Unit 1: Strategic framework for supply chains
Supply Chain & Logistic Management notes · PTU syllabus (MBA 953-18)
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Unit summary
A supply chain links suppliers, manufacturers, distributors, retailers and customers to fulfil demand. This unit covers supply chain stages and decision phases, the process view, supply chain flows, competitive and supply chain strategies, drivers of performance — inventory, transportation, facilities and information — and obstacles to achieving strategic fit.
After this unit you can
- Explain supply chain stages, flows and decision phases
- Explain the cycle and push/pull process views
- Achieve strategic fit between competitive and supply chain strategy
- Explain supply chain drivers and obstacles to fit
PTU syllabus topics
- Supply chain stages and decision phases
- process view
- supply chain flows
- competitive and supply chain strategies
- drivers of performance (inventory, transportation, facilities, information)
- obstacles to achieving fit
Facilities
Where things are made and stored
Inventory
How much to hold
Transportation
How goods move
Information
Data that coordinates decisions
Sourcing
Who supplies
Pricing
How demand is shaped
Topic 1
Supply chain stages and flows
Supply chain: all parties involved, directly or indirectly, in fulfilling a customer request (Chopra and Meindl).
- 1Suppliers
- 2Manufacturers
- 3Distributors and wholesalers
- 4Retailers
- 5Customers
- Flows: product (downstream), information (both ways), funds (upstream), and returns (reverse).
- Objective: maximise supply chain surplus = customer value − supply chain cost.
Topic 2
Decision phases
Strategy or design
Several years
Location and capacity of plants and warehouses, make or buy, transport modes
Planning
Quarter to a year
Markets served, inventory policies, promotions, subcontracting
Operation
Weekly or daily
Allocating orders, setting delivery dates, picking and shipping
Topic 3
Process views of a supply chain
- Cycle view: procurement cycle, manufacturing cycle, replenishment cycle and customer order cycle at each stage interface.
- Push/pull view: pull processes start in response to a customer order (reactive); push processes run in anticipation of orders (speculative). The push/pull boundary separates them.
Example
Dell's build-to-order PCs pulled assembly from customer orders while components were pushed to stock; FMCG products are pushed to retail shelves.
- Macro processes: customer relationship management (CRM), internal supply chain management (ISCM), supplier relationship management (SRM).
Topic 4
Competitive and supply chain strategies
Goal
Supply demand at lowest cost
Respond quickly to demand
Product
Functional, predictable demand
Innovative, uncertain demand
Inventory
Low, high turns
Buffer stock of parts
Lead time
Reduce without raising cost
Reduce aggressively
Supplier choice
Cost and quality
Speed, flexibility, quality
- Strategic fit: understand customer and supply uncertainty (implied demand uncertainty) → understand supply chain capabilities (efficiency–responsiveness frontier) → match responsiveness to uncertainty.
Topic 5
Drivers of supply chain performance
Facilities
Location, capacity, flexibility — product vs functional focus
Inventory
Cycle, safety, seasonal stock; turns
Transportation
Mode, route, network design
Information
Visibility, forecasting, coordination
Sourcing
In-house vs outsource, supplier selection
Pricing
Everyday low pricing vs promotions, dynamic pricing
- Logistical drivers (facilities, inventory, transportation) and cross-functional drivers (information, sourcing, pricing).
Topic 6
Obstacles to achieving strategic fit
- Increasing product variety and shorter life cycles; demanding customers; fragmented ownership of the chain; globalisation and longer lead times; environmental and sustainability pressures; disruptions (pandemics, geopolitical events); the bullwhip effect.
Key terms
- Supply chain surplus
- Customer value minus total supply chain cost
- Push/pull boundary
- Point separating forecast-driven and order-driven processes
- Strategic fit
- Consistency between competitive and supply chain strategies
- Implied demand uncertainty
- Uncertainty of the demand portion the chain must meet
- Responsive supply chain
- Chain designed for speed and flexibility
Quick revision
- Stages; product, information, fund flows; surplus.
- Strategy, planning, operation phases.
- Cycle view; push/pull view; CRM, ISCM, SRM.
- Efficient vs responsive; achieving strategic fit.
- Six drivers; obstacles to fit.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.Define a supply chain.
- Q2.What is supply chain surplus?
- Q3.Name the three decision phases.
- Q4.What is the push/pull boundary?
- Q5.Distinguish efficient and responsive supply chains.
- Q6.Name the six drivers of supply chain performance.
Long-answer questions
- Q1.Explain supply chain stages, flows and decision phases.
- Q2.Explain the cycle and push/pull views of supply chain processes.
- Q3.Explain how strategic fit is achieved between competitive and supply chain strategy.
- Q4.Discuss the drivers of supply chain performance and obstacles to fit.
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