supply chain management. Lecture 1

Professor Bowon Kim

KAIST Business School

Supply Chain ManagementA Learning Perspective

Lecture 1

Coursera KAIST: SCM101

1What is Supply Chain Management

Why does a firm exist?

A firm exists to earn profit. In turn, the firm maximizes its profit by creating value for the market.

Value creation by providing products and services to the customers

through optimally managing processes, resources, and capabilities

Supply chain management is about creating value by coordinating various activities, functions, and participants

Value = Utility

Cost

2Value Creation Hierarchy

Profitability

Value Creation

Product/Service

Resource Process

Capabilities

Value-Chain Perspective

Inter-firm coordination

Supply Chain Management

Fundamental

Building blocks Capability

ProcessResource

3What is Value Chain

Value Chain (Porter 1985)

InfrastructureHuman Resources

Technology, R&D

Procurement

Inb

ou

nd

Lo

gis

tics

Op

era

tio

ns

Ou

tbou

nd

Lo

gis

tics

Ma

rket

ing

,

Sa

les

Ser

vic

es

Market,

Customers

Sources

Supportive

Activities

Primary

Activities

Upstream Activities Downstream Activities

4Supply Chain

1st-tier supplier

(e.g., engine)

1st-tier supplier

(e.g., tire)

1st-tier supplier

(e.g., car seat)

1st-tier supplier

(e.g., windows)

1st-tier supplier

(e.g., electronics)

Carmaker: assembly carConsumer

Dealer

2nd-tier supplier

(e.g., steel,

aluminum)

2nd-tier supplier

(e.g., plastic,

Rubber)

2nd-tier supplier

(e.g., bolts,

nuts)

2nd-tier supplier

(e.g., electronic

parts)

2nd-tier supplier

(e.g., auto glass)

Multi-tier suppliers Manufacturer Distributor

Value Chain/Supply Chain System

5Supply Chain

6Value through Supply Chain Management

Value

S M D C

Supplier/vendor

Service

supporter

Manufacturer

Service

creator

Distributor

Service contact

/provider

Customer

Supply Chain System

Efficiency-driven

value more relevant

Responsiveness-driven

value more relevant

Value = Utility

Cost Responsiveness Efficiency

7Supply Chain A Focal Company

S M D C

Supplier/vendor

Service supporter

Manufacturer

Service creator

Distributor

Service contact

/provider

Customer

INTEL

LGD

Microsoft

DELL BestBuy

Circuit City

WALMART

End Customer

Part suppliers

Raw materials

INTEL Third-party

Logistics Companies

DELL

HP

CJ

(a food company)

EMART

(a major supermarket chain)

Individual

Retail StoresEnd customer

Farm

(farmers, growers)

CJThird-party

Logistics Companies EMART

Writers

Actors

Filmmaking

(film producers)

CGV(a multiplex movie theater)

End consumer

(movie goers)

Focal company

Approach the SCM issues from Ms perspective

Supply Chain System

Various suppliers,

vendors

(for foods, laundry, )

Ritz-Carlton Hotel

(ladies and gentlemen serving)

Internal customer contact points

External contact points

(e.g., on-line sites)

End consumer

(hotel guests)

8Value Life Cycle

Value Life Cycle

Integration of new product innovation and SCM New product innovation

Essential condition for sustainable competitive advantage

But, until very recently Lack of identity

Treated as a separate issue, and dispersed research

Supply chain management Traditionally focused on existing products/services

Coincided with traditional PLC (product life cycle)

Integration of NPI and SCM Looking at the entire value cycle from the new product/service

conception to the end of the product/service life (and starting recycling)

Firm must understand it to achieve competitive advantage in the global market

9Value Life Cycle

Product Life Cycle

Co

nce

pt

Dev

elo

pm

en

t

NPD-Process Knowledge

Product-specific Knowledge

(Design, R&D, Marketing, Quality, Mfg, Procure.)

Initial

Ramp-up

Production

New Product Innovation

Pil

ot

Pro

du

ctio

n

Fin

al

Pro

cess

fo

r

Ma

nu

fact

ura

bil

ity

Ramp-up Quality

Improvement

On-going

Production

Value Life Cycle

Cumulative Sales ($)# of Alternative

Concepts/Designs

PLC

NPC

(New Product Cycle)

10

SCM101 Course Syllabus Course Objectives

As human beings, we all consume products and/or services all the time. Consider fresh

strawberries. In order for the strawberries to be on your breakfast table, there must be

numerous functions, activities, transactions, and people involved in planting, cultivating,

delivering, and consuming strawberries. Moreover, all of these functions, activities,

transactions, and people are connected as an integral chain, through which physical

products like strawberries themselves and virtual elements such as information and

communication flow back and forth constantly. By grouping related functions or activities

systematically, we have a supply chain, which is comprised of four primary functions such as

supplier, manufacturer, distributor, and finally consumer. A supply chain is essentially a value

chain. In this course, we want to understand fundamental principles of value creation for the

consumers or the market. We answer questions like how the product or service is made,

how the value-creating activities or functions are coordinated, who should play what

leadership roles in realizing all these, and so on. We approach all of these issues from a

learning perspective, which is dynamic in nature and emphasizes long-term capability

building rather than short-term symptomatic problem solving.

Grading Policy

The final grade is based on eight quizzes and biweekly assignments.

To receive a Statement of Accomplishment, you are expected to obtain more than or equal

to 60% of the maximum possible score. To receive a Statement of Accomplishment with

Distinction you are expected to obtain more than or equal to 80% of the maximum possible

score.

11

SCM101 Course Syllabus Main Topic Sub Topic Video length

week1

Introduction to value, value

creation, and supply chain

management

1.1 Value, value creation, supply chain management 20 min

1.2 Efficiency-driven and responsiveness-driven value 20 min

1.3 Focal company in supply chain management 15 min

1.4 Value life cycle 15 min

Quiz/Assignment Quiz Sub-total: 70 min

week2

Management capabilities

2.1 Definition of management capability 15 min

2.2 Controllability, flexibility, and tradeoff between capabilities 20 min

2.3 Integrating capability 20 min

2.4 Dynamic changes of capability 15 min

Quiz/Assignment Quiz, Assignment Sub-total: 70 min

week3

Learning perspective

3.1 Definition of learning, learning capability 15 min

3.2 Double-loop and single-loop learning 20 min

3.3 Cause-and-effect diagram 20 min

3.4 Learning propensity model 15 min


week4

Quality management

4.1 Quality is free? 15 min

4.2 Dimensions of quality 20 min

4.3 Order-qualifying versus order-winning attributes 10 min

4.4 Assignable versus common causes 10 min

4.5 Principles of statistical process control 15 min


12

SCM101 Course Syllabus

week5

New product innovation

5.1 Sequential new product development process 15 min

5.2Flexible or cross-functional new product development

process20 min

5.3 Implementation strategy 20 min

5.4 Integration with supply chain management 15 min


week6

Supply chain strategy I:

structural and

infrastructural dimensions

6.1 Structural dimension 25 min

6.2 Infrastructural dimension 20 min

6.3 Minimization of mismatch between supply and demand 10 min

6.4 Information quality 15 min


week7

Supply chain strategy II:

coordination for value

creation

7.1 Supply chain coordination 15 min

7.2 Bullwhip effect 15 min

7.3 Postponement 20 min

7.4 Vendor-managed inventory (VMI) 20 min


week8

Supply chain globalization

and sustainability

8.1 Global supply chain management 20

8.2 Scale, scope, and speed in global SCM 15

8.3 Sustainable SCM 20

8.4 Calculus, creativity, and commitment 15


Total Quiz: 8 times; Assignments: 4 times Total: 560 min

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supply chain management. Lecture 1