MGT/ME 6753

Supply Chain
Management
(03/25, 03/30, 04/01)
Ravi Subramanian
Associate Professor of Operations
Management
Faculty Director, Denning T&M Program

Session Plan
Foundational concepts
Features of and Issues in Global Supply
Chain Management (03/25)

Supply chain coordination

Informational Mechanisms (03/30, Online
Supply Chain Simulation,
Purchase access before 03/30 class at:
https://cb.hbsp.harvard.edu/cbmp/access/36211476

Bring laptop to class

Financial Mechanisms (04/01)

What is?
Supply Chain Management (SCM) is
concerned with the efficient and
effective coordination within the
network of primary and supporting
members, so that the concerned
product/ service is delivered to
customers in an economically
sustainable manner.

Products

And Services

Components of Global SCM

(1)
Creating the global supply chain network
structure
Primary and Secondary members
Suppliers and customers
Financers

Structural relationships
Horizontal structure
Length of supply chain

Vertical structure
Depth of supply chain

Position
Location within the chain
Physical location

Interfaces with secondary members

Components of Global SCM

(2)
Developing global supply chain
business processes/policies

Product/Service development and

commercialization
Manufacturing/Service flow
Procurement
Logistics
Order fulfillment

Components of Global SCM

(3)
Managing global supply chain
activities
Implementing processes
Monitoring and controlling
Managing supplier/customer
relationships

Matching Supply Chain with

Product

Environments Suitable for

Efficient/Responsive Supply
Chains
Factor

Efficient Supply Chains

Responsive Supply Chains

Demand

Predictable, low forecast errors

Unpredictable, high forecast

errors

Competitive priorities

Low cost, consistent quality,

on-time delivery

Development speed, fast

delivery times, customization,
volume flexibility, variety, top
quality

New-service/product
introduction

Infrequent

Frequent

Contribution margins

Low

High

Product variety

Low

High

Design Features of
Efficient/Responsive Supply
Chains
Factor

Efficient Supply Chains

Responsive Supply Chains

Operation strategy

Make-to-stock or standardized
services or products;
emphasize high volumes

Assemble-to-order, make-toorder, or customized service or

products; emphasize variety

Capacity cushion

Low

High

Inventory investment

Low; enable high inventory

turns

As needed to enable fast

delivery time

Lead time

Shorten, but do not increase

costs

Shorten aggressively

Supplier selection

Emphasize low prices,

consistent quality, on-time
delivery

Emphasize fast delivery time,

customization, variety, volume
flexibility, top quality

Determinants of
Supply Chain Success
Agility
Effectively reacting to sudden changes in
demand and supply

Adaptability
Adapting as the external environment
changes

Alignment/Coordination
Seamlessly sharing information
(Informational)
Aligning incentives of all members in the
supply chain (Financial)

Agility
Share real-time information with supply
chain partners
Develop close, collaborative relationships
Design products with common
components/ processes
Keep small inventories of critical
components
Build a dependable logistics network
Train teams in handling unexpected events

Adaptability
Track macroeconomic changes
Connect with ultimate customers
sell-through vs. sell in

Plan for access to future suppliers

Design adaptable products
Modularity

Alignment/Coordination
Align Information
Session 2 (Supply Chain Simulation)

Align Incentives
Session 3

Issues in Global Supply

Chains
Lead times

Information
Transportation

Transit risks

Pilferage/Theft
Contamination

Inconsistent Regulations

Labor, Environment, Import/Export, Intellectual

Property, etc.

Exchange rates
Geopolitical conditions
Cultural differences

Addressing Global SCM

Issues (1)
Lead times
Transportation/Inventory
Delayed differentiation
Frequent replenishments/Air Freight

Information
Information sharing
Information centralization

Transit risks
Visibility
Choice of physical location/logistics system

Addressing Global SCM

Issues (2)
Inconsistent Regulations
Develop internal standards in line with
the strictest

Exchange rates
Develop both domestic and international
markets
Currency hedging

Addressing Global SCM

Issues (3)
Geopolitical conditions
Supply chain redundancies
Disruption insurance

Cultural differences
Cultural immersion

Supply Chain Decisions and

ROA/Profitability
Total revenue
Increase sales through
better customer service

Cost of goods sold

Net income

Reduce costs of
transportation and
purchased materials

Improve profits
with greater
revenue and
lower costs

Operating expenses
Return on assets
(ROA)

Reduce fixed expenses

by reducing overhead
associated with supply
chain operations

Increase ROA with

higher net income
and fewer total
assets

Working capital
Net cash flows
Improve positive cash
flows by reducing lead
times and backlogs

Reduce working
capital by reducing
inventory
investment, lead
times, and backlogs

Fixed assets
Inventory
Increase inventory turnover

Reduce the number

of warehouses
through improved
supply chain design

Total assets
Achieve the same
or better
performance with
fewer assets