1. Dr. RAVI SHANKAR
Professor
Department of Management Studies
Indian Institute of Technology Delhi
Hauz Khas, New Delhi 110 016, India
Phone: +91-11-26596421 (O); 2659-1991(H); (0)-+91-9811033937 (m)
Fax: (+91)-(11) 26862620
Email: r.s.research@gmail.com
http://web.iitd.ac.in/~ravi1
SESSION#6: Basics & Beyond (CFVG: 2012)
MANAGEMENT OF GLOBAL
SUPPLY CHAINS

2. Supply Chain Stages
Supply Chain encompasses all activities associated with the flow
and transformation of materials and information
from the raw material stage through to the end user.
Supplier Manufacturer Distributor Retailer Customer

3. Supply Chain Illustration

4. Global Supply Chains
• “…designing and managing of a system that
controls the flow of materials into, through,
and out of the international corporation”

5. Types of Global Operations
•International distribution operations
•International suppliers
•Off-shore manufacturing operations
•Fully-integrated global supply
chains

6. Types of Global SC
Type of
International
Supply Chain
Inbound
Logistics
Process
Outbound
Logistics
International
Distribution Domestic Domestic International
International
Suppliers International Domestic
Domestic/
international
Offshore
Manufacturing International International Domestic
Fully Integrated
Global Supply
Chain
Domestic/
international
Domestic/
international
Domestic/
international

7. Example 1:
Supply
Chain for
Denim
Jeans

8. Example 1:
Supply
Chain for
Denim
Jeans
(Contd.)

9. EXAMPLE : CONTRACT FARMING
Thai agro products are in great demand in many countries.
In order to improve their global competitiveness by bringing
down cost, many agro-industries in Thailand have started
contract farming in the neighboring countries like
Laos and Cambodia.
This is due to cheap production cost.
The selected agro products are grown in these countries in
accordance with a contact with the farmers or their agents.
After harvest, the produce is shipped back to the agro
industries in Thailand for processing, packaging and
marketing.
Through contact farming, the cost of growing raw agro-
products has gone down considerably.

10. Case 1: Supply Chain Evolution at Nabisco
Source: F. Keenan, “Logistics Gets a Little Respect,” Business Week (November 20, 2000), pp. 112–115.

11. Case 1: Supply Chain Evolution at Nabisco
(cont.)
Source: F. Keenan, “Logistics Gets a Little Respect,” Business Week (November 20, 2000), pp. 112–115.

12. Case 1: Supply Chain Evolution at Nabisco
(cont.)

13. EXAMPLE: TIPCO FOOD,
THAILAND
Thailand has the largest global market share of around 45% in
processed pineapple.
Tipco Food is one the largest Thai exporters of this product with a
hopping figure of Baht 3.7 billion.
In 2006-07, due to weakening of US dollar ($) against most of the
global currencies, including Baht,
Tipco global supply chain came under tremendous threat.
Look at these steep drops in exchange rate. It has crumbled as follows:
late 2006- Baht 41 per $; early 2007 -Baht 37 per $; July 2007-
Baht 33 per $.
For the same export, the revenue inflow from exports has gone down
by about one fifth of its value few months back.
Most of these export-oriented supply chains have become non-
competitive in global market.
As a protective measure, these export-oriented firms are focusing on
local market to boost their sales.
– Reference: Bangkok Post: 4 August 2007, p B4.

14. CASE STUDY 2: WAL-MART
In 1979 Kmart was one of the leading companies in the retail
industry, with 1,891 stores and average revenues per store of
$7.25 million.
At that time Wal-Mart was a small niche retailer in the South
with only 229 stores and average revenues about half those of
Kmart stores.
In 10 years Wal-Mart had transformed itself; in 1992 it had the
highest sales per square foot and the highest inventory turnover
and operating profit of any discount retailer.
Today Wal-Mart is the largest and highest profit retailer in the
World. How did Wal-Mart do it?

15. CASE STUDY 2: WAL-MART
The starting point
a relentless focus on satisfying customer needs;
Wal-Mart's goal was simply to provide customers with access to
goods when and where they want them and to develop cost
structures that enable competitive pricing.

16. Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,”
Harvard Business Review 70(2; March–April 1992), pp. 60–71.
Relationship between Facilities and Functions along the
Wal-Mart Supply Chain

17. Wal-Mart
Customers Request:
Buying detergent,
clothes, TV, …...
Wal-Mart
Stores
Wal-Mart
or third-party
distribution
centers
Procter & Gamble
Plastic Producer
Fabric Producer
Da-Fa Clothing, Inc. (China)
SONY Factory (Malaysia)
Electronics Components Producer
Chemical Producer
Zipper Producer
Thread Producer
Plastic Producer
Case 2: Global Supply Chain Example of WalGlobal Supply Chain Example of Wal--MartMart

18. CASE STUDY 2: WAL-MART (contd..)
The key to achieving this goal was to make the
way the company replenishes inventory the
centerpiece of its strategy.
This was done by using a logistics technique known
as cross-docking.
In this strategy, goods are continuously delivered to
Wal-Mart's warehouses from where they are
dispatched to stores without ever sitting in inventory.

19. CASE STUDY 2: WAL-MART (contd..)
This strategy reduced Wal-Mart's cost of sales
significantly and made possible to offer everyday
low prices to their customers.
- Stalk et. al, Harvard Business Review (1992)

20. SCM Software
• Enterprise Resource Planning (ERP)
– software that integrates components of a
company by sharing and organizing
information and data
– SAP was first ERP software
– mySAP.com
• web enabled modules that allow collaboration
between companies along the supply chain

21. Linking Supply Chain with SAP

22. Suppliers IC Mfg
PC Board
Subassembly
Suppliers
FAT
US DCs
Europe
DCs
Far East
DCs
Suppliers
Suppliers
Retailer
Retailer
Retailer
Case 3: Hewlett & Packard (HP)
FAT = Final assembly & test
IC Mfg = Integrated circuit manufacturing
PC Board = Printed circuit board
DCs = Distribution Centers
Consumers
Consumers
Consumers

23. Similar is Dell
Customers order
computers on-line
Dell
Assembly
Plant
Monitors by SONY (Mexico)
Keyboards by Acer (Taiwan)
CPU by Intel (USA)
Other components

24. Five core principles of
Supply Chain
Management?

25. Summary: Five Core Principles in
Global SCM
•Connectivity
•Collaboration
•Synchronization
This principle deals with the connectivity
network of supply chain partners.
Connectivity can be strategic in dealing with
planned linkage information integration and
network architecture.
Collaboration allows a closer integration
of the supply chain partners by integrating,
planning, forecasting and over all decision
making processes across organization
boundaries. True collaboration in an
ongoing investment in the extended supply
chain network.
Synchronization between vendors, manufacturing, sales
and marketing, finance, customers, and third parties is
an integral part of supply chain development. When
finely developed interface within the firms are between
the firm and its partners are seamless, frictionless and
transparent.

26. Five Core Principles
(Continued)
•Leverage
•Scalability
Scalability as it is used here, refers to the ability of the
firm to develop a set of supply chain processes that can
be easily duplicated with additional suppliers, customers,
and 3PL’s. The Principle of Scalability requires a
balance between customization and scalability.
The Principle of Leverage simply suggests that the firm
cluster and focus their assets on high payout
opportunities with core suppliers, customers, and Third
Party Logistics (3PL’s).

27. Trends in Global Supply Chain Management
• Collaborative Product Development:
– Example All Major Auto Companies
• Virtual Manufacturing and Supply Chain
Management
• Demand signal closest to supplier and
accurate
– Point-of-sales (POS) data capture and transmission and
now RFID in each piece of product eliminating the
need for line of sight scanning

28. Achieving the 21st Century Supply Chain: Seven areas of
opportunity
1
Use of low cost
sources
3
Focused
manufacturing
strategies
5
Globally aligned
operations
6
Built in agility “the
Virtual Supply
Chain”
2
Creative use of
strategic partnerships
OEMs, Outsourcing,
sub contracting 7
Industry wide
solutions
4
Distribution,
logistic
Optimisation
Multiple Channels
THE ‘GOAL’ IS TO CREATE A CUSTOMER DRIVEN AGILE BORDERLESS
SUPPLY CHAIN THAT IS BASED ON LOWEST COST ECONOMICS

29. Challenges for Global Supply Chains - Six key questions
6. How
closely
should
suppliers be
integrated?
1. What
should the
customer
interface look
like?
2. Should the
supply chain be
geared to
responsiveness
or efficiency?
3. How
critical are
new
products?
4. What
economies of
scale are
driving the
supply chain?
5. Where
should the
supply chain
be decoupled?
Buying
structure
Customer
base
Time
frame
The “Customer
Insight”
challenge

30. Thank You