within a week delivery for online buyer to their websites

Customer Support should be reliable and easy to handle complaint and return ability of the products.

What are the stores likely characteristics in terms of customer and supply chain uncertainty?
To understanding supply chain is to understand how the firm can best meet demand in an uncertain environment. Supply chain performances can be determined by its : Responsiveness :comes at high cost (low efficiency) Cost efficiency: come at low responsiveness

At this David Jones case, I think we can characteristics the store in the area of Somewhat efficient, with the order fulfillment lead time of several weeks.

Where would you place the demand faced by the store on the implied demand uncertainty spectrum? Why?
Implied demand uncertainty is demand uncertainty due to the portion of demand that the supply chain is targeting, not the entire demand. A high-end department store chain such as David Jones falls on the high end of the implied demand uncertainty scale. The fashion items that Davis Jones stocks have extremely high product margin, high forecast errors, and stockout rates, and once the season is over, these items are sold at deep discounts at their David Jones Rack outlets stores.

The medium uncertainty is the right one for this David Jones case. That is because the products that is sold at David Jones, are mostly predictable

supply and uncertain demand, or uncertain supply and predictable demand or somewhat uncertain supply and demand.

What level of responsiveness would be most appropriate its supply chain?

Supply chain responsivenee takes many forms, including the ability to respond to a wide range of quantities , meet short lead times, handle a large variety of products, build innovative products, meet a high services level, and handle supply uncertainty, The David Jones supply chain must be highly responsive, and service level; they are effective in supplying well-heeled customers with merchandise and their return policy is good. The most appropriate for its supply chain would be somewhat efficient within several weeks of lead time. What should the supply chain be able to do particularly well? It should achieve strategic fit which is the alignment of goals of companys competitive and supply chain strategies. Key success of value chain (strategic fit) : -

The competitive strategy and all fuction must fit together All functional processes and resources must appropriately structured Design of supply chain must align with supply chain strategy

Topic 3
1. Explain the measures of customer service that are influenced by the structure of the distribution network.
Factors influencing distribution network design :

At the highest level, performance of a distribution network should be evaluated along two dimensions : 1. Customer need that are met 2. Cost of meeting customer needs Thus, a firm must evaluate the impact on customer service and cost as it compares different distribution network options. The customer that are met influence the company's revenues, which along with cost decide the profitability of the delivery network. Below those measures that are influenced by the stucture of the distribution network. These include : Response time Product variety Product availability

Customer experience Time to market Order visibility Returnability

Response time is the amount of time it takes for for a customer to receive an order. Product variety is the number of different product/configuration that are offered by the distribution network. Product availability is the probability of having a product in stock when a customer order arrives. Customer experience includes the ease with which customers can place and receive order as well as the extent to which this experience is customized. Time to market is the time it takes to bring a new product to the market. Order visibility is the ability of customer to track their order from placement to delivery. Return ability is the ease with which a customer can return unsatisfactory merchandise and the ability of the network to handle such returns. These are the supply chain costs or the costs of supply drivers : Inventories Transportation Facilities and handling Information

2. Explain how the design of a distribution network affects the cost of the four supply chain drivers. Distribution network can be classified into 4 basic configurations : 1.Manufacturer storage with direct shipping 2.Distributor storage with carrier delivery 3.Manufacturer/distributors storage with customer pick up at pick up points 4.Retail storage with customer pick up at retail stores

Below strength and weaknesses that affecting the cost of the supply chain drivers 1) Manufacturer Storage with Direct Shipping Strengths : Low inventory cost Low facility cost High level of variety High level of product availability Good customer experience Fast time to market

Weaknesses : High Transportation cost Significant investment in information infrastructure required Slow response time Difficulty in tracking orders Difficulty in handling returns

2) Distributor Storage with Carrier Delivery Strengths : Low transportation cost Less complex information and infrastructure Fast response time Good customer experience Fast time to market Ease in tracking order Ease in handling return

Weaknesses : High inventory cost High facility cost Low level of variety Low level of product availability due to cost

3) Distributors Storage with Customer Pick up Strengths : Low inventory cost Low transportation cost Fast response time High level of variety High level of product availability Fast time to market Ease in handling returns

Weaknesses : High facility cost Significant investment in information infrastructure required Low customer experience Difficulty in tracking orders

4) Retail Storage with Customer Pickup Strengths : Low transportation cost Fast response time Fast time to market Ease in handling returns Weaknesses : High inventory cost High facility cost Investment in information infrastructure required Low product variety Low product availability

5.A distributor has heard that one of the major manufacturers it buys from is considering going direct to the consumer. What can the distributor do about this? What advantages can they offer the manufacturer that the manufacturer is unlikely to be able to reproduce? The two supply network designs that the distributor can propose to counter the manufacturers proposal are the distributor storage with package carrier delivery and the distributor storage with last mile delivery. Both of these counter-proposal offer higher order visibility for the customer while having simpler information infrastructure than with manufacturer storage. The response time for both is excellent, and the customer experience is also superior to the direct model. If the manufacturer is trying to provide excellent customer service, the increased cost in transportation and potentially higher levels of inventory maybe acceptable tradeoffs.

Topic 4
4.Consider a firm like Dell with very few production facilities worldwide. List the pros and cons of this approach and why it may or may not be suitable for the computer industry.

The advantage for Dells network design is lower facility costs; they can locate in just enough countries to avoid tariff and mitigate some of their exchange rate and demand risk. The disadvantage for Dell is the lack of responsiveness this adds to their system. A customer has no expectation of zero flow time, so they know as they enter the transaction that they must wait for their PC. Shipping from one of the production facilities add to the delay, which is highly visible on Dells or the package carriers web site. The shipping cost might also be a concern for some customers, but the value to shipping cost ratio is so high that these cost seem like small potatoes in comparison to the total invoice.