A.

Artale

Supply Chain Management MBA247.1/EWMBA247.1

HAAS School of Business Supply Chain Management Syllabus

Professor: Time: Room: Office Hours: E-mail: Phone:

Angelo Artale Thursdays, 6-9:30PM C110 By appointment artale@haas.berkeley.edu 916 296-0497

Course Description Supply Chain Management is about the management of material and information flows in multi-stage production-distribution networks. Driven by fierce global competition and enabled by advanced information technology, many companies have taken initiatives to reduce costs and at the same time increase responsiveness to changes in the marketplace. This course will provide students with the knowledge and the tools necessary to develop, implement, and sustain strategies for managing supply chain issues. We will begin reviewing the basics of supply chain: Forecasting, Aggregate Planning, Inventory Management, Efficient Consumer Response, Postponement, Transportation and Network Design. We will focus on the analytical decision support tools (both models and applications) as well as on the organizational models that successfully allow companies to develop, implement and sustain supplier management and collaborative strategies. Emphasis will be given to understanding change management implications when executing supplier and collaborative strategies. Business case techniques for the adoption of tools for decision support, execution and implementation will be illustrated and used throughout the class. We will then cover some international as well as operational issues in supply chains. Particular relevance will be given on how to strategically think about Outsourcing. The course will end with the discussion of case studies on the competitive advantage of enterprises with an effective Collaboration program through Virtual Integration. Students will face real life situations during the entire course and will be requested to develop solutions to current issues. Guest speakers will share their experiences in supply chain management applications and consulting. This course will provide an excellent background to all consultants, general managers and corporate finance generalists. Those interested in brand management or channel management will find it complementary to their interests. Course Material Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations MBA247.1/EWMBA247.1 Course Reader (case studies and articles)

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Grading and Class Preparation Case studies discussion and submission: 35% - group preparation This is a case based class. This will account for 35 % of the grade. All cases must be prepared prior to coming to the class. Not for all cases a written submission is required. For those cases for which written submission is required, each case write-up is due in groups. Please keep group size to a maximum of five. Please read the short note that will be distributed prior to the discussion of the case and try to structure case reports accordingly. Class participation and contribution: 15% - individual preparation The entire class will benefit only if each of you contributes to the group discussion. For this reason, 15% of the grade will be for class participation and contribution on the newsgroup [to be set-up in Catalyst]. Homework problems assignment: 10% - individual preparation Exercises assignments will help you to become familiar with the more technical models and tools that we will learn during the course. 10% of the grade will be for the homework problems. Final exam: 15% - individual preparation The final exam will consist of a series of short conceptual questions that each of you will answer individually. The primary objective is for you to review all concepts taught in class one last time. The exam is open text (i.e. you are allowed to use any course material as well as your personal notes) and its weight is 15% of the grade. Project presentations: 25% - group or individual preparation Finally, 25% of the grade will be for a final project. Details of the project will be given on the first day of class. As most of the work is in groups, individual grades will take into account a peer review from each group member of other members in the group. It is extremely important and part of the honor code that each member of a group contributes to the case analysis by the group. If any individual has not contributed for a particular week, (s)he should not append his/her name to the case report but submit a separate report on their own. It will also be the groups responsibility to ensure that this happens. Only one written report will be due per group. However, as I have stressed, each member must contribute to the analysis leading to the report. Homework problem assignments that require individual preparation may be discussed in groups for clarification purposes, but each of you has to individually write and submit the solutions.

Missing a Class If you know that you will miss a class, you are required to notify me by e-mail as soon as you know it. There are no make-up classes. However students that miss a class for

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health reasons or important personal matters, may receive an opportunity to make up for the points lost. Use of computers and calculators You are encouraged to take your computer with you to class. Some classes, as noticed in the class schedule, require you to bring your computer in order to practice some of the models that will be presented. Course Outline and Schedule Please refer to the Glossary for a definition of Read, Prepare, Submission, Download, and Additional INTRODUCTION TO SUPPLY CHAIN MANAGEMENT Objective: Introduction and overview of the course Class 1 (August 29, 2002) Course Overview Read: o Supply Chain Basics (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 1-3) COMPETITIVE ADVANTAGE IN SUPPLY CHAINS Objective: Supply Chain Strategy Framework Prepare: o Kellogg case Seven Eleven Japan Class 2 (September 5, 2002) Submission: o Case Study: Halloran Metals HBSP # 683-062 PLANNING DEMAND AND SUPPLY IN A SUPPLY CHAIN Objective: The goal of this session is to stress the importance of planning in a supply chain and provide
basic tools that can be used when planning demand and supply.

Prepare: o Planning Demand and Supply in a Supply Chain (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 4-6) Additional: o Case Study: Specialty Packaging Corporation (A) and (B), Chapter 4 and Chapter 5

Class 3 (September 12, 2002) Submission:

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o Homework Problem: Mintendo Game Girl (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 6) MANAGING ECONOMY OF SCALE AND UNCERTAINTY IN SUPPLY CHAINS Objective: We will discuss the effects of economies of scale, volume discounts and short term discounts
on order sizes and thus inventory and flow times in the supply chain. We will then discuss the impact of uncertainty on inventory policies. We will continue with our discussion on Inventory Management to study impact of supply and demand uncertainty. We will try to characterize products by demand characteristics (highly uncertain to stable) and see how appropriate purchasing decisions can be made. In addition, we will introduce the powerful concept of risk pooling in managing inventory.

Prepare: o Inventory Management Risk Pooling (Readings Simchi-Levi, Kaminsky, Simchi-Levi, Designing and Managing the Supply Chain, Chapter 3, Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 7) o Safety Inventory (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 8)

Class 4 (September 19, 2002) Submission: o Homework Problem: Exercises 7.1, 7.2, 7.3 o Case Study: Managing Inventory at ALKO (Chapter 8) RESPONSIVE SUPPLY CHAINS: MASS CUSTOMIZATION Objective: Our ability to manage inventory effectively depends critically on uncertainty, supply lead
times, and product life cycles. Long supply lead times and short product lifecycles characterize fashion goods. Even in staple consumer goods, today's environment is characterized by explosion of variety. How to manage inventory / procurement in such settings. This is the primary focus of the next 3 sessions. We will start with studying supply chain designs appropriate for Mass Customization.

Prepare: o Mass Customization at Hewlett-Packard: The Power of Postponement, HBR, January 1997 o Teaching note: Postponement, Kellogg Graduate School of Management [This is not included in your reader] o Case Study: Hewlett-Packard DeskJet Printer Supply Chain (A) (Stanford Case) RESPONSIVE SUPPLY CHAINS: ACCURATE RESPONSE

Objective: We next consider fashions goods in the apparel industry and analyze appropriate sourcing
strategies in an international context. We will use the Sport Obermeyer case for introduction to some fundamental decision making tools under uncertainty.

Class 5 (September 26, 2002)

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Prepare: o Determining Optimal Level of Product Availability (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 9) Additional: o Coordination: An Overview, HBSP 9-696-001 Submission: o Project proposals

Class 6 (October 3, 2002) Submission: o Case Study: Sport Obermeyer, HBSP # 9-695-022 MANAGING TRANSPORTATION IN SUPPLY CHAIN Objective: We will discuss the domestic transportation industry and consider the different modes
available. We will correlate the link between transportation and inventory costs in the design of transportation networks. We will also consider different issues that are relevant when making transportation decisions. We will then consider some of the issues in facilities location in supply chain. Gianpaolo Callioni will then provide an overview of some of most recent trends in Supply Chain Management at HP.

Prepare: o Transportation in a Supply Chain (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 10)

Class 7 (October 10, 2002) Submission: o Case Study: Merloni Elettrodomestici SpA: The Transit Point Experiment, HBSP # 9-690-003 Guest Speaker: Gianpaolo Callioni, Director, Strategic Planning and Modeling, HP Corp. NETWORK DESIGN IN SUPPLY CHAINS Objective: We will now develop a framework for facility location decisions that allows for a multi-plant,
multi-warehouse network to supply a large and diverse customer base. Our objective will be to optimally structure the distribution network, taking into account cost and customer service factors. We will then cover the basics of financial valuation of supply chain decisions. We will conclude the discussion on location decisions within the supply chain with a case study exploring such decisions in an international setting. We will develop some notions of the value of flexibility.

Class 8 (October 17, 2002) Prepare: o Network Design (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 11) o Financial Evaluation of Supply Chain decisions (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 15) Submission:
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o Case study: Applichem (A) Class 9 (October 24, 2002) Submission: o Homework Problem: Exercises 15.1 and 15.3 OPERATIONAL ISSUES IN SUPPLY CHAINS Objective: After an introduction of framework on how strategically to think about outsourcing, you will
be asked to provide a recommendation for the selection of a hosting provider.

Read: o Article: Strategic Sourcing: To Make or not to Make, HBR, NovemberDecember, 1992 o Article: Turning negotiation into a corporate capability, HBR, 1999 Prepare: o Article: How to think strategically about outsourcing, HBSP, 2002 o Exercise: Selecting a hosting provider, HBSP # 601-171 OPERATIONAL ISSUES IN SUPPLY CHAINS

Objective: We will review the reasons for a company to establish a global presence (other than the need
to expand). We will answer why is beneficial for a company to have suppliers in multiple countries and investigate the reasons for different organizational structures, such as centralized vs. decentralized. We will then discuss the Levi-Strauss case and see how a company maintains its values when contractors operating within diverse cultures and political systems perform essential manufacturing processes. During the other half of this class, we will play the Beer Distribution Game to motivate the supply chain dynamics.

Class 10 (October 31, 2002) Prepare: o International Issues in Supply Chain Management (Simchi-Levi, Kaminsky, Simchi-Levi, Designing and Managing the Supply Chain, Chapter 7) o Case Study: Levi Strauss & Co.: Global Sourcing (A), HBSP # 395-127 Download: o The BeerNet Game, http://kaizen.kellogg.nwu.edu/BeerNet/ SUPPLY CHAIN COORDINATION Objective: Bill Patrizio will speak about the recent successes yielded in Strategic Sourcing and Supply
Chain at The Walt Disney Company. We will then recap the key results of BeerNet and begin to discuss the key concept of supply chain coordination. In the class, until now, we have developed the building blocks of supply chain performance. Synchronization of supply chain performance is, however, critical to leverage the drivers effectively. We will use the Barilla, SpA case to discuss dynamics in a more complex supply chain and explore some coordination mechanisms. We will conclude this module with a session on how to develop incentives for coordination.

Class 11 (November 7, 2002) Guest Speaker: Bill Patrizio, SVP Strategic Sourcing, The Walt Disney Company

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Prepare: o Coordinating a Supply Chain (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 13) o Kellogg note on Vendor Managed Inventories Submission: o Case Study: Barilla, SpA (A) (HBS Case 9-694-046) SUPPLY CHAIN COORDINATION: INCENTIVES

Objective: We will continue our discussion of supply chain coordination and focus on the role of
incentives.

Class 12 (November 14, 2002) Prepare: o Article: Aligning Incentives for Supply Chain Efficiency, HBSP # 600110 INFORMATION TECHNOLOGY AND E-BUSINESS IN SUPPLY CHAINS Objective: Introduction and Overview of the role that both IT and e-business play in supply chain
management. Pete Meindl will talk about how software is helping companies enhancing supply chain performance.

Prepare: o Information Technology in Supply Chain (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 12) Guest Speaker: Peter Meindl, Stanford University

Class 13 (November 21, 2002) Prepare: o Case Study: i2 Technologies, Inc. (HBS 9-699-042) o E-business and the Supply Chain (Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations, Chapter 14) Additional: o Kellogg note on Third Party Logistics o Article: Note on Logistics in the Information Age o Article: Aligning Supply Chain Strategies with Product Uncertainties, Hau Lee, CMR 230 [This is not included in your reader] Video: Supply Chain Management in the Internet Age by Hau Lee of Stanford University VIRTUAL INTEGRATION IN SUPPLY CHAINS Objective: We will study the Ford Motor Company case to see if the Dell structure is appropriate for
Ford and identify reasons why it may or may not be so.

Class 14 (December 5, 2002) Prepare:

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o The Power of Virtual Integration, An Interview with Dell Computers Michael Dell Submission: o Case Study: Ford Motor Co.: Supply Chain Strategy HBSP # 699-198 WRAP UP

Objective: Each team will present the findings of its project. Class 15 (December 12, 2002) Submission: o Project Presentations Final Exam (December 19, 2002)

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Below, I have listed the required readings and the submission of the homework exercises and of the case study write-ups. Please refer to the Glossary below for a definition of Read, Prepare, and Submission.
Class 1 2 3 4 Date Aug. 29 Sep. 5 Sep. 12 Sep. 19 Read/Prepare Read: Chapters 1 3 in C&M Prepare: Seven Eleven Japan Prepare: Chapter 4 - 6 in C&M Prepare: Chapter 7, 8 in C&M (Computer Required in class) Prepare: Mass Customization at HP Prepare: Teaching note: Postponement Prepare: HP DeskJet Printer Supply Chain Prepare: Chapter 9 in C&M (Computer Required in class) Prepare: Chapter 10 in C&M (Computer Required in class) Prepare : Merloni Elettrodomestici (Computer Required in class) Prepare: Chapter 11, 15 in C&M (Computer Required in class) Read: Strategic Sourcing: To make or not to make Read: Turning negotiation into a corporate capability Prepare: How to think strategically about outsourcing Prepare: Exercise: Selecting a hosting provider Prepare: International Issues in Supply Chain Management Prepare: Levi Strauss: Global Sourcing Prepare: Chapter 13 in C&M (Computer Required in class) Prepare: Teaching Note: VMI Prepare: Aligning incentives for supply chain efficiency Prepare: Chapter 12 in C&M Prepare: Chapter 14 in C&M Prepare: I2 Technologies Prepare: The power of virtual integration Project Presentations FINAL EXAM Submission

Halloran Metals Mintendo Game Girl ALKO Incorporated Exercises: 7.1-7.3 Project proposals

5 6 7 8 9

Sep. 26 Oct. 3 Oct. 10 Oct. 17 Oct. 24

Sport Obermeyer
Merloni Elettrodomestici Applichem (A) Exercises: 15.1, 15.3

10

Oct. 31

11

Nov. 7

Barilla

12

Nov. 14

13 14 15 16

Nov. 21 Dec. 5 Dec. 12 Dec. 19

Ford Motor Project Report

Abbreviations: C&M: Chopra and Meindl, Supply Chain Management: Strategy, Planning and Operations

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Guest Speakers (To be completed) Gianpaolo Callioni is the Director of Strategic Planning and Modeling (SPaM) at Hewlett-Packard. His organization improves the quality of HPs strategic decision making through the use of quantitative modeling and analysis in areas including supply chain management, forecasting, planning, risk management, warranty and product design. The team has proven its value over time, catalyzing significant savings and breakthroughs in business processes and methodologies over the last decade. He holds a B.S. in Business Administration and Economics from Bocconi University, Milan, Italy. Gianpaolo will discuss some of the most recent trends in supply chain management at HP. Bill Patrizio is Senior Vice-President of Strategic Sourcing and Procurement at The Walt Disney Company. Bill has worldwide responsibility for strategic sourcing, procurement and supply management across the Company. He leads the Company in establishing and executing procurement and supply strategies that maximize value through association with high quality, low cost supply partners and by leveraging the Companys position in the marketplace. He leads and supports the Company-wide efforts to improve supply chain performance, visibility and total cost. His team will develop procurement technology solutions that improve productivity and generate efficiencies and will take a leadership role in evaluating outsourcing opportunities across the company. Prior to joining The Walt Disney Company, Bill was senior vice president and general manager of Chromium Graphics, Inc., and vice president, reengineering and change management, at Universal Studios. Prior to joining Universal Studios, Bill was an executive with Joseph Seagrams & Sons in New York where he held a variety of marketing and sales management positions, including vice president of marketing and vice president of sales. He also participated in Seagrams worldwide reengineering effort. He began his career with the Kellogg Company in sales and account management. Bill received an M.B.A. and a B.B.A. from Iona College in New Rochelle, New York. Bill will talk about the Supply Chain and Procurement challenges faced by Entertainment businesses at The Walt Disney Company focusing in particular on the Theme and Parks as well as on the Studios segment. Peter Meindl focuses on supply chain management and the enterprise software industry. He is currently pursuing his Ph.D. in Operations, Information, and Technology at Stanford University. Previously, he was Director of Corporate Strategy for i2 Technologies, a supply chain software company, and spent 5 years as a strategy consultant with the Boston Consulting Group and Mercer Management Consulting. He is the co-author with Sunil Chopra of the book Supply Chain Management: Strategy, Planning, and Operation. Peter holds an MBA from the Kellogg School at Northwestern University and an MS in Operations Research, a BS in Industrial Engineering, and a BA in Political Science from Stanford University.
Peter will talk about the most recent trends in supply chain software and e-business.

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Project Guidelines This is a project that can be done individually or in groups (It would be best to use the same groups that you are using for class assignments. However this is not a requirement). There are three possible outcomes from a project report, as follows: The analysis of an existing logistics process and the suggestion for any improvements that need to be made. Examples include a study of the distribution system and store deliveries at Home Depot, design of a logistics system for a manufacturer of DVDs, and an analysis of intermodal movement for a railroad. The study of logistics practices in industry from the point of describing risks, benefits, best practices along with industry examples of each. The identification of a business opportunity (for example selling furniture on line) involving a product and build a business plan with a focus on supply chain issues. The goal is to identify the business opportunity and design the ideal supply chain for it. The project should include implementation details.

My expected outline for the three types of projects are discussed below: The analysis of an existing logistics process and suggestions for improvement should not be a detailed description of everything you have done but a specific set of observations and recommendations. It should begin with an executive summary no longer than 250 words. All details are to be put in an appendix in the form of exhibits, tables, etc. The general guidelines for the project are as follows: 1. 2. 3. 4. Executive summary. Define the process and the context (business unit) in which it operates. What is the strategy / market of the business unit? What does this imply in terms of the logistics process you are studying? What must this process be able to do particularly well in terms of cost, time, quality, and flexibility? The headings mentioned here are broad. You are expected to identify specific dimensions along which the process is expected to do particularly well. Describe the current process structure in terms of information, inventory, transportation, and location. Discuss the process capabilities, given the current structure, in terms of the specific dimensions identified by you in 4. Discuss existing problems and weaknesses in the current process. What additional capabilities does the process need to develop? How should the process be restructured to develop these capabilities? Discuss why the changes suggested by you will have the desired effect along the key dimensions identified by you. Discuss how the suggested changes should be implemented with a time line. Explain any resistance you may face in implementing the changes.

5. 6. 7. 8.

9.

Please note that these are general guidelines. I am not looking for a project report with nine points in the sequence listed above. I have listed the points that I feel are

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important in most reports. Please feel free to add to or alter the above list as best fits your project. The study of logistics practices in industry . The objective here is to study logistics practices in industry such as: E-commerce and its impact on logistics and supply chain in an industry or company EDI Systems including other supporting systems that it makes possible, e.g. CAO (computer assisted ordering systems) etc. Coding and Scanning Technologies (Bar coding, SCM, etc.) Third party logistics Warehouse management systems Warehouse design and management

Please do not restrict yourself to the above list. It is meant simply as a starting point. In each report I expect the following: 1. A description of the logistical practice including its key elements and its role in the overall supply chain. 2. Major benefits of the practice. 3. Major risks/cost of the practice. 4. Key issues in designing and implementing the practice. 5. Which companies is this practice ideally suited for? Which companies may this not be suitable for? 6. Examples of companies that are successfully using the practice, including best practices. 7. Examples of companies that have been unsuccessful in their implementation of the practice and possible reasons. Once again, please do not feel bound by the above structure. It is simply meant to help you get started. The identification of a business opportunity requires building a business plan with a focus on product. The objective of this report is to identify a business opportunity involving products where supply chain issues are significant. This could be done for a particular company or an industry in general. The business plan should detail the supply chain opportunity and how it will help the business position itself strategically. The report should also detail implementation issues.

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Glossary Read: Means the readings /chapters are required reading for the course. However, you are not required to read them before class. Prepare : You are expected to read the material listed under this heading (case / readings) and come prepared to class for discussion. If it is a case, then read the case and prepare the questions for discussion. If it is a reading / book chapters, etc., then material in them will be used for class discussion. Furthermore, you may be asked to post your thoughts on specific questions on the group discussion board. Submission: You are expected to prepare the material for submission. Please bring your write-up and submit it at the beginning of class. Download: Download any software (spreadsheets, etc.) to prepare for class / submissions. Additional: This includes interesting articles, cases or links to relevant web sites, and software for downloads. This material is optional and is not required to complete this course. However, they do enhance your understanding of the material in class.

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