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Q: 1 Why Integration among three macro processes- CRM, ISCM and SRM is crucial for successful supply chain

Answer: Customer relationship management (CRM) is a widely-implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments. Measuring and valuing customer relationships is critical to implementing this strategy Internal Supply Chain Management (ISCM) The primary objective is to visualize activity and event spawn during work flow and offers panoramic view of upstream and downstream activities. It constitutes inbound, outbound and production operations, and can be segmented into Raw material, work in process and finished goods with their intrinsic operations. Supplier Relationship Management (SRM) is about developing two-way, mutually beneficial relationships with your most strategic supply partners that deliver greater levels of innovation and competitive advantage than could be achieved by operating independently. Supplier SRM Source Negotiate Buy Design Collaboration Supply Collaboration Firm ISCM Strategic Planning Demand Planning Supply Planning Fulfillment Field Service Customer CRM Market Price Sell Call Center Order Management

Figure: Supply Chain Macro Processes In a macro process, all 3 supply chain management processes needs to be integrated with each other. Because at first cycle, in the procurement cycle, the relationship with supplier is really important and depending one success of this cycle, then come the internal supply chain management where the most crucial thing is to manufacture the product and make the product available in the retails

network via distributors. When customer buy/consume the products, that initiates the customer relationship management and as long the customer consume the product or regular buy the product , the better relationship can be maintained with the customers, the more revenue earns by the company. So, when in success of a Macro process, all 3 supply chain management process is important and they are integrated to each other.

Q: 2 A supply chain is a sequence of processes and flows that take place within and between different stages and combine to fill a customer need for a product. Justify the statement with example.
Answer: There are two different ways to view the processes performed in a supply chain. 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of a supply chain. 2. Push/Pull View: The processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders. Cycle View of Supply Chain Processes: All Supply chain processes can be broken down into the following four process cycles: Customer Order Cycle Replenishment Cycle Manufacturing Cycle Procurement Cycle

Each cycle occurs at the interface between two successive stages of the supply chain. The five stages thus result in four supply chain process cycles. Not every supply chain will have all four cycles clearly separated. For example, a grocery supply chain in which retailer stocks finished-goods inventories and places replenishment orders with a distributor is likely to have all four cycles separated. Dell, in contrast, sells directly to customers, thus bypassing the retailer & distributor.

Fig.: Supply Chain Process Cycles A cycle view of the supply chain clearly defines the processes involved and the owners of each process. A cycle view of the supply chain is very useful when considering operational decisions because it clearly specifies the roles of each member of the supply chain. The detailed process description of a supply chain in the cycle view forces a supply chain designer to consider the infrastructure required to support these processes. The cycle view is useful when setting up information systems to support supply chain operations. Push/Pull View of Supply Chain Processes All processes in a supply chain fall into one of two categories depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order. With push processes, execution is initiated in anticipation of customer orders. Therefore, at the time of execution of a pull process, customer demand is known with certainty, whereas at the time of execution of a push process, demand is not known and must be forecast. Pull processes may also be referred to as reactive processes because they react to customer demand. Push processes may also be referred to as speculative processes because they respond to speculated (or forecasted) rather than actual demand. The push/pull boundary in a supply chain separates push processes from pull processes as shown in the below figure. Push processes operate in an uncertain environment because customer demand is not yet known. Pull processes operate in an environment in which customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase. A push/pull view of the supply chain is very useful when considering strategic decisions relating to supply chain design. The goal is to identify an appropriate push/pull boundary such that the supply chain can match supply and demand effectively.

Fig.: Push/Pull view of the supply chain We can compare a make-to-stock environment like that of L.L.Bean and a build-toorder environment like that of Dell to compare the push/pull view and the cycle view. L.L.Bean executes all processes in the customer order cycle after the customer arrives. All processes that are part of the customer order cycle are thus pull processes. Order fulfillment takes place from product in inventory that is built up in anticipation of customer orders. The goal of the replenishment cycle is to ensure product availability when a customer order arrives. All processes in the replenishment cycle are performed in anticipation of demand and are thus push processes. The same holds true for processes in the manufacturing and procurement cycle. In fact, raw material such as fabric is often purchased six to nine months before customer demand is expected. Manufacturing itself begins three to six months before the point of sale. The processes in the L.L.Bean supply chain break up into pull and push processes. The situation is different for a build-to-order computer manufacturer like Dell. Dell does not sell through a reseller or distributor but directly to the consumer. Demand is not filled from finished-product inventory, but from production. The arrival of a customer order triggers production of the product. The manufacturing cycle is thus part of the customer order fulfillment process in the customer order cycle. There are effectively only two cycles in Dell supply chain: (1) a customer order and manufacturing cycle and (2) a procurement cycle. All processes in the customer order and manufacturing cycle at Dell are thus classified as pull processes because they are initiated by customer arrival. Dell, however, does not place component orders in response to a customer order. Inventory is replenished in anticipation of customer demand. All processes in the procurement cycle for Dell are thus classified as push processes, because they are in response to a forecast. The processes in the Dell supply chain break up into pull and push processes.

So, A supply chain is a sequence of processes and flows that take place within and between different stages and combine to fill a customer need for a product this statement is highly justified with above examples.

Q: 3. Anderson Windows, a major manufacturer of residential wood windows located in Bayport Minnesota, has invested in an information system that enables the company to bring customized products to the market rapidly. This system, called Windows of Knowledge allows distributors and customers to design windows to custom fit their needs. User can select from a library of over 50,000 components that can be combined in any number of ways. The system immediately gives the customer price quotes and automatically sends the order to the factory if the customer decides to buy. This information investment not only gives the customer a much wider variety of products, it allows Anderson to be much more responsive to the customer, as it gets customers order to the factory as soon as the order is placed. Analyze the above situation and explain the supply chain drivers that successfully used by Anderson Windows to be highly responsive to their customer orders.
Answer: A company can improve supply chain performance in terms of responsiveness and efficiency by examining the logistics and cross-functional drivers of supply chain performance: facilities, inventory, transportation, information, sourcing & pricing. These drivers interact with each other to determine the supply chains performance in terms of responsiveness & efficiency. 1. Facilities: Facilities are the actual physical locations in the supply chain network where product is stored, assembled or fabricated. The two major types of facilities are production sites and storage sites. Decisions regarding the role, location, capacity and flexibility of facilities have a significant impact on the supply chains performance. 2. Inventory: Inventory encompasses all raw materials, work in process, and finished goods within a supply chain. Changing inventory policies can dramatically alter the supply chains efficiency & responsiveness. A large inventory increases the retailers cost, thereby, making it less efficient. Reducing inventory makes the retailer more efficient but hurts its responsiveness. 3. Transportation: Transportation entails moving inventory from point to point in the supply chain. Transportation can take the form of many combinations of modes and routes, each with its own performance characteristics. Transportation choices have a large impact on supply chain responsiveness and efficiency.

4. Information: Information consists of data and analysis concerning facilities, inventory, transportation, costs, prices, and customers throughout the supply chain. Information is potentially the biggest driver of performance in the supply chain because it directly affects each of the other drivers. Information presents management with the opportunity to make supply chains more responsive and more efficient. 5. Sourcing: Sourcing is the choice of who will perform a particular supply chain activity such as production, storage, transportation, or the management of information. At the strategic level, these decisions determine what functions a firm performs and what functions the firm outsources. Sourcing decisions affect both the responsiveness and efficiency of a supply chain. 6. Pricing: Pricing determines how much a firm will charge for goods & services that it makes available in the supply chain. Pricing affects the behavior of the buyer of the good or service, thus affecting supply chain performance.

Competitive Strategy Supply Chain Strategy Efficiency Supply chain structure Logistical Drivers Facilities Inventory Transportation Responsiveness


Sourcing Cross Functional Drivers


Fig.: Supply Chain Decision-Making Framework Among the above discussed supply chain drivers, Anderson Windows used Information driver to be highly responsive to the customer needs. And information deeply affects every part of the supply chain.

1. Information serves as the connection between various stages (distributor & customer in this case) of a supply chain, allowing them to coordinate and maximize total supply chain profitability. 2. Information is also crucial to the daily operations of each stage (production scheduling, inventory levels) in a supply chain. Accurate information can help a firm improve efficiency by decreasing inventory and transportation costs. Accurate information can improve responsiveness by helping a supply chain better match supply & demand which is the case here for Windows.

Q: 4 sells books, music and other items over the Internet and is one of the pioneers of consumer e-business. Amazon, based in Seattle, started by filling all orders using books purchased from a distributor in response to customer orders. This practice differs from that of a traditional bookstore, which usually purchases directly publishers and stocks books in anticipation of customer orders. Today, Amazon has six warehouses where it holds inventory. Amazon stocks best-selling books, though it still gets other titles from distributors or publishers. It uses the U.S. Postal service and other package carriers Such as UPS and FedEx to send books to customers. Amazon has continued to expand the set of products that it sells online. Besides books and music, Amazon has added many product categories such as toys, apparel, electronics, jewellery and shoes. After several years of losses, Amazon has been profitable since 2003. How do the facility decision and competitive strategy affect the performance of What factor should take into account when making this decision?
Answer: sells books and other items over the internet and as thus, takes competitive advantages by giving the customers easy access to information about products or services without traveling to stores to inspect products and compare prices. In the offline market researching product offerings can be extremely expensive and time consuming. As a result, consumers rely on product suppliers and retailers to aid them in the search, and the suppliers and retailers take advantage of this situation by charging higher prices.

Amazon .com takes in to consideration the place strategy to gain competitive advantage over the competitors. The place aspects of the marketing mix are closely related to the distribution and delivery of products or services. The Internet and its associated application software have significantly changed the way companies products or services are delivered by reducing transaction and distribution costs. One way for Amazon .com to differentiate their products from rival companies is faster and more efficient delivery of products to their customers. The Internet allows companies to jump over parts of the traditional supply channel. Amazon .com does not rely on wholesalers and retailers to deliver their products to consumers. Instead they contract with third-party providers such as FedEx and UPS, which provide fast, efficient delivery because they have superior logistical expertise and economies of scale in distribution (Bakos 1998). Delivery providers such as UPS also have programs to set up e-commerce sites for businesses that ship with them. Most important, Amazon.Com takes recourse to pull process instead of Push process (in anticipation of customer order). This practice differs from that of a traditional bookstore, which usually purchases directly publishers and stocks books in anticipation of customer orders. Along with many other factors, Amazon probably would have looked into these above mentioned factors at their initial stage.

Q: 5 A speciality chemical company is considering expanding its operations into Brazil, where five companies dominate the consumption of speciality chemicals. What sort of distribution networks should the company utilize?
Answer Distribution refers to the steps taken to move and store a product from the supplier stage to a customer stage in the supply chain. Distribution is a key driver of the overall profitability of a firm because it directly impacts both the supply chain cost and the customer experience. Good distribution can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness. As a result, companies in the same industry often select very different distribution networks. The customer services that are influenced by the structure of the distribution network are: Response time Product variety Product availability Customer experience Order visibility Return ability

So in this case where the chemical company is thinking of expanding its operation in Brazil where there are already five dominating competitors, the best distribution network that the company can utilize is Distribution storage with carrier delivery. Under this option, inventory is not held by manufacturers at the factories but is held by distributors retailers in intermediate warehouses and package carriers are used to transport products from the intermediate location to the final customer. As the product of the company is a special chemical so the product variety is limited. From an inventory perspective, distributor storage makes sense for products with somewhat higher demand. As the demand of the special chemical product may not as high as other basic necessary products so increasing the distribution storage may not be the right distribution network for the company. Also in this distribution network there will not be any deficiency in product availability. As there are already five dominating competitors so the new company must take the best strategy to compete with them. The distribution network is elaborated in the following figure.

In this network the transportation cost is also reduced due to the low number of facilities. An economic mode of transportation (e.g. truckload) can be employed for inbound shipments to the warehouse. The information flow is the most important in this distribution network. The information flow from the customers is via the Distributors to the Factories. So proper information should be passes on to the top of the hierarchy. Response time is also good because distributor warehouses are, on average, closer to customers and the entire order is aggregated at the warehouse before transportation. Distributor storage with carrier delivery is well suited for this type of special chemical items. Distributor storage can handle somewhat lower variety which is not required in our case but can handle a much higher level of variety than a chain of retail stores.

Q: 6 In examining the demand for Pampers disposal diapers, executive at Procter & Gamble noticed an interesting phenomenon. As expected, retail sales of the product were fairly uniform; there is

no particular day or month in which the demand is significantly higher or lower than any other. However, the executive s noticed that distributors orders placed to the factory much more than retail sales. In addition, P&G orders to its suppliers fluctuated even more. Analyse the above situation and discuss the reasons of this increasing variability across the supply chain. Suggest some methods of coping with the above mentioned variability in demand.
Answer: In this case, it becomes obvious that while customer demand for specific product does not vary to a considerable extent, but order levels of the product fluctuate considerably across their supply chain. To analyze the above situation let us consider a simple four stage supply chain: a single retailer, a single wholesaler, a single distributor and a single factory. The retailer observes customer demand and places order to the wholesaler. The wholesaler receives products from the distributor, who places order to the factory. To understand the impact of the increase in variability on the supply chain, we need to consider business of the wholesaler. The wholesaler receives orders from the retailer and places the orders to his supplier, the distributor. To determine these order quantities, the wholesaler must forecast the retailers demand. If the wholesaler does not have access to the customers demand data he must use orders placed by the retailer to perform his forecasting. Since variability in orders placed by the retailer is significantly higher than variability in customer demand, the wholesaler is forced to carry more safety stock than the retailer or else to maintain higher capacity than the retailer in order to meet the same service level as earlier. It is important to identify techniques and tools that will allow us to control the bullwhip effect, that is, to control the increase in variability in supply chain. For this purpose, we need to first understand the main factors contributing to the increase in variability in the supply chain. Factors of the Bullwhip Effect Factors of variability can be demand variability, quality problems, strikes, plant fires, etc. Variability coupled with time delays in the transmission of information up the supply chain and time delays in manufacturing and shipping goods down the supply chain create the bullwhip effect. The following all can contribute to the bullwhip effect:

Overreaction to backlogs

Neglecting to order in an attempt to reduce inventory No communication up and down the supply chain No coordination up and down the supply chain Delay times for information and material flow Order batching - larger orders result in more variance. Order batching occurs in an effort to reduce ordering costs, to take advantage of transportation economics such as full truck load economies, and to benefit from sales incentives. Promotions often result in forward buying to benefit more from the lower prices. Shortage gaming: customers order more than they need during a period of short supply, hoping that the partial shipments they receive will be sufficient. Demand forecast inaccuracies: everybody in the chain adds a certain percentage to the demand estimates. The result is no visibility of true customer demand. Free return policies

Countermeasures to the Bullwhip Effect While the bullwhip effect is a common problem, many leading companies have been able to apply countermeasures to overcome it. Here are some of these solutions:

Countermeasures to order batching - High order cost is countered with Electronic Data Interchange (EDI) and computer aided ordering (CAO). Full truck load economics are countered with third-party logistics and assorted truckloads. Random or correlated ordering is countered with regular delivery appointments. More frequent ordering results in smaller orders and smaller variance. However, when an entity orders more often, it will not see a reduction in its own demand variance - the reduction is seen by the upstream entities. Also, when an entity orders more frequently, its required safety stock may increase or decrease; see the standard loss function in the Inventory Management section. Countermeasures to shortage gaming - Proportional rationing schemes are countered by allocating units based on past sales. Ignorance of supply chain conditions can be addressed by sharing capacity and supply information. Unrestricted ordering capability can be addressed by reducing the order size flexibility and implementing capacity reservations. For example, one can reserve a fixed quantity for a given year and specify the quantity of each order shortly before it is needed, as long as the sum of the order quantities equals to the reserved quantity.

Countermeasures to fluctuating prices - High-low pricing can be replaced with every day low prices (EDLP). Special purchase contracts can be implemented in order to specify ordering at regular intervals to better synchronize delivery and purchase. Countermeasures to demand forecast inaccuracies - Lack of demand visibility can be addressed by providing access to point of sale (POS) data. Single control of replenishment or Vendor Managed Inventory (VMI) can overcome exaggerated demand forecasts. Long lead times should be reduced where economically advantageous. Free return policies are not addressed easily. Often, such policies simply must be prohibited or limited.