Chapter 1

Key terms and their definitions

Dr. Nguyen Duc Duy

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 Understanding the Supply Chain

Chopra, S., & Meindl, P. (2013). Supply Chain Management: Strategy, Planning, and Operation, 5th edition.
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Title Text
What is a Supply Chain?
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• All stages involved, directly or indirectly, in fulfilling a customer request.
•▪ Body
Includes
Levelmanufacturers,
One suppliers, transporters, warehouses, retailers, and
•customers.
Body Level Two
• Within
➢ Body each company,
Level Three the supply chain includes all functions involved in
fulfilling
• aBody
customer
Level Four request (product development, marketing, operations,
distribution,• finance, customer service).
Body Level Five

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Title Text
What is a Supply Chain?
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▪ Customer is an integral part of the supply chain
▪▪ Includes movement
Body Level One of products from suppliers to manufacturers to distributors
and information, funds, and products in both directions
• Body Level Two
▪ May be more accurate to use the term “supply network” or “supply web”
➢ Body Level Three
▪ Typical supply chain stages:
• Body Level Four
• Customers,
• Body Level Five
• Retailers
• Distributors
• Manufacturers
• Suppliers
➢ All stages may not be present in all supply chains (e.g., no retailer or distributor for
Dell)

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Title Text
What is a Supply Chain?
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text
Flows in a Supply Chain
Click
A to edit
supply chainMaster text styles
is dynamic and involves the constant flow of information, product,
and funds between different stages.
▪ Body Level One
• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text
Flows in a Supply Chain
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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TitleObjective
The Text of a Supply Chain
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Maximize overall value created
▪ Body Level One
• Body Level Two
➢ Body LevelChain
Supply Three Surplus
•
= Customer Value – Supply Chain Cost
Body Level Four
• Body Level Five

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TitleObjective
The Text of a Supply Chain
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Example:
• A Level
▪ Body customer
Onepurchases a wireless router from Best Buy for $60 (revenue).
•• Supply chain incurs costs (information, storage, transportation, components,
Body Level Two
assembly, etc.)
• ➢ Body Level Three
Difference between $60 and the sum of all of these costs is the supply chain
•
profit Body Level Four

• Supply •chain
Body Level Five
profitability is total profit to be shared across all stages of the supply
chain.
• Success should be measured by total supply chain profitability, not profits at an
individual stage.

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TitleObjective
The Text of a Supply Chain
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▪ Customer the only source of revenue
▪ Body
Sources of cost
Level One include flows of information, products, or funds between stages
• the
of supply
Body Levelchain
Two
▪ Effective
➢ Bodysupply
Levelchain
Three management is the management of flows between and
among •supply
Body chain stages to maximize total supply chain surplus
Level Four
• Body Level Five

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Title Text of Supply Chain Decisions
Importance
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▪ Wal-Mart, $1 billion sales in 1980 to $408 billion in 2010
▪ Seven-Eleven Japan, ¥1 billion sales in 1974 to ¥3 trillion in 2009
Body Level One
• Bodyfolded
▪ Webvan in two years
Level Two
➢ Body
▪ Borders, Level Three
$4 billion in 2004 to $2.8 billion in 2009
• Body Level Four
▪ Dell, $56 billion in 2006, adopted new supply chain strategies
• Body Level Five

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Title Text Phases of a Supply Chain
Decision
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▪ Supply chain strategy or design
• How
▪ Body to structure
Level One the supply chain over the next several years
• Bodychain
▪ Supply Levelplanning
Two
• ➢ Body Level
Decisions overThree
the next quarter or year
▪ Supply •chain
Body Level Four
operation
• • Body Level Five
Daily or weekly operational decisions

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Title Text
Supply Chain Strategy or Design
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▪ Decisions about the structure of the supply chain and what processes each
stage will perform
▪ Body Level One
▪ Strategic supply chain decisions
• Body Level Two
• Locations and capacities of facilities
➢ Body Level Three
• Products
•
to be made or stored at various locations
Body Level Four
• Modes• of Body
transportation
Level Five
• Information systems
▪ Supply chain design must support strategic objectives
▪ Supply chain design decisions are long-term and expensive to reverse – must
take into account market uncertainty

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Title Text
Supply Chain Planning
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▪ Definition of a set of policies that govern short-term operations
▪ Fixed by theOne
Body Level supply configuration from previous phase
• Body
▪ Starts withLevel
a forecast
Two of demand in the coming year
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text
Supply Chain Planning
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▪ Planning decisions:
• Which
▪ Body Levelmarkets
One will be supplied from which locations
• Planned buildup
Body Level Two of inventories
• ➢ Body Level Three
Subcontracting, backup locations
• • Body Level Four
Inventory
•
policies
Body Level Five
• Timing and size of market promotions
▪ Must consider in planning decisions demand uncertainty, exchange rates,
competition over the time horizon

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Title Text
Supply Chain Operation
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▪ Time horizon is weekly or daily
▪▪ Decisions
Body Levelregarding
One individual customer orders
• Bodychain
▪ Supply Levelconfiguration
Two is fixed and operating policies are determined
▪ Goal➢is Body
to implement
Level Three the operating policies as effectively as possible
▪ Allocate• orders to inventory
Body Level Four or production, set order due dates, generate pick
lists at a warehouse,
• allocate an order to a particular shipment, set delivery
Body Level Five
schedules, place replenishment orders
▪ Much less uncertainty (short time horizon)

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Title TextView of a Supply Chain
Process
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▪ Cycle View:
• processes
▪ Body in a supply chain are divided into a series of cycles, each performed at
Level One
the interfaces between two successive supply chain stages
▪
• Body Level Two
Push/Pull View:
• ➢ Body Level Three
processes in a supply chain are divided into two categories depending on
•
whetherBody Levelare
they Four executed in response to a customer order (pull) or in
•
anticipation of Level
Body a customer
Five order (push)

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Title Text
Cycle View of Supply Chain Processes
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text
Cycle View of Supply Chain Processes
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

Figure 1-4

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Title Text View of Supply Chains
Push/Pull
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text View of Supply Chain Processes
Push/Pull
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▪ Supply chain processes fall into one of two categories depending on the timing
of their execution relative to customer demand
▪ Body Level One
▪ Pull: execution is initiated in response to a customer order (reactive)
• Body Level Two
▪ Push: execution is initiated in anticipation of customer orders (speculative)
➢ Body Level Three
▪ Push/pull boundary separates push processes from pull processes
• Body Level Four
• Body Level Five

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Title Text View of Supply Chain Processes
Push/Pull
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▪ Useful in considering strategic decisions relating to supply chain design – more
▪ global view One
Body Level of how supply chain processes relate to customer orders
• Body
▪ Can combine
Levelthe
Twopush/pull and cycle views
• L.L. Bean
➢ Body Level Three
• Dell• Body Level Four
• Body Level Five
▪ The relative proportion of push and pull processes can have an impact on
supply chain performance

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 Push/Pull View of – L.L. Bean
Title Text
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text View – Dell
Push/Pull
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text
Supply Chain Macro Processes
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▪ Supply chain processes discussed in the two views can be classified into
• Customer
▪ Body Relationship Management (CRM)
Level One
• Internal Supply
Body Level TwoChain Management (ISCM)
• ➢
Supplier Relationship
Body Level Three Management (SRM)
▪ Integration
• Body Levelthe
among Fourabove three macro processes is critical for effective and
successful•supply
Body Level
chainFive management

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Title Text
Supply Chain Macro Processes
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

Figure 1-8

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Title Text
AIC- Examples of Supply Chains
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▪ Read case studies and answer the questions:
• Gateway
▪ Body and Apple
Level One
• Zara
Body Level Two
• ➢
W.W. Grainger
Body and McMaster-Carr
Level Three
• •
Toyota Body Level Four

• Amazon
• Body Level Five

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 The E-Supply Chain

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Title Text
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▪ Body Level One

https://trends.google.com.vn
• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
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1. First Stage — Logistics Decentralization
▪ Body
2. Second One— Total Cost Management
Stage
Level
3. •Third Stage
Body —Two
Level Integrated Functions
➢ Body
4. Fourth Stage — Supply
Level Three Chain Management
• •
Supply Body Level Four
chain operations reference (SCOR)
• Body Level Five
5. Fifth Stage — e-Supply Chain Management

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
The SCM
Click concept
to edit could
Master textbe said to consist of Þve distinct management stages:
styles

▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
The SCM
Click concept
to edit could
Master textbe said to consist of five distinct management stages:
styles

▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
The SCM
Click concept
to edit could
Master textbe said to consist of five distinct management stages:
styles

▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
Click tochain
Supply edit Master
operations
text styles
reference (SCOR)

•▪ Body
SCORLevel
focuses
Oneon five basic management processes in the supply chain
• Body
• These Level Two
processes are plan, source, make, deliver, and return.
➢ Body Level Three
• Body Level Four
• Body Level Five

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
Click to edite-SCM
Actualizing Master text styles

▪ Body
❑ Three-step
Level One
process:
•• Body
Integration
Level of
Twosupply channel functions within the enterprise.
➢➢ Body
An example
Level Three
would be integrating sales and logistics so that the customer, rather
•thanBody
departmental
Level Four measurements, would receive top attention.
• Integrate
• across
Body trading partners channel operations functions, such as
Level Five
transportation, channel inventories, and forecasting.
• Utilize the power of the Internet to synchronize the channel functions of the
entire supply network into a single, scaleable “virtual” enterprise, capable of
optimizing core competencies and resources from anywhere at any time in the
supply chain to meet market opportunities.

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STAGES
Title TextOF SUPPLY CHAIN MANAGEMENT DEVELOPMENT
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Changing when
Master
appling
text styles
e-supply chain

▪ Product
Body Level
andOne
Process Design
• Body Level Two
▪ e-Marketplaces and Exchanges
➢ Body Level
▪ Collaborative Three
Planning
• Body Level Four
▪ Fulfillment Management
• Body Level Five

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
Click to edit
e-Supply chain
Master
system
text styles

▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
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Elements of e-supply
Master text
chains
styles

▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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 Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
Click toDEFINITION
e-SCM edit Master text styles

▪ Body Level One

• application
“The Body LevelofTwoInternet technologies focused on the continuous regeneration
of networks
➢ BodyofLevel
businesses
Three empowered to execute superlative, customer-
winning value
• atLevel
Body the Four
lowest cost through the digital, real-time synchronization
of product/service
• transfer,
Body Level Five service needs and demand priorities, vital
marketplace information, and logistics delivery capabilities.”

Superlative: Cấp cao

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
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CHARACTERISTICS OF styles
e-SCM

▪ Body
1. e-SCM
Level
enables
One a whole new view of the function of information in the supply
•chain
Body Level Two
2. e-SCM enables
➢ Body Level enterprises
Three to form customer-winning relationships with supply
chain partners
• Body Level Four
•
3. Supply chain synchronization:
Body Level Five timing is everything!

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
CHARACTERISTICS OF e-SCM
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1. e-SCM enables a whole new view of the function of information in the
supply chain
▪ Body Level One
•▪ Body LevelofTwo
Utilization e-Information
➢ BodyChain
▪ Supply Level Three
Event Management
• Body Level Four
▪ “Real Options” Management
• Body Level Five
▪ Supply Chain Systems Integration
▪ Collaborative Relationships

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
CHARACTERISTICS OF e-SCM
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2. e-SCM enables enterprises to form customer-winning relationships with
supply chain partners
▪ Body Level One
• Body Level
▪ Establish Two
a Web-Enabled Network of Channel Partners
➢ BodyCustomers
▪ Network-In Level Three
• Body Level Four
▪ Accelerate and Improve Decision-Making by Integrating Business Partners
• Body Level Five
▪ Meeting Customer Expectations

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
CHARACTERISTICS OF e-SCM
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3. Supply chain synchronization: timing is everything!
▪ Body Level One
• BodyaLevel
▪ Develop TwoChain Strategy that Provides for Avenues of Ongoing Supply
Supply
Chain
➢ Synchronization
Body Level Three
▪ Provide• forBody
the Level
Establishment
Four of Avenues for e-SCS Operations Excellence
• Body Level Five
▪ Identify and Implement the Right Enabling Technologies
▪ Design and Implement New Forms for Organizational Relationships

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
CHARACTERISTICS OF e-SCM
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e-Supply chain channels
▪ Body Level One
• Body Level
A successful Two channel will contain the
e-SCS
followingkey
➢ Bodycomponents:
Level Three
• •
a market-winning strategy
Body Level Four

• • Body Level Five

synchronized relations with partners
• technologies that enable channel
synchronized e-information
• performance metrics that assist cross-
channel teams to continuously review
channel capabilities and reformulate
channel decisions

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Title Text e-SUPPLY CHAIN MANAGEMENT
DEFINING
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▪ Body Level One

• Body Level Two
➢ Body Level Three
• Body Level Four
• Body Level Five

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