Supply Chain Management Strategy, Planning, and Operation

This book has grown from a course on supply chain management taught to second-year MBA students at the Kellogg School of Management at Northwestern University. The goal of this class was to cover not only high-level supply chain strategy and concepts, but also to give students a solid understanding of the analytical tools necessary to solve supply chain problems. With this class goal in mind, our objective was to create a book that would develop an understanding of the following key areas and their interrelationships: The strategic role of the supply chain The key strategic drivers of supply chain performance Analytic methodologies for supply chain analysis Our first objective in this book is for the reader to learn the strategic importance of good supply chain design, planning, and operation for every firm. The reader will be able to understand how good supply chain management can be a competitive advantage while weaknesses in the supply chain hurt the performance of a firm. We use many examples to illustrate this idea and develop a framework for supply chain strategy. Within the strategic framework, we identify facilities, inventory, transportation, and information as the key drivers of supply chain performance. Our second goal in the book is to convey how these drivers may be used on a conceptual level during supply chain design, planning, and operation to improve performance. For each driver of supply chain performance, our goal is to provide readers with practical managerial levers and concepts that may be used to improve supply chain performance. Utilizing these managerial levers requires knowledge of analytic methodologies for supply chain analysis. Our third goal is to give the reader an understanding of these methodologies. Every methodological discussion is illustrated with its application in Excel. In this discussion, we also stress the managerial context in which they are used and the managerial levers for improvement that they support. The strategic frameworks and concepts discussed in the book are tied together through a variety of examples that show how a combination of concepts is needed to achieve significant improvement in performance. CHANGES TO THE NEW EDITION Although the basic goal of the book remains unchanged, this second edition has several significant changes that we believe improve the book. The first such change is the addition of new chapters on distribution networks (Chapter 4), sourcing (Chapter 13), and price and revenue management (Chapter 15). Chapter 4 provides a conceptual basis for designing a distribution network. It contains a discussion of different distribution networks and when a firm should prefer one over the other. The chapter provides a framework to answer questions such as: When is it best to structure a direct distribution system with all inventory stored at the manufacturer? When is it better to go through an intermediate distributor? When is it appropriate to stock and sell products at retail stores? Our goal is to provide managers with a logical framework for selecting the appropriate distribution network given product characteristics and the markets being served. Chapter 13 takes a comprehensive look at various sourcing decisions within a supply chain. We discuss different sourcing activities including supplier assessment, supplier contracts, design collaboration, and procurement. Building on previous chapters, we show how a supplier's performance impacts total supply chain cost and provide a structure for supplier evaluation based on total cost. We describe various forms of supplier contracts and discuss their impact on supply chain profits, information distortion, and supplier behavior. Our goal in this chapter is to provide a framework for evaluating a variety of sourcing decisions. Chapter 15 discusses how pricing and revenue management may be used to improve profits from a given sChopra, Sunil is the author of 'Supply Chain Management Strategy, Planning, and Operation', published 2003 under ISBN 9780131010284 and ISBN 013101028X.