Supply Chain

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Rohit Roy

Supply Networks-A global perspective

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Introduction

What are supply networks

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Definition

“A supply network is a collection of mutually dependent and strategic supply chain partners that share proprietary information and make joint decisions in order to better synchronize demand fulfillment to the customer”

Supply networks allows us to look at the big picture; giving us a better understanding of the flow of materials and information

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Example of a network

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Integrated Manufacturing and Service Network

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Three Flows

• Logistics network provides a streamlined material flow between all partners, with the objective of reducing lead time (time to deliver) and cost.

• Communications network provides information integration between companies of supply chain network.

• Financial network connects all institutions providing funds,letters of credit and insurance.

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Flow network representation

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Flow network representation

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Flow network representation

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Three Sub Networks

• Demand sub-network consists of manufacturing, distribution, distribution, retailing ,logistics and finance. Perfect delivery is important.

• Supply sub-network B2B network consisting of suppliers,manufacturers, logistics and finance.

• Service sub-networks connects consumer with suppliers and manufacturers,after-sales service centres.

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Demand network representation

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Supply network representation

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Service network representation

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Three Business Processes

• Procurement : Sourcing raw materials and components from the suppliers, Vendor and logisitic provider selection, delivery scheduling and inventory management

• Manufacturing : Could be in a single location or geographically distributed

• Distribution and Retail: Consists of packaging, transportation and warehousing. Options include direct shipping or outsourcing to third parties.

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Characterstics of High Performance Supply chain

• Lean , JIT, TQM, Outsourcing, Collaboration, Visibility etc• Web ,software and Consultants and Implimentation

Experts• Global sourcing from low cost countries.• Highly connected (logistically,informationally and

financially)• Final Goal: Global Suppl-Demand matching

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The puzzle of Weak ties and Strong ties among Supply chain partners

• Strong ties promote commitment but also restrict firms freedom to access new frontiers

- The buyers may socially obligate themselves to partners with obsolete capabilies and ignore potential new partners with lower costs or better technologies.• Weak ties - Forces partners to be on the cutting edge in cost and innovation - Provides flexibility to severe ties if needs emerge

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SCNs act as Risk Transmitters and amplifiers

• Efficiency contributors of SCNs turned Risk Creators: Outsourcing, International Logistics, Credit through LCs, Trade Liberalization.

• 2008 Financial Crisis and Decline in Trade- Deglobalization• 2011 March 11,Earthquake, Tsunami, Nuclear crisis and

Plant Shutdowns in Japan threatened supplies of semiconductors and car parts to the globe.

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Conclusion

Globalization has created dispersed supply chains which are vulnerable to and dependent on factors that are exogenous to the supply chain.