Week 14 - Supply Chain and Value Chain

8/14/2019 Week 14 - Supply Chain and Value Chain

1/23


2/23

Profit = Revenue Costs

Weve talked about the revenue side

marketing techniques such assegmenting, targeting andpositioning products, brand

management and new products.

How to reduce costs?


3/23

Fulfill customer demands through the

most efficient use of resources,

including distribution capacity,inventory, transportation and labor.


4/23

Outsourcing Supply chain management Inbound logistics Operations Outbound logistics Marketing and Sales Service


5/23

Logistics plans, implements andcontrols the efficient, effective forward

and reverse flow and storage of goods.

Getting the right goods . .

To the right place . .

At the right time on time.


6/23

Inbound

logistics

Operations Outbound

logistics

Receiving,

warehousing,

and inventorycontrol of input

materials.

Transforming the

inputs into the final

product

Getting the

finished

product to the

customer -

including

warehousing

and order

fulfillment

Can account for

10% of costs!


7/23

InventoryWhen to order

How much to order

Just-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

Warehousing

StorageDistributionAutomated

Order ProcessingReceivedProcessedShipped

Transportation Rail,

Truck, Water,Pipeline, Air,

Intermodal


8/23

Physical Goods Information Finance

Companies that were historically inone of these flows are now

expanding into other parts.


9/23

TPG and Excel Previously -flow ofgoods transport - moving goodsfrom one point to another.

Now pure logistics They analyzeand optimize the supply chain for thecompany and so create value.

What do they do? Page 277


10/23

Batches a group of things of thesame kind, made at the same time

Outsourcing - To send out work to

an outside provider or manufacturerin order to cut costs

Third Parties - someone other than

the principals who are involved in atransaction


11/23


12/23

Read

2.Competitive Advantage and

3.Generic Strategies

4.PC makers embark on a rural journey


13/23

Marketing & Sales are those activities

associated with getting buyers to

purchase the product, including channel

selection, advertising, pricing, etc.

Service activities are those that maintain

and enhance the product's value including

customer support, repair services, etc.


14/23

A supply chain is the system of

organizations, people, technology,

activities, information and resourcesinvolved in moving a product or

service from supplier to customer.


15/23

Supply chain activities transform

natural resources, raw materials and

components into a finished productthat is delivered to the end

customer.

A supply chain seeks to matchdemand with supply and do so with

the minimal inventory.


16/23


17/23

Work with suppliers to eliminatebottlenecks (something that holds up

progress)

Can you think of examples ofbottlenecks?

Source strategically to strike a balance

between lowest material cost andtransportation

Implement JIT (Just In Time) techniques

to optimize manufacturing flow


18/23

Maintain the right mix and location of

factories and warehouses to serve

customer markets, and Maximize the efficiency of the

distribution side by using

location/allocation, vehicle routinganalysis, and dynamic programming.


19/23

Value chain is a model of howbusinesses receive raw materials asinput, add value to the raw

materials through variousprocesses, and sell finishedproducts to customers.


20/23


21/23

Strategic Sourcing Assessmentrequires evaluation of 5 key criteria

Customer

Importance:HighMedium

LowTechnologyClockspeed:

FastMediumSlow Competitive

Position:

AdvantageParityDisadvantage

CapableSuppliers:

NoneFewMany

Architecture:

IntegralModular

Possible

Decisions(Knowledge &

Supply):

InsourceOutsource

Partner/AcquirePartialInsourcePartialOutsource

InvestS in Off

CompetitivePosition:


High customer importance and fast

clockspeedmeans more strategic

Competitive position iscritical for assessingvalue of outsourcing

Supply BaseCapabilitymust be

present forsuccessful

outsourcingDegree ofmodularityaffectssignificantly theease and risk ofoutsourcing


22/23

Customer

Importance

High

Technology Clockspeed

Fast

Competitive

Position:


Capable Suppliers

None

Architecture

Modular

Value ChainStrategyOutcome

InsourceAll

Competitive

Position

Parity

The performance of the Exhaust subsystemimpacts the emissions of the vehicle, which isimportant to the customers. This system also has ahigh impact on acceleration due to the converterskey role in regulating exhaust backpressure

The OEMs have differentstrategies for the cost and

performance of thissubsystem, but overall allOEMs have similar capability.

Although there aresuppliers capable ofcomponent design, thereare currently no suppliersthat are capable ofdeveloping the entiresubsystem.

The powertrain exhaust system issomewhat modular because the sameconverter can be used in multiplevehicle applications. The packagingconstraints may drive changes in thedesign of the down pipes and boltingschemes from vehicle to vehicle.

Key driver is the sensor technology, which

is relatively fast changing. Stringentgovernment regulations and use of

precious metals requires GMPT to maintaina continual focus on improving the

performance of this subsystem.


23/23

Low

(negative)

High

(positive)

Strategic

Value

Low

High

Economic ValueAdded

Medium

Medium

(breakeven)

ConsideralliancesUse forhigherpricevehiclesegments

Outsource

Strategic - Low

Economic - Low

HarvestStrategic - Low

Economic - High

Invest

Strategic - High

Economic - High

Leverage

Strategic - High

Economic - Low

Week 14 - Supply Chain and Value Chain

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