Lesson 4

TOPIC: DESIGN OF SUPPLY CHAIN

COURSE CONTENT
5.1 Introduction
The supply chain network consists of suppliers, manufacturing centres, warehouses, distribution
centres, and retail outlets, as well as raw materials, work-in-process inventory, and finished products
that flow between the facilities. It is the collection of physical locations, transportation vehicles and
supporting systems through which the products and services the firm markets are managed and
ultimately delivered. All organisations have or can purchase the components to build a supply chain
network. Physical locations included in a supply chain network can be manufacturing plants, storage
warehouses, major distribution centres, ports, etc. Transportation modes that operate within a supply
chain network can include the many different types of trucks, trains, container ships or cargo planes.
The many systems which can be utilised to manage and improve a supply chain network include order
management systems, warehouse management system, transportation management systems,
strategic logistics modelling, inventory management systems, replenishment systems, supply chain
visibility, optimisation tools and more. Emerging technologies and standards are now making it possible
to automate these supply chain networks in a real time mode making them more efficient than the
simple traditional supply chain.
5.2 Role of Distribution
Distribution is the steps taken to move and store a product from the production stage to the
customer stage in a supply chain. Distribution directly affects cost and the customer experience and
therefore drives profitability. There is a system of intermediaries between the producer of goods and/or
services and the final users. A strong and efficient distribution network is one of the most important
assets a manufacturer can possess. The distribution is one of the four elements of the marketing mix.
The other three parts of the marketing mix are product, pricing, and promotion. Distribution is a key
driver of the overall profitability of a company because it directly impacts both the supply chain costs
and customer experience. Good distribution system serves the effectiveness of realising marketing
strategy. This strategy is aimed at reaching certain levels of customer service.
Distribution process involves each intermediary passing the product down the chain to the next
organisation, before it finally reaches the consumer or end-user. This process is known as the
distribution chain or the channel. Each of the elements in these chains will have their own specific
needs, which the producer must take into account, along with those of the all-important end-user.
A number of alternate channels of distribution may be available:
• Distributor, who sells to retailers
• Retailer (dealer), who sells to end customers
• Advertisement typically used for consumption goods
Distribution channels may not be restricted to physical products from producer to consumer in
certain sectors. Both direct and indirect channels may be used. Hotels, for example, may sell their
services directly or through travel agents, tour operators, airlines, tourist boards, centralised reservation
systems, etc. There has been some sort of innovations in the distribution of services. For example,
there has been an increase in franchising and in rental services. There has also been some evidence of
service integration, with services linking together, particularly in the travel and tourism sectors. For
example, links now exist between airlines, hotels and car rental services.
 Supply chain distribution often introduces middlemen into the economic market. Historically, supply
chains were primarily found in the manufacturing and production industries. These companies
transform raw materials such as timber, minerals, steel, and fabric into valuable goods ready for use by
consumers. Manufacturing and production companies may not have resources available for delivering
products into retail stores where consumers can safely shop and purchase items, so they depend upon
supply chain distribution to complete the process. There is an increasing number of complicated supply
chains. So, the distribution network design plays a key role in controlling the cost of doing business.
The distribution network design involves:
• Locating production plants and distribution warehouses
• Determining the best strategy for distributing the product from the plants to the warehouses and
from the warehouses to the customers
The aim is to select the optimum numbers, locations and capacities of plants and warehouses to
open so that all customer demand is satisfied at minimum total costs of the distribution network
(including transportation and production costs). Since, controlling of the cost of doing business is an
important factor; it can put supply chain network optimisation goals ahead of competitors. The choice of
distribution network can achieve supply chain objectives from low cost to high responsiveness
.
5.3 Factors Influencing Distribution Network Design

At the highest level, performance of a distribution network should be evaluated along two dimensions:
• Customer needs that are met (influence the company’s revenues)
• Cost of meeting customer needs (decide the profitability of the delivery network)
Elements of customer service influenced by network structure are:
• Response time: The time between when a customer places an order and receives delivery.
• Product variety: The number of different products/ configurations that a customer desires from
the distribution network.
• Product availability: The probability of having a product in stock when a customer order arrives.
• Customer experience: This includes the ease with which the customer can place and receive
their order.
• Order visibility: The ability of the customer to track their order from placement to delivery.
• Returnability: The ease with which a customer can return unsatisfactory merchandise and the
ability of the network to handle such returns.
Generally, a customer always wants the highest level of performance along with the above
dimensions. However, in practice, this is not always the case. For example: customers ordering a book
at Amazon.com are willing to wait longer than those that drive to a nearby store to get the same book.
On the other hand, customers can find a far larger variety of books at Amazon compared to the nearby
store.

There can be customers who can tolerate a large response time. The firms target these customers
and require few locations that may be far from the customer. They focus on increasing the capacity of
each location. On the other hand, firms that target customers who value short response times need to
locate close to them. Such firms must have many facilities, with each location having a low capacity.
Thus, a decrease in the response time which the customers desire, increases the number of facilities
required in the networks. For example, ABC provides its customers with books on the same day but
requires about 400 stores to achieve this goal for most of the country. Amazon, on the other hand,
takes about a week to deliver a book to its customers, but only uses about 5 locations to store its
books.
Changing the distribution network design affects the following supply chain costs:
• Inventories
• Transportation
• Facilities and handling
• Information

As the number of facilities in a supply chain increases, the inventory and resulting inventory costs
also increase as shown in the above figure. As long as inbound transportation economies of scale are
maintained, increasing the number of facilities decreases total transportation cost. A distribution
network with more than one warehouse allows reduction of transportation cost relative to a network with
a single warehouse. Facility costs decrease as the number of facilities is reduced, because a
consolidation of facilities allows a firm to exploit economies of scale. Total logistics costs are the sum of
inventory, transportation, and facility costs for a supply chain network. Distribution network design
options must therefore be compared according to their impact on customer service and the cost to
provide this level of service.

5.4 Design Options for a Distribution Network

Distribution network design options must be compared according to their impact on customer
service and the cost to provide this level of service. There are two key decisions while designing a
distribution network:
• Will product be delivered to the customer location or picked up from a predetermined site?
• Will product flow through an intermediate location?

The distribution networks have their relative strengths and weaknesses. Based on the choices for
the two decisions, there are five distinct distribution network designs that are classified as follows:

Manufacturer storage with direct shipping (Drop shipping)

The product is shipped directly from the manufacturer to the end customer, bypassing the retailer (who
takes the order and initiatesthe delivery request). All inventories are stored at the manufacturer.
Information flows from the customer, via the retailer, to the manufacturer, while product is shipped
directly from the manufacturer to customers.
● The biggest advantage of drop shipping is the ability to centralise inventories at the
manufacturer. A manufacturer can aggregate demand and provide a high level of product
availability with lower levels of inventory than individual retailers.
● The benefits from such sort of centralisation are highest for high value, low volume items with
unpredictable demand and vice verse. Thus, drop shipping would not offer a significant
inventory advantage to an online grocer selling a staple item like detergent.
● Transportation costs are high with drop shipping because the average outbound distance to the
end consumer is large and package carriers must be used to ship the product that have high
shipping costs per unit compared to truckload carriers.
 ● With drop shipping, a customer order with items from several manufacturers will involve
multiple shipments to the customer. This loss in aggregation in outbound transportation further
increases cost.
● Supply chains save on the fixed cost of storage facilities when using drop shipping because all
inventories are centralised at the manufacturer.
● There can be some savings of handling costs too because the transfer from manufacturer to
retailer no longer occurs. Handling costs can be significantly reduced if the manufacturer has
the capability to ship orders directly from the production line.
● A good information infrastructure is needed so that the retailer can provide product availability
information to the customer even though the inventory is located at the manufacturer.
● The information infrastructure requirement is simpler for direct sellers like Dell because two
stages (retailer and manufacturer) do not need to be integrated.
● Response times tend to be large when drop shipping is used because the order has to be
transmitted from the retailer to the manufacturer and shipping distances are on average longer
from the manufacturer’s centralised site. Also, the response time need not be identical for
every manufacturer that is part of a customer order.
● Manufacturer storage with drop shipping allows a high level of product variety to be made
available to the customer.
● Drop shipping provides a good customer experience in the form of delivery to the customer
location. The experience, however, suffers when a single order containing products from
several manufacturers is delivered in partial shipments.

Manufacturer storage with direct shipping and in-transit merge

● Unlike drop shipping where each product in the order is sent directly from each manufacturer to
the end customer, in-transit merge combines pieces of the order coming from different locations
so that the customer gets a single delivery. Information and product flows for the in-transit
merge network. For example, when a customer orders a PC from ABC along with a XYZ
monitor, the package carrier picks up the PC at the ABC factory, the monitor at the XYZ factory
and merges the two together at a hub before making a single delivery to the customer.
● The ability to aggregate inventories and postpone product customisation is a significant
advantage of in-transit merge.
● As from above example, in-transit merge allows ABC and XYZ to aggregate all their inventories
at the factory. This approach will have the greatest benefits for products with high value whose
demand is hard to estimate.
● The transportation costs are lower than drop shipping because of the merge that takes place at
the carrier hub prior to delivery to the customer.
● An order with products from many manufacturers thus requires only one delivery to the
customer. Fewer deliveries save transportation cost and simplify receiving process.
● Overall supply chain facility and handling costs are somewhat higher than drop shipping.
● Sophisticated information infrastructure is needed to allow the in-transit merge.
● The information, operations at the retailer, manufacturers, and the carrier must be coordinated.
● Response times may be higher because of the need to perform the merge.
 ● Customer experience should be better than drop shipping because the customer receives only
one delivery for their order instead of many partial shipments.
● The main advantage of in-transit merge over drop shipping is the lower transportation cost and
improved customer experience.
● The major disadvantage is the additional effort during the merge.

Distributor storage with package carrier delivery

● Under this option, inventory is not held by manufacturers at the factories but is held by
distributors or retailers in intermediate warehouses and package carriers are used to transport
products from the intermediate location to the final customer. Information and product flows
when using distributor storage with delivery by a package carrier.
● Transportation costs are somewhat lower for distributor storage compared to manufacturer
storage because an economic mode of transportation (example, truckload) can be employed
for inbound shipments to the warehouse, which is closer to the customer.
● Unlike manufacturer storage where multiple shipments may need to go out for a single
customer order with multiple items, distributor storage allows outbound orders to the customer
to be bundled into a single shipment further reducing transportation cost.
● For faster moving items, transportation savings from distributor storage relative to manufacturer
storage increase.
● Compared to manufacturer storage, facility costs are somewhat higher with distributor storage
because of a lack of aggregation. From a facility cost perspective, distributor storage is not
good for extremely slow moving items.
● The information infrastructure needed with distributor storage is significantly less complex than
the manufacturer storage.
● Response time with distributor storage is better than with manufacturer storage because
distributor warehouses are closer to customers and the entire order is aggregated at the
warehouse on shipping.
● Distributor storage can handle somewhat lower variety than manufacturer storage.

Distributor storage with last mile delivery

● Last mile delivery refers to the distributor / retailer delivering the product to the customer’s
home instead of using a package carrier. Peapod and Albertson’s have used last mile delivery
in the grocery industry. Unlike package carrier delivery, last mile delivery requires the distributor
warehouse to be much closer to the customer, increasing the number of warehouses required.
● Distributor storage with last mile delivery requires higher levels of inventory because it has a
lower level of aggregation.
● Transportation costs are highest using last mile delivery. This is because package carriers
aggregate delivery across many retailers and are able to obtain better economies of scale than
available to a distributor or retailer attempting last mile delivery.
● Last mile delivery is cheaper in dense cities.
 ● Transportation costs are reasonable for bulky products where the customer is willing to pay for
home delivery. For example, home delivery for water and large bags of rice has proved quite
successful in China, where the high population density has helped decrease delivery costs.
● Facility and processing costs are very high using this option given the large number of facilities
required. For example, a grocery store doing last mile delivery performs all the processing until
the product is delivered to the customer’s home unlike a supermarket where there is much
more customer participation.
● The information infrastructure with last mile delivery requires the additional capability of
scheduling deliveries.
● Response times are faster than the use of package carriers.
● Product variety is generally lower than distributor storage with carrier delivery.

Manufacturer or distributor storage with costumer pickup

● In this approach, inventory is stored at the manufacturer or distributor warehouse but
customers place their orders online or on the phone and then come to designate pickup points
to collect their orders. Orders are shipped from the storage site to the pickup points as needed.
● Inventory costs using this approach can be kept low with either manufacturer or distributor
storage to exploit aggregation.
● Transportation cost is lower than any solution using package carriers because significant
aggregation is possible when delivering orders to a pickup site.
● Facility costs are high if new pickup sites have to be built.
● A significant information infrastructure is needed. A good coordination is needed between the
retailer, the storage location, and the pickup location.
● The main advantage of a network with consumer pickup sites is that it can lower delivery cost,
thus expanding the set of products sold as well as customers served online.
● The major hurdle is the increased handling cost at the pickup site.

5.5 E-business and its Impact

Electronic business is commonly referred as eBusiness or e-business, or an internet business, may
be defined as the application of information and communication technologies in support of all the
activities of business. E-business is a term used to describe businesses that run on the internet, or
utilise internet technologies to improve the profitability of a business. The entire process of setting up a
website, helping the prospective customers navigate through the website, showing them the available
products, offering discounts and vouchers and doing everything possible to encourage the prospective
clients and converting them into customers, comes under the area of e-business.

By selling products and services online, an e-business is able to reach a wider consumer base. This
function of eBusiness is referred to as ecommerce, and the terms are occasionally used
interchangeably. E-business is a vast term encompassing the various business processes that aim to
integrate the vendors or traders with the consumers and suppliers using the internet. E-commerce, on
the other hand, is a subset of e-business and refers to online transactions that can be accounted for in
monetary terms. For instance, accepting credit card payment for products sold to consumers or making
payments for shopping online are examples of e-commerce. Thus, simply saying, e-commerce refers to
the last stage of e-business which involves collecting payments for the goods sold by the business firm.
Wherein, commerce constitutes the exchange of products and services between businesses and
groups and individuals, electronic commerce focuses on the use of information and communication
technologies to enable the external activities and relationships of the business with individuals, groups
and other businesses. An eBusiness may also use the internet to acquire wholesale products or
supplies for in-house production. This facet of eBusiness is sometimes referred to as e-procurement.
Using email and private websites as a method for dispensing internal memos and white sheets is
another use of the internet by e-business.

A central server or email list can serve as an efficient method for distributing necessary information.
The trend continues with new technologies, such as internet-enabled cell phones and laptops. It can be
used for buying and selling of products. The electronic chat is widely in use nowadays which saves
time. The technical support operators can remotely access a customer’s computer and assist them in
correcting a problem. Organisations are finding that their ability to respond to unpredicted changes in
the market is becoming a key factor in survival. The ability to adjust e-business processes to customer
references (flexibility) has become a necessity for online systems.

5.5.1 Advantages of E-Business The advantages of e-business are described below:

The advantages of e-business are described below:
Worldwide presence. This is the biggest advantage of conducting business online. A firm engaging
in e-business can have a nationwide or a worldwide presence. There are many examples which had
the advantage by the use of e-business. IBM was one of the first companies to use the term e-business
for servicing customers and collaborating with business partners from all over the world. Dell Inc. is
another success story which too had a blooming business selling personal computers throughout the
United States, only via telephone and the internet till the year 2007. Hence, worldwide presence is
ensured if companies rethink their business in terms of the Internet.
Cost effective marketing and promotions Nowadays, the web is used to market products
guarantees worldwide. Advertising techniques like pay per click advertising ensure that the advertiser
only pays for the advertisements that are actually viewed. Affiliate marketing is a sort of marketing
where customers are directed to a business portal because of the efforts of the affiliate who in turn
receive a compensation for their efforts meeting with success. Affiliate marketing has helped both the
business and the affiliates. The cost effective online advertising strategies are used in e-business.

Developing a competitive strategy In order to ensure a competitive advantage, an effective

strategy should be there to maintain the advantage and earn profits. It can be a cost strategy or a
differentiation strategy. For example, till the year 2007, Dell Inc. was selling computers only via the
internet and the phone. It adopted a differentiation strategy by selling its computers online and
customising its laptops to suit the requirements of the clients. Thus, e-business resulted in Dell Inc.
managing to capture a vast market using the differentiation strategy.
 Better customer service Customer services help in encouraging the customer to know more about
the product or service. For example, on visiting a website, the customer is greeted by a pop-up chat
window. Moreover, payments can be made online; home-delivery of products can be done.

5.5.2 Disadvantages of E-Business

The disadvantages of E-Business are described below:

Sectoral limitations Lack of growth in some of the sectors can be on the account of product or
sector limitations. For instance, food sector has not experienced growth of sales and revenue
generation because of a number of practical reasons like food products being perishable items. Also,
consumers do not look for food products on the internet since they prefer going to the supermarket to
buy the necessary items as and when the need arises.

Costly e-business solutions for optimisation Substantial resources are required for redefining
product lines in order to sell online. Upgrading the computer systems, training personnel, and updating
websites require substantial resources. Moreover, electronic data management and enterprise resource
planning is necessary for ensuring optimal internal business processes.

From the above discussion, it is observed that the advantages clearly overshadow the
disadvantages of e-business.

5.6 Distribution Networks in Practice

The ownership structure of the distribution network can have as big as an impact as the type of
distribution network. The choice of a distribution network has very long-term consequences. Consider
whether an exclusive distribution strategy is advantageous. Product, price and commoditisation
criticality have an impact on the type of distribution system preferred by customers.

5.7 Distribution Network Design in the Supply Chain

The objective of strategic distribution network planning is to determine a plan that indicates the most
economic way to ship and receive product while maintaining or increasing customer service
requirements, i.e., to maximise profits and optimise service. Strategic distribution network planning
typically answers the following:

● How many distribution centres should exist?

● Where should the distribution centre(s) be located?
● How much inventory should be stocked at each distribution centre?
● What customers should be serviced by each distribution centre?
● How should the customer `order` from the distribution centre?
● How the distribution should centres `order` from vendors?
● How frequently should shipments be made to each customer?
● What should the service levels be?
● What transportation methods should be utilised?
● How to measure the balance between logistic costs and customer service correlation?
●
5.8 Factors Affecting Network Design Decisions

Following are the factors that influence the decision of distribution network design:

Centralisation vs. Regionalisation. In distribution network planning, there is a well-established

relationship between the number of distribution points, transportation costs and customer service
targets. Graphically, the point at which these three entities merge is the optimum balance of facility and
transportation costs to develop a low-cost, high service distribution network. As the distribution
networks become more centralised, the internal support structures such as facility management, order
entry, customer service and data processing also do the same. Degree of centralisation achieved
determines the cost savings over decentralised networks. However, service levels, limitations on total
facility size and risk mitigation must be factored into the decision.

Energy. Considerable shifts in the cost of energy (for example, electricity, fuel, etc.) can have an
impact on operating costs and, as a result, on distribution. Distribution projects may fail once the cost of
energy turnsinto an influencing factor, for example, energy-intensive facilities such as refrigerated
warehouses. Thus, it is critical to work with all energy providers to determine the load that an operation
would put on the local energy system and develop solutions that conserve energy while achieving
goals. Some interesting energy solutions can be abatement programs (high power generator or solar
power) to run normally on a reduced energy load or high-efficiency units. Even if the transportation is
handled via third party carriers, rising fuel costs make a very sensitive component of distribution costs.
Some strategies to consider mitigating this can be cube out containers, transportation management
systems, private fleet concerns and so on.

Flexibility. When designing a distribution facility, versatile equipment should be specified. In the
beginning, the latest technology can make a good start but becomes a waste of money if it can’t keep a
pace with unpredictable events. Planning for probable or doubtful changes in the distribution profile
should drive the warehouse design and equipment specifications.
For the majority of distribution operations, flexible equipment is the more practical choice.

Global marketplace. Preparedness is the critical element in a global marketplace. The supply chain
is ever-changing and has a global impact that needs to be considered. This could be as minor as a
domestic customer wanting direct shipments to an international location, or as major as an acquisition
by a global company or addition of a key global account. Transportation systems should be designed
with exports in mind. Proper customs documentation and international shipping paperwork should be
done. Operations should be designed in a manner that product re-labelling or special packaging for
international customers can be done easily. Facilities may be needed to accommodate inbound or
outbound airfreight or ocean freight containers. Customer service functions may need to operate in
24-hour mode to assist customers in all time zones.

Government involvement. The involvement of government has an impact on distribution. The

distribution system should be aware of legislation that involves their industry. Many decisions are made
daily at a local, state, and federal level that impact distribution operations. Taxes, labor regulations,
transportation restrictions and infrastructure decisions are continually up for review and discussion at
every level of government.
 Information systems. In today’s e-world, timely and accurate information is needed. The days of
daily distribution activity and nightly updates to financial systems are done. Today distribution execution
systems must be:

● Real-time: Customer requirements are moving toward being able to instantly track an order
through every step of the fulfilment process to delivery. The information is linked to internet
where a customer can easily log in and see the exact status of their order. Real-time interfaces
and host system updates enable the customer.
● Paperless: Language and educational barriers result in error-prone paper documents that are
often misinterpreted, at best resulting in loss within the distribution operation or, worse still, lost
customers due to fulfilment issues. The solution is paperless systems requiring operator
validation.
● Standardised: Standardised, industry-tailored software is now the rule.
Modularity. As companies in the distribution space move, their business will typically jump to a new
distributor or distributors. The ability to quickly take on significant business volumes dictates that
modularity is a necessity for a thriving distribution organisation. Modularity must be evident in:
● Assets: Distribution assets must be modular, providing the ability to easily expand facilities,
capacities and equipment to meet increasing demands and diverse products. Many
companies design this into a facility.
● Work assignments: The workforce must be able to handle new work assignments and
transfer knowledge to new employees effectively.
● Labour management systems: These systems must be able to handle the addition of new
operations quickly and economically so that performance can be measured and costs can
be kept under control.

Off-highway vehicles. In many countries, issues regarding the environment and air quality
continue. These issues for stringent air-quality regulations will impact the warehouse. Electric vehicles
will take over as the preferred models in the warehouse.

Pace Access to a web site can now order product, specify their service requirements, pay for their
order on-line, and track the order right to their doorstep. For distributors, this meansthat the pace of
distribution must increase significantly to account for the reduced times, shorter product lives, increased
inventory turnover and greater customer expectations that is considered standard in the modern
business-to-business and business-to-consumer marketplace. For example, if a customer places an
order today with next-day delivery, a company picks and ships the order the next day. This won’t be
competitive and the entire supply chain needs to keep pace, from vendor compliance to information and
execution systems in order to support the new economy.

People Team-based, participatory organisational culture and a total dedication to customer

satisfaction are the components of success in supply chain distribution network. For example,
employee celebration days, employee suggestion programs, revised organisational designs,
compensation or incentive or bonus plans, and other processes that directly tie the distribution
associate.
Price The service and quality are key factors in selecting a distribution partner. Modern free
enterprise demands efficient, effective and low-cost distribution. The goal of a successful distribution
operation should be to operate within their core values at the lowest cost possible. The path to
competitive pricing is to operate efficiently and flexibly at low cost.
Accountability A successful distribution operation must have accountability. Accountability is made
possible by effective leadership, clear communications and efficient systems and equipment to enable
productive operations and a fulfilling work environment. Effective leadership make difficult decisions
while maintaining the commitment of the organisation. Accountability requires establishing standards,
identifying improvement opportunities and measuring performance.
Reverse logistics The challenge is the question of handling the products that are coming back into
the operation. The decision on whether to accept the product, whether a refused shipment, an
authorised customer return, or an unexpected return must be planned for and communicated with the
distribution operation.
Third party logistics A growing number of companies are turning to third party logistics
organisations to handle the customer fulfilment in the supply chain. Companies that are accustomed to
true partnering with customers and suppliers have less trouble moving to the third party logistics and
achieving the potential cost savings. The key steps are to conduct a complete search for the right third
party logistics vendor, thoroughly review cost proposals and contracts to ensure there is financial
benefit, and work with the third party logistics.
Variety Special packaging, pricing, labelling and delivery requirements are becoming the norm and
must be addressed in any distribution plan. These tasks should be designed into the operation. Many
companies invest large amounts of capital setting up specialised packing or value-added services to
gain competitive advantages. Properly planned, these services can give profits, providing differentiation
in a competitive marketplace.
5.9 Supply Chain Model
The supply chain models address both the upstream and downstream sides. The Supply-Chain
Operations Reference model (SCOR) measures total supply chain performance. It is a process
reference model for supply-chain management, spanning from the supplier’s supplier to the customer’s
customer. It is the most widely used model. It includes delivery and order fulfilment performance,
production flexibility, warranty and returns processing costs, inventory and asset turns, and other
factors in evaluating the overall effective performance of a supply chain.
SCOR is based on five distinct management processes: Plan, Source, Make, Deliver, and Return.
● Plan: Processes that balance aggregate demand and supply to develop a course of action
which best meets sourcing, production, and delivery requirements.
● Source: Processes that procure goods and services to meet planned or actual demand.
● Make: Processes that transform product to a finished state to meet planned or actual demand.
● Deliver: Processes that provide finished goods and services to meet planned or actual
demand, typically including order management, transportation management, and distribution
management.
● Return: Processes associated with returning or receiving returned products for any reason.
These processes extend into post-delivery customer support.