Chapter # 3 SC DRIVERS & MATRICS 1-Logistical Drivers Facilities:- (Locations) Inventory:Transportation:-

2-Corss-Functional Drivers Information Sourcing Pricing

SC Decision-Making Framework (Check Fig. 3.1 Page 63) FACILITIES Bases of Selection of Facility Location Capacity Flexibility Dedication Utilization Cycle of Production time Efficiency Product Variety Other customers Set Up Time Break up Time Ave. Production Batch Size Production Service Level Quality Overall Trade Off Responsiveness VS Efficiency INVENTORY Management of Inventory to drive SC performance Major Inventory Decisions Cycle Inventory Safety Inventory Seasonal Inventory

 Level of Product Availability Other Inventory Related Matrix Average Inventory Over Average Inventory Replenishment Batch Size Average Safety Inventory Seasonal Inventory Fill Rate Fraction Time out stock Overall Trade Off Responsiveness VS Efficiency TRANSPORTATION Transportation plays a major role on responsiveness and efficiency. Faster Transportation has higher responsiveness but lower efficiency Role of Transportation in Competitive Strategy depends upon target customer. Other factors involves in Transportation Decision Transportation Net Work of Routes Direct Supply or Consolidation Individual Orders or Full Load Truck Lead Time Inbound Cost Outbound Cost Outbound Shipment Size Outbound transportation cost per shipment Transportation by each Mode

Overall Trade Off Responsiveness VS Efficiency INFORMATION Role in the Sc 1. Information connects and coordinates all the stages of SC to generate maximum profitability of SC. 2. Information has a very crucial role in daily operation at each SC Level. Role in Competitive Strategy 1-For Efficiency 2-For Better Responsiveness Factors Involved in Information Decision Supply/Production Base on Push or Pull (Detailed/Actual) Sharing of Information Sophistication of Information Techniques( High Tech or Low Tech) Information Technologies

1-EDI 2-Internet-Web Based information 3-Enterprise Resource Planning (ERP) System for tracking and global visibility 4-SCM software to interpret ERP information 5-Radio Frequency Identification Information-Related Metrics Forecasting Frequency of Updating forecasting Prediction of Uncertainty Seasonal Factors Variance from Plan Ratio of Demand Variability to order variability.

Sourcing Process required to purchase goods & Services Decisions 1In-house or Outsourcing 2Single or Multi Source 3Role of Each Source 4Pre-Qualification Standards 5Performance Standards 6Negotiating of Contract 7Placement of Order 8Delivery of Order Role of Sourcing in Competitive Strategy Efficiency VS Responsiveness Components of Sourcing 123In-house or Outsourcing Suppliers Selection Procurement

Sourcing-Related Metrics 1-Terms 2-Purchase Price 3-Quantity Discount 4-Order quantity 5-Deliveries Schedules 6-Supply Quantities 7-Supply Lead Time PRICING

Pricing is the process in which a firm decides how much to charge customers for its goods & services. Pricing is one of the most significant factors which affect the level & type of demand that the SC faces. Also has very important role in completive strategy formulation. Components of Pricing Decisions 1-Economies of Scale 2-Everyday Low Price Vs High Price 3-Fixed Price VS Menu Pricing Price-Related Metrics Profit Margin Terms given Incremental fixed cost per order Average Sale Price Average Order size Range of Sale Price Range of periodic sales

OBSTACLES TO ACHIEVING STRATEGIC FIT Larger Product Line Shorter Product Life Cycle More Demanding Customers Fragmentation of SC ownership Globalization Difficulty executing new strategies ( Skillful Executors)