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Course Code MGT 561 Supply Chain Management

Course Code MGT 561 Supply Chain Management Book: Supply Chain Management Strategy, Planning, and Operation 5 th edition (Pearson Publishing) Author: Sunil Chopra and Peter Meindl. Summary of the last lecture. Understand the role of network design in a supply chain

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Course Code MGT 561 Supply Chain Management

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  1. Course Code MGT 561 Supply Chain Management Book:Supply Chain Management Strategy, Planning, and Operation 5th edition (Pearson Publishing) Author: Sunil Chopra and Peter Meindl

  2. Summary of the last lecture • Understand the role of network design in a supply chain • Identify factors influencing supply chain network design decisions • Develop a framework for making network design decisions • Use optimization for facility location and capacity allocation decisions

  3. 6 Designing Global Supply Chain Networks

  4. Learning Objectives • Identify factors that need to be included in total cost when making global sourcing decisions. • Define uncertainties that are particularly relevant when designing global supply chains. • Explain different strategies that may be used to mitigate risk in global supply chains. • Understand decision tree methodologies used to evaluate supply chain design decisions under uncertainty.

  5. Impact of Globalization on Supply Chain Networks • Opportunities to simultaneously grow revenues and decrease costs • Accompanied by significant additional risk • Difference between success and failure often ability to incorporate suitable risk mitigation into supply chain design • Uncertainty of demand and price drives the value of building flexible production capacity

  6. Impact of Globalization on Supply Chain Networks Table 6-1

  7. The Offshoring Decision: Total Cost • Comparative advantage in global supply chains • Quantify the benefits of offshore production along with the reasons • Two reasons offshoring fails • Focusing exclusively on unit cost rather than total cost • Ignoring critical risk factors

  8. The Offshoring Decision: Total Cost Table 6-2

  9. The Offshoring Decision: Total Cost Table 6-2

  10. The Offshoring Decision: Total Cost • A global supply chain with offshoring increases the length and duration of information, product, and cash flows • The complexity and cost of managing the supply chain can be significantly higher than anticipated • Quantify factors and track them over time • Big challenges with offshoring is increased risk and its potential impact on cost

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