1. Presented by: HC Lalpanmawia
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2.  The way of measure of product and service
 Internal quality assurance  external customer
satisfaction  customer value
 SCM is naturally an important component in
fulfilling customer needs and providing value.
 SCM can also impact the important customer
value of price by significantly reducing costs.
 Customer value drives changes and
improvements in the supply chain.
 Customer value is also important for
determining the type of supply chain.
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3.  Customer value  the way the customer
perceives the entire company’s offerings
(products, services…)
 Customer perception can be broken into
several dimensions:
 Conformance(mil) to requirements
 Product selection
 Price and brand
 Value-added services
 Relationships and experiences
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4.  The ability to offer what the customer wants and
needs is a basic requirement to which SCM
contributes by creating availability and selection
 market mediation(buaina kara palai) function
 the differences between supply and demand will lead to
the costs associated with the market mediation
 Supply > demand  inventory cost
 Demand > supply  lost sales and possibly market share
 Customer access
 the ability to easily find and purchase a product
 In all, the company provides
 Products, services for customers
 The way for customers to know its products, services
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5.  The contribution of product proliferation (rapid
reproduction/increase in no)to customer value is difficult to analyze
and understand.
 The proliferation of products and difficulty in predicting demand for a
specific model force retailers and distributors to hold large inventories.
 Sometimes there is no need to provide too many selections for one item
 Three successful business trends
 Specializing in offering one type of product : Starbucks, Subway
 Megastores that allow one-stop shopping for a large variety of
products :Wal-Mart
 Megastores that specialize in one product area : Home Depot, Office Max,
Sportmart
 Several ways to control the inventory problem of a large variety of
configuration or products
 Build-to-order model : Dell
 Larger inventories at major distribution centers: vehicles
 A fixed set of options that cover most customer requirements
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6.  Price of products and the level of service are
essential parts of customer value
 The price may not be the only factor a customer
considers, there may be a narrow price range that is
acceptable for certain products.
 Brand – an important factor affecting the price
 The internet and its impact on consumer behavior
have increased the importance of brand names,
because a brand name is guarantee of quality in the
buyer’s mind.
 Mecedes cars, Rolex watches, Coach purses…
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7.  Value-added offering can differentiate some
companies from their competitors and provide
them with more profitable pricing structures
 Especially technical products : after sales services
 Other reasons why many companies are
adding more services around their products:
 The commoditization of products
 The need to get closer to the customer
 The increase in information technology capabilities
 Value-added services
 Support, maintenance
 Information access
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8.  An increased connection between the firm and its
customers makes it more difficult for customers to
switch to another provider
 The learning relationship
 Companies build specific user profiles and utilize this
information to enhance sales as well as retain customers
 Beyond relationship, some companies are also
designing, promoting, and selling unique
experiences to their customers.
 An experience occurs when a company intentionally uses
services as the stage, and goods as props, to engage
individual customers in a way that creates memorable
events
 Disney’s theme parks
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9.  Revenue management
 “selling the right inventory unit to the right type of
customer, at th-e right time, and for the right price”
 Smart pricing
 Use price as a tool to influence customer demand
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10.  Many companies use price as a tool to influence customer demand
and apply the principles of revenue management techniques to their
respective industries.
 Smart pricing
 Customized pricing
 The objective is to distinguish between customers
according to their price sensitivity
Dynamic pricing
 Dynamic pricing, or changing price over time without
necessarily distinguish between different types of
customers has traditionally been used only for sales or
promotions
 Example : fashion clothing retailers offer discounts later
in the season to reduce inventory, and this discount is the
same for all customers at a given time.
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11.  The objective in this section is to introduce
various measures of customer value as well as
supply chain performance measures
 Service level
 Customer satisfaction
 Supply chain performance measures
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12.  Service level is the typical measure used to
quantify a company’s market conformance.
 Service level is usually related to the ability to
satisfy a customer’s delivery date.
 There is a direct relationship between the
ability to achieve a certain level of service and
supply chain cost and performance.
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13.  Customer satisfaction surveys are used to
measure sales department and personnel
performance as well as to provide feedback for
necessary improvements in products and
services.
 Customer satisfaction
 Customer loyalty
 Customer defections
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14.  Information technology has produced many
valuable benefits for customers and businesses.
 Customer benefits
 Exchange of information between customers and
business
 Business benefits
 The use of information by companies to learn more
about their customers
 Business-to-business benefits
 Enhance business-to-business capacities
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15.  Creating customer value is the driving force
behind a company’s goals, and supply chain
management is one of the means of achieving
customer value.
 Companies need to select their customer value
goals since the supply chain, market
segmentation, and skill sets required to succeed
depends on this choice.
 There is no real customer value without a close
relationship with customers.
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16. SUPPLY CHAIN
MANAGEMENT
SCM
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17. Flow of products and services from:
 Raw materials manufacturers
 Intermediate products manufacturers
 End product manufacturers
 Wholesalers and distributors and
 Retailers
• Connected by transportation and storage
activities
• Integrated through information, planning, and
integration activities
• Cost and service levels
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18. Supplier Material Flow
Material Flow Customer
Management Management
Information Flow
Schedule / Stock
Conversion Delivery
Resources Deployment
Leads to Business Process Integration

19. Plan Source Make Deliver Buy
Suppliers Manufacturers Warehouses & Customers
Distribution Centers
Transportation Transportation
Material Costs Costs Costs Transportation
Manufacturing Costs Inventory Costs Costs
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20.  A set of approaches used to efficiently integrate
 Suppliers
 Manufacturers
 Warehouses
 Distribution centers
 So that the product is produced and distributed
 In the right quantities
 To the right locations
 And at the right time
 System-wide costs are minimized and
 Service level requirements are satisfied
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21.  Supply chain management is a set of
approaches utilized to efficiently integrate
suppliers, manufacturers, warehouses, and
stores, so that merchandise is produced and
distributed at the right quantities, to the right
locations, and at the right time, in order to
minimize system wide costs while satisfying
service level requirements.
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22.  Supply Chain Goals
Efficient supply chain management must
result in tangible business improvements. It
is characterized by a sharp focus on
 Revenue growth
 Better asset utilization
 Cost reduction.

23.  Uncertainty is inherent to every supply chain
 Travel times
 Breakdowns of machines and vehicles
 Weather, natural catastrophe, war
 Local politics, labor conditions, border issues
 The complexity of the problem to globally optimize a supply
chain is significant
 Minimize internal costs
 Minimize uncertainty
 Deal with remaining uncertainty
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24.  Dealing with uncertain environments –
matching supply and demand
 Shorter product life cycles of high-technology products
 Less opportunity to accumulate historical data on customer demand
 Wide choice of competing products makes it difficult to predict
demand
 The growth of technologies such as the Internet enable greater
collaboration between supply chain trading partners
 If you don’t do it, your competitor will
 Major buyers such as Wal-Mart demand a level of “supply chain
maturity” of its suppliers
 Availability of SCM technologies on the market
 Firms have access to multiple products (e.g., SAP, Baan, Oracle) with
which to integrate internal processes
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25.  Forecasts are never right
 Very unlikely that actual demand will exactly equal forecast demand
 The longer the forecast horizon, the worse the forecast
 A forecast for a year from now will never be as accurate as a forecast
for 3 months from now
 Aggregate forecasts are more accurate
 A demand forecast for all CV therapeutics will be more accurate than a
forecast for a specific CV-related product
 Nevertheless, forecasts (or plans, if you prefer)
are important management tools when some
methods are applied to reduce uncertainty
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26. ISSUE CONSIDERATIONS
Network Planning • Warehouse locations and capacities
• Plant locations and production levels
• Transportation flows between facilities to minimize cost and time
Inventory Control • How should inventory be managed?
• Why does inventory fluctuate and what strategies minimize this?
Supply Contracts • Impact of volume discount and revenue sharing
• Pricing strategies to reduce order-shipment variability
Distribution Strategies • Selection of distribution strategies (e.g., direct ship vs. cross-docking)
• How many cross-dock points are needed?
• Cost/Benefits of different strategies
Integration and Strategic • How can integration with partners be achieved?
Partnering • What level of integration is best?
• What information and processes can be shared?
• What partnerships should be implemented and in which situations?
Outsourcing & Procurement • What are our core supply chain capabilities and which are not?
Strategies • Does our product design mandate different outsourcing approaches?
• Risk management
Product Design • How are inventory holding and transportation costs affected by product
design?
• How does product design enable mass customization?
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Source: Simchi-Levi

27. STRATEGY WHEN TO CHOOSE BENEFITS
Make to Stock standardized products, Low manufacturing costs;
relatively predictable meet customer demands
demand quickly
Make to Order customized products, Customization; reduced
many variations inventory; improved
service levels
Configure to Order many variations on Low inventory levels; wide
finished product; range of product
infrequent demand offerings; simplified
planning
Engineer to Order complex products, unique Enables response to
customer specifications specific customer
requirements
Source: Simchi-Levi
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28.  View the supply chain as a strategic asset and a
differentiator
 Wal-Mart’s partnership with Proctor & Gamble to
automatically replenish inventory
 Dell’s innovative direct-to-consumer sales and build-to-
order manufacturing
 Create unique supply chain configurations that align
with your company’s strategic objectives
 Operations strategy
 Outsourcing strategy
 Channel strategy
 Customer service strategy Supply chain configuration components
 Asset network
 Reduce uncertainty
 Forecasting
 Collaboration
 Integration
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