• Home
• Module overview
• 1. Introduction to supply chain management
  • Introduction
  • 1.1 What is supply chain management?
    • 1.1.1 Supply chain management: The concept
    • 1.1.2 Supply chain management: Evolution
    • 1.1.3 Supply chain management: The search for a definition
    • 1.1.4 Supply chain management: The drivers:
  • 1.2 Technology and supply chain management
  • 1.3 Supply chain management: New business models and challenges
    • 1.3.1 New supply chain business models
    • 1.3.2 Challenges
  • 1.4 Key issues in supply chain management

• 2. Supply chain management and information systems

  • 2.1 Introduction
  • 2.2 Goals of supply chain IT systems
  • 2.3 Supply chain IT goals: Challenges and means
    • 2.3.1 Standardisation
    • 2.3.2 Infrastructure
    • 2.3.3 Electronic commerce
    • 2.3.4 Supply chain management issues and IT
  • 2.4 Integrating the supply chain information systems
  • 2.5 Decision support systems
    • 2.5.1 The characteristics of decision support systems
    • 2.5.2 DSS components
    • 2.5.3 DSS in supply chain management
  • 2.6 Summary

• 3. Logistic network configuration

  • 3.1 Introduction
  • 3.2 The supply chain network
    • 3.2.1 Network design decisions
    • 3.2.2 Design consideration
  • 3.3 Logistics and facility costs in logistics network configuration
  • 3.4 Logistics network design and decision support systems
    • 3.4.1 The supply chain model
    • 3.4.2 Data and a network model
    • 3.4.3 Model and data validation
    • 3.4.4 Solution techniques
  • 3.5 Key features of a network configuration DSS

• 4. Inventory management and risk pooling

  • 4.1 Introduction
  • 4.2 Inventory: Basic concepts
    • 4.2.1 Why hold inventory: Inventory functionality
    • 4.2.2 Inventory related definitions
    • 4.2.3 Inventory related issues
  • 4.3 The inventory policy
    • 4.3.1 Basic inventory decisions and EOQ
    • 4.3.2 Inventory policy under conditions of uncertainty
  • 4.4 Risk pooling
    • 4.4.1 The Square Root Law of Inventory
    • 4.4.2 Centralised versus the decentralised system
    • 4.4.3 Supply chain inventory
    • 4.4.4 Inventory management: Practical issues
  • 4.5 Summary

• 5. Supply chain integration: The value of information

  • 5.1 Introduction
  • 5.2 Information and supply chain integration
    • 5.2.1 The bullwhip effect
    • 5.2.2 The reasons for bullwhip effect
    • 5.2.3 Quantifying the bullwhip effect
    • 5.2.4 Measuring bullwhip effect: The practical issues
    • 5.2.5 Bullwhip effect: Managerial insight
    • 5.2.6 Reducing bullwhip effects
  • 5.3 Effective forecasts and supply chain integration
  • 5.4 Collaborative supply chains and information integration
  • 5.5 Supply chain systems and information integration
  • 5.6 Information and the synchronised supply chain
  • 5.7 Summary

• 6. Supply chain integration: Distribution strategies

  • 6.1 Introduction
  • 6.2 Transportation and distribution
    • 6.2.1 Transport modes
    • 6.2.2 Inbound transportation
    • 6.2.3 Distribution
  • 6.3 Centralised versus decentralised control
  • 6.4 Distribution strategies
    • 6.4.1 Direct shipment
    • 6.4.2 Cross docking
    • 6.4.3 Warehousing and distribution strategies
    • 6.4.4 Transhipment
  • 6.5 Central versus local facilities
  • 6.6 Push versus pull systems
    • 6.6.1 Push systems
    • 6.6.2 Pull systems
  • 6.7 Summary

• 7. Supply chain simulation games:

  • 7.1 Introduction
  • 7.2 The Beer Game
    • 7.2.1 The purpose
    • 7.2.2 The Beer Game scenario
    • 7.2.3 Features and options
  • 7.3 Playing the Beer Game
    • 7.3.1 Beer Game projects
    • 7.3.2 The Beer Game: The learning tool
  • 7.4 The Risk Pooling Game
    • 7.4.1 Playing the Risk Pooling Game
    • 7.4.2 Risk pooling project
  • 7.5 Summary

• 8. Supply chain integration: Strategic partnering

  • 8.1 Introduction
  • 8.2 Strategic partnering
    • 8.2.1 Strategic partnering: A framework
  • 8.3 Supply chain partnership models
    • 8.3.1 Manufacturer and supplier partnership
    • 8.3.2 Strategic partnering with logistics service providers
    • 8.3.3 RSP or retailer supplier partnership
    • 4.3.4 Distributor integration
  • 8.4 Summary

• 9. International issues in supply chain management

  • 9.1 Introduction
  • 9.2 Globalisation and SCM issues
    • 9.2.1 Global business forces
  • 9.3 International supp ly chain - risks and advantages
    • 9.3.1 Risks in international supply chain
    • 9.3.2 Risk management strategies
    • 9.3.3 Risk management framework
  • 9.4 Issues in intern ational supply chain management
  • 9.5 Logistics infrastructure: Regional issues
  • 9.6 Summary

• 10. Product design and supply chains

  • 10.1 Introduction
    • 10.1.1 Matching the supply chain to the product
  • 10.2 Design for logistics
    • 10.2.1 Packaging
    • 10.2.2 Manufacturing: Concurrent and parallel processing
    • 10.2.3 Postponement or delayed differentiation
  • 10.3 Mass customisation and supply chains
  • 10.4 Supply chain is sues and the push-pull boundary
  • 10.5 Summary

• 11. Supply chain management and customer value

  • 11.1 Introduction
    • 11.1.1 The concept of value
    • 11.1.2 Customer service and value
  • 11.2 Supply chain management and customer value
    • 11.2.1 Tailored logistics
    • 11.2.2 Customer value dimensions
  • 11.3 Customer value measures
    • 11.3.1 Customer based measures
    • 11.3.2 Supply chain performance measures
  • 11.4 Information technology and customer value
  • 11.5 Summary

10.4 Supply chain issues and the push-pull boundary

The classification of supply chains into responsive and efficient supply chains, as made by Fisher, is generally accepted. The same concept is reflected in the somewhat different terminologies of lean and agile supply chains and push-pull systems . Many of the issues identified in Readings 10. 4 and 10.5 relating to the implementation of mass customisation strategies and their workability do point to the inherent difficulty of applying mass customisation across the board to all kinds of products by all organisations.

This observation, of course is, linked mainly to the product and supply chain matrix which we saw earlier, albeit with other important considerations. The main point is that a supply chain, when viewed in the broad context in which we are considering it, may be 'lean' (efficient), 'agile' (responsive) or a 'leagile' (mixture of lean and agile). It is this third category of supply chain or leagile supply chains which are our current focus of attention.

A supply chain which is responsive to customer demands and has the capacity to quickly match demand by postponement or through mass customisation has to be agile at the downstream end to quickly respond to customer demand. The efficiency of the supply chain requires the 'agility' to enable it to meet changing market conditions. On the other hand, the 'leanness' of the supply chain focuses on waste elimination from the supply chain in the upstream section. The overall effect is a supply chain which is responsive and lean and this is the best of both the worlds.

Refer to the example of Toyota in Reading 10.3 and try to understand why Toyota found it so difficult to implement a mass customising strategy. It is essentially because Toyota is the quintessential lean enterprise. All the details you find in the reading regarding Toyota display the hallmarks of leanness; and adapting a lean enterprise to the agile model is not a very pleasant experience.

An agile enterprise on the other hand is market responsive . Christopher (1999) describes an agile supply chain in terms of a supply chain which is virtual, market sensitive, network based and possesses integrated processes. (A full explanation of this definition is provided in the next reading). Again the Dell computers supply chain is a classic example of an agile supply chain.

Figure 10. 4 The agile supply chain (Christopher 1999)

The following table summarises the difference between a lean and an agile supply chain.

Table 10.1 Lean and agile supply chains (Christopher 1999)

Agile supply chain management versus lean approach
Lean Approach	Agile Approach
Stock is held at multiple echelons, often based on organisational and legal ownership considerations.	Stock is held at the fewest echelons, if at all, with finished goods sometimes being delivered direct from factory to customer.
Replenishment is driven sequentially by transfers from one stocking echelon to another	Replenishment of all echelons is driven from actual sales/usage data collected at the customer interface.
Production is planned by discrete organisational units with batch feeds between discrete systems.	Production is planned across functional boundaries from vendor to customer, through highly integrated systems, with minimum lead times.
Majority of stock is fully finished goods, dispersed geographically, waiting to be sold.	Majority of stock is held as work in progress awaiting build/configuration instructions.

 

When talking about 'leagile' supply chains it would be instructive to refer to the Benetton example. The Benetton supply chain upstream of the 'plain sweater' must be highly streamlined to eliminate all waste from the supply chain while the portion of the chain downstream of the plain sweater should be highly responsive or agile to respond quickly to market signals. When the supply chain is designed in this way, it is possible to harness the best from both types of supply chains. The concept of a 'leagile' supply chain is very relevant in today's highly competitive market conditions as careful designing of the supply chain in accordance with the concept of 'leagility' would allow a firm to extract maximum benefit from the supply chain.

The critical question, however, is where lies the push-pull boundary or the decoupling point which separates the lean processes from agile processes. Given products and markets are different, there is no standard answer. The decoupling point has to be different under different circumstances. The following reading introduces you to the concepts of lean, agile and leagile supply chains and the relevance of the 'decoupling point'. You will identify that this decoupling point is the point where postponement is effected.

Reading 10.5

Childerhouse, P & Towill, D (2000) 'Engineering supply chains to match customer requirements', Logistics Information Management , volume 13, number 6,
pp.337-345.

Activity 10.4

Refer to reading 10.5 and identify the role of the de-coupling point in leagile supply chains. What effects does the position of the de-coupling point have on supply chain performance?

Back Page - Next Page