6: DESIGN: Supply Network Design

Question 1

What is the supply network perspective?

Answer 1

Setting an operation in the context of another operation. It can be customers and suppliers.
Supply side: suppliers of parts, information, services
Demand side: customers

Question 2

What are the 4 different supply network types?

Answer 2

First-tier: immediate relationship between suppliers, customers and operation
Second-tier: supp. and cust. separated from operation because of first-tiers
Immediate supply network: supp, cust have direct contact with operation
Total supply network: everyone whos involved in supply chains

Question 3

Why consider the whole supply network?

Answer 3

1,helps to understand how an operation can compete effectively within the network
2,helps to identify links within the network
-upstream(supply side)
-downstream(demand side)
3,helps to identify long-term strategic changes

Question 4

What are the design decisions withing supply network?

Answer 4

1, configuration of network
2, location of network
3, physical capacity

Question 5

What is configuration of supply network

Answer 5

Changing the shape of the supply network. (scope of activities, parts are being merged)

Question 6

What is disintermediation?

Answer 6

Direct contact with customer’s customer, and supplier’s supplier.

Question 7

What is co-opetition?

Answer 7

4 ‘players’ can be enemies or friends.

Suppliers, customers, competitors, complementors

Question 8

What are the 3 vertical integration decisions?

Answer 8

1, Do or buy decison: shall organization own the process and or have it done by another org.
2, Business process outsourcing: indirect processed being outsourced to reduce cost
3, Vertical integration: The extent to which the organization owns the network

Question 9

Why changing locations?

Answer 9

Change in demand: convenience for guests, image of location

Change in supply: labor and utility costs

Question 10

What’s the goal of location decisions?

Answer 10

To achieve a balance between 3 things:

service, potential revenue and spatially variable cost(graphical location change)

Question 11

What are the location techniques?

Answer 11

1, Centre of gravity method: finding location, which minimises transp. cost
2, Weighted score method: comparing attractiveness of alternative locations to significant factor

Question 12

Whats is long term capacity management?

Answer 12

Organizations need to decide their size (capacity), with checking the current and future demand. If there’s a change in demand, few decisions need to be taken.

Question 13

balancing capacity

Answer 13

all stages in network need to have the same capacity, otherwise its capacity will be limited to the slowest one.

Question 14

3 types of timing of capacity change

Answer 14

capacity lagging strategies, capacity leading strategies, smoothing with inventory

Question 15

What’s capacity leading strategy

Answer 15

planning capacity in a way, that it ensures there is always sufficient capacity to meet forecast demand
+: sufficient capacity to meet demand -> revenue maximization, satisfied customers
-: utilization of plants is low -> high costs
-: risk of over-capacity, if demand does not reach forecast level

Question 16

whats capacity lagging strategy

Answer 16

planning capacity in a way, that it ensure there are less or equal capacity levels to forecast demand. Demand >= capacity
+: sufficient demand to keep plants working -> unit costs minimised
+: over capacity problems are minimised
-: insufficient capacity to meet demand -> less revenue, lower cust. sat.
-: no ability to achieve short-term increases in demand

Question 17

whats smoothing with inventory

Answer 17

no inventories are accumulated
+: all demand is satisfied, so high revenue and cust. sat.
+: high utilization, low cost
-: working capital requirement cost can be high