1MSc International Management – CEMS Global Supply Chain Management IM03CC Preliminary version – Subject to changes. Last updated: J uly , 2014 Lecturers Prof.dr. René de Koster (coordinator) Dr. Melek Akin-Ates Department of Technology and Operations Management Rotterdam School of Management, Erasmus University Academic Year 2014/2015 2 GLOBAL SUPPLY CHAIN MANAGEMENT (IM03CC) Course Faculty Prof.dr. M.B.M. de Koster (coordinator) Office: T10-56 (after mid August : T09-56) Tel: 010-408 1719 Email:
[email protected] Dr. M. Akin-Ates Office: T10-50 Tel: 010-408 1636 Email:
[email protected] Course Staff Mrs. Carmen Meesters, Office T10-25 (after mid August: T09-25), Tel: 010 408 1719, Email:
[email protected] Course Description Supply chain management (SCM) has emerged as one of the major areas for companies to gain a competitive edge. Managing supply chains is a complex and challenging task, due to current business trends of expanding product variety, short product life cycles, increasing outsourcing, globalization of business, and continuous advances in information technology. Supply chain management, as a natural successor to operations management, is a fundamental driver not only for further improving operations but also for strengthening the competitive position of firms. When a company faces the pressure of excessive inventories, degraded customer service, escalating costs and declining profits, or a poor return on assets, its supply chain is out of control. On the other hand, when a company moves into new markets or new technologies, it must have its supply chain prepared for new business challenges and opportunities. The course will introduce students to concepts and techniques related to the design, management and improvement of supply chains and supply chain operations. The course focuses on a variety of challenging supply chain business situations. For example, how different types of supply contracts can be used to design win-win solutions between buyer and supplier, how the benefits of information sharing can be estimated in the context of supply chain, and what supply chain strategies match with proliferating product variety. Other topics include, but are not limited to, supply chain design, performance measurement and metrics, inter-organizational collaboration, business process integration, and alignment of incentives. Course Objectives By the end of this course, you will: understand the role of supply chain management in the overall strategy of the firm through the conceptual, strategic view of supply chain design and operations provided in the course; have knowledge of, and skills for, managing and coordinating operations in large and complex demand-supply networks; have enhanced your critical, conceptual and creative thinking, not only in the area of supply chain management but also in general management, which is required for identifying both problems and improvement opportunities; and have improved your discussion, debating and presentation skills as well as your capability to gain insights from journal articles. 3 Teaching Methods / Course Format This is a discussion-based course that relies heavily on the so-called case teaching method. Teaching cases 1 as well as pedagogical games are used to set up a platform for discussion in the classroom. The format relies heavily on the capability of students to think critically and their readiness to be engaged in discussions that include both problem solving and decision-making. Hence, students are expected to be prepared for the scheduled sessions according to the detailed course outline that will be distributed at the beginning of the course. In addition, lectures are used for teaching some supply chain management concepts and tools, as we aim to maximize the benefit of the course from the perspective of students. The textbook of Simchi-Levi et al. is meant to supplement the journal articles, cases and other material distributed in class. The written exam is designed in such a way that it tests how well students can apply concepts, methods and tools learnt during the course. Class Attendance Class attendance is mandatory. Certain obligations may require you to miss a class but no more than two absences are allowed. Without regular attendance, it will be difficult to get a passing grade. If you need to miss a class, you have to notify the lecturer (and coordinator) in advance by email, with the reason for your absence. Moreover, note that class attendance is not the same as class participation (see details below). Class and Case Preparation Teaching cases require a very thorough preparation by the participant. You are expected to read the case very well and prepare the accompanying questions prior to the class. In addition, the assigned literature should be read in advance to facilitate class discussion. In a typical class session, one or more students will be asked to begin the discussion of a selected topic. If you have thoroughly prepared the case and/or readings you should have no difficulty in handling such a lead-off request. During case discussions, we will build a complete analysis of the case situation and address the problems and issues. In this course, the development of verbal skills is given high priority, and the classroom should be considered as a laboratory in which you can test your ability to present and defend your analysis, recommendations, and implementation plans clearly, to convince your fellow-students of the desirability and success of your approach to complex problems. Main criteria used for judging the level and quality of your class participation for grading purpose are: Is there a willingness to participate? Is there a willingness to test new ideas, or are all comments “middle-of-the-road”? Are points made relevant to the current discussion? Are they linked to the comments of others? Do comments clarify and highlight important aspects of earlier comments and lead to a better understanding of the concepts being covered? Do comments show clear evidence of appropriate and insightful analysis of the data? Is the participant a good listener? We assume that you will be completely prepared for every class. Since we frequently call on individuals whose hands are not raised, you should let the instructor know before class if and why you have come unprepared. Without proper preparation, it will be difficult to receive a passing grade. To help us and your fellow students to learn your name quickly, please use a name card placed in front of you. Also, please try to sit in the same seat every class. Also, to help us create a stimulating class environment, use the front seats first as much as possible. 1 A teaching case describes typical administrative issues or problems confronting a manager in an organization, usually presented from the standpoint of the decision maker involved. It gives you the opportunity to place yourself in the position of the decision maker, offering debate on alternative courses of action, rather than offering a single "correct" outcome or solution. In other words, teaching cases serve as educational vehicles and are not to be considered as best practices or business cases. 4 Prerequisites: Participants should master Operations Management concepts as taught in undergraduate courses in Operations management, Logistics management, or Supply chain management. Such material can be mastered by self study, for example from the book: J. Heizer and B. Render (2011), Operations Management, Pearson Prentice Hall, Upper Saddle River, 10 th edition, ISBN 0-13-511143-9. In particular the following chapters (topics) are important: 4 (forecasting), 6 (quality management), 7 (process strategy), 9 (layout), 11 (supply chain management), 12 (inventory management), 14 (Material Requirements Planning: MRP and ERP), 15 (scheduling), 16 (JIT) and Module D (waiting line models). Any other book on OM covering these topics will do. Literature A collection of journal papers and cases that will be distributed in class (D) or made available via Blackboard (B). SKS: Simchi-Levi, D., Kaminsky, P. & Simchi-Levi, E. (2008): Designing and Managing the Supply Chain, McGraw-Hill, 3 rd edition, ISBN 978-0-07-110750-1, selected chapters. Please note that the collection of journal articles and cases forms the primary course literature, and the text book of Simchi-Levi et al. is used as background material, only where appropriate. Material and Copyright Fee To receive a grade for this course, you need to pay a €25 fee to Mrs. Carmen Meesters (course secretary, office T10-25) as a contribution to the copyright fees of the cases, papers, and games used. The department has to pay these fees up front per person to the copyright owners. Assignments There are two types of assignments: individual assignments and group assignments. Groups consist of 5-6 persons (unless specified otherwise). Individual reports need to be your own independent work. There will be a grade penalty for turning in replicated and/or group work for the individual assignments. The group assignments have to be done in groups of five people and needs to be done independently of other groups. The groups are formed by us so that you have the opportunity to enhance your group skills. All assignments will be graded on the usual scale from 1-10. They need to be handed in as hard copies (1.5-spaced, 11 point size, standard margins) and dropped in the mailbox outside Mrs. Carmen Meesters’ office (T10-25 or T09-25), unless specified otherwise. Requirements and Grading The final grade of the course will be composed from the following assignments: Class participation (individual) 10% Case reports and games 35% - CEMS Productions Lab (group) 10% - Individual purchasing assignment 15% - Supply Chain game (group) 10% Written (short) exam 55% Total 100% Deadlines for assignments will be announced during the lectures and posted on blackboard afterwards. The exam will be open book and covers materials of the book, all class discussions, cases, and literature treated. The exam focuses on understanding concepts. It is not needed to „learn the book by heart‟. The best exam preparation is to prepare and actively participate in each class, and make and understand the assignments. Up to 20% of the exam can exist of quantitative exercises similar to those practiced in the exercise lecture and the additional (online) test. 5 In case of a fail for the exam and assignments, the assignment grades will be declared void and a re-examination has to be taken counting for 100%. This re-examination can be oral, written, or a combination. Make an appointment with the coordinator in case of a resit. Please be aware that in case of a resit, the last grade will count (i.e. you run the risk of a lower grade or even a fail). 6 BIOGRAPHY & CONTACT DETAILS René B.M. de Koster (http://www.rsm.nl/rdekoster, http://people.rsm.nl/r_dekoster) is a professor of Logistics and Operations Management at Rotterdam School of Management, Erasmus University. He holds a PhD in Industrial Engineering from Eindhoven University of Technology. He worked as a consultant for seven years, responsible for concept, design and implementation of logistic information and material handling systems. His research interests are warehousing and material handling, retail operations, and behavioral logistics. He is (co-) author/editor of 8 books and over 150 papers in books and journals. He currently also lectures at UCL (B), UP (SA), USTC (PRC), and TIAS. He chairs RSM‟s program committees, chairs Erasmus Smart Port, is a member of the R&D committees of BVL, AIRL, and the European Logistics Association, jury member/chair of 3 Dutch logistics awards, chair of LOGISTICA: the industry sector organization on logistics systems, and on the editorial (review) boards of 11 journals, including JOM, OR, IJOPM and TS. Melek Akin Ates (http://www.rsm.nl/people/melek-akin-ates/) is Assistant Professor of Purchasing & Supply Management at Rotterdam School of Management, Erasmus University. She obtained a PhD in Purchasing and Supply Management from Rotterdam School of Management, Erasmus University in 2014. Melek teaches Strategic Sourcing master elective and Bachelor Thesis courses, and supervises many master thesis projects. Her main research interests are purchasing and innovation, buyer-supplier relationships, behavioral aspects of purchasing, and green supply chain management. She was awarded the Best Student Paper Prize at Decision Sciences conference in 2011, Chris Voss Highly Commended Award at POM/EurOMA conference in 2012, and was a finalist for the Chan Hahn Best Paper Award at Academy of Management conference in 2014. Some of her research has been published in International Journal of Production Research and International Journal of Operations and Production Management, and others are under review in operations management journals where she frequently serves as an ad-hoc reviewer. 7 DETAILED COURSE OUTLINE The following detailed course outline specifies per session, the required preparation including readings, cases and other assignments. Please consult the outline carefully before every session in order to come well prepared to each class. The required material (cases and articles) can either be picked up at the department –room T9- 25, after you have paid the fee- (D) or made available via the Blackboard site (B). For articles longer than 15 pages we only provide the link (due to copyright reasons), which can only be accessed through the EUR library journal subscription. The course consists of three parts: Principles of Operations and Supply chain management, Supply chain practices and + Collaboration in demand-supply networks. Not all classes are exactly in this order. This detailed course manual gives you an overview. 8 Class 1: Introduction to OM Case: “Airbus” (game will be explained in class) Lecturer: Prof.dr. M.B.M. de Koster When: Tuesday, September 2, 2014, 9:00-11:45 Preparation No particular preparation is required Topic In the first class we will brush-up your knowledge of operations and logistics management. We treat concepts like, throughput, throughput time (lead time), cycle time, takt time, inventory, as well as various tools to achieve performance: assembly line balancing (ALB), process control (batch sizing, order release, push-pull control, JIT, ..). We do this partly by playing a game. Learning objectives To become (again) acquainted with the domains of operations, logistics and supply chain management To understand the fundamental balance between service and efficiency To become (again) familiar with important performance measure variables in OM: lead time, throughput time, cycle time, takt time, utilization, productivity, work-in-process, service level To understand the OM triangle: fundamental relations in performance management: between information (or lead time), capacity, and inventory To understand implementations of the above fundamental relations, particularly the role of lead time, batch size, capacity, and utilization. After we have played the game in class, you should do the following: Read your Operations Management textbook on the topics listed above in italics (use the index), in particular (chapters and page numbers refer to the H&R textbook): product layout (p.392- 397), inventory management (reorder systems, reorder points: Ch.12), EOQ (Ch.12), Little‟s law (L=λW: p.786-787) and queuing systems (p.772-781). Literature Heizer, J., Render, B. 2011. Operations Management, Pearson-Prentice Hall, Upper Saddle River, 10 th edition, ISBN 0-13-511143-9 SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 rd edition, ISBN: 978-0-07-110750-1, Chapter 1. B G.M. Schmidt (2005), Applicability of the OM triangle to health care, Excerpt from OMER 1(1), 87-103. Posted on BB after class. B Some OM formulas. This sheet contains definitions used today and formulas that will be used further in the course. 9 Between the first and fourth class your team will play the CEMS Productions Lab game during 7 days Topics The learning objectives of this assignment are lead time, inventory and capacity management skills in the context of a network of interrelated processes (in this case a health care lab). This simulation demonstrates how uncertain demand and process dependencies interact to affect lead time. Preparations (start as soon as possible) Read the CEMS Productions case and analyze the realized demand of the first available days. Based on this, prepare your team‟s strategy for playing the game. Your team can use multiple computers for analyses, if so desired. Game playing will take one full week. I n your preparation you might find it handy to review some theory from an OM textbook and try to apply it, for example: Demand forecasting. H&R: -small part of- Ch.4 (moving average, regression, exponential smoothing) Reorder methods (EOQ, reorder point, stochastic demand). H&R: Ch.12 Queuing (relation between OM performance measures). H&R: p.772-781 Schmidt‟s OM triangle (see BB, session 1) The newsvendor problem (H&R: p.524-525) Assignment 1 All teams must submit a ppt slide presentation as hand-in report illustrating decisions taken. Please take it with you at the class of 12 Sept. This report will be graded. The final score achieved accounts for 10% of the grade. Further details of the assignment will be posted on Blackboard. The winning team will have the opportunity to present its strategy in session 6. The team ending last will be asked to share the lessons learned. Final scores will be announced on Blackboard. 10 Class 2: Performance measurement and improvement Case: Kristen‟s Cookie Company. KCC Lecturer: Prof.dr. M.B.M. de Koster When: Thursday, September 4, 2014, 9 :00-12 :00 Topics The focus in this session is on the trade-off between Operational Efficiency and Customer Service Experience. To this end, we build on the case Kristen Cookie Company (KCC). Specifically, we try to see the bigger picture by addressing two questions: - How can we improve operational efficiency, without changing the business model? - How can we change the business model to improve operational efficiency? Preparations Case (pick it up in Carmen Meester‟s office T10-25 of T09-25): Kristen‟s Cookie Company. KCC is intended as a fun review of the fundamentals of process analysis: set-up time, run time, throughput time, cycle time, labor content, bottleneck, and capacity. The case also introduces tools and concepts such as process flow diagram, capacity analysis, and Gantt charts and serves as a stepping stone to such issues as labor flexibility, interaction between product design with the production system, product positioning and pricing. It cements the foundation for the more advanced topics later on in the module. This case looks deceivingly simple – but when you start working on it, you realize it is tougher than you think. Take your time to understand the concepts and try and answer the questions and problems listed at the end of the case description. Literature SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 rd edition, ISBN: 978-0-07-110750-1, Chapter 1. Similar to 2 nd edition, chapter 1. B K.J. Roodbergen/M.B.M. de Koster, Deterministic performance estimation. This is non- compulsory background reading only B F.X. Frei (2006), Breaking the trade-off - Between efficiency and service, Harvard Business Review 84(11), 93-101. Can be read afterwards. D R. Bohn, K. Somers and G. Greenberg (1986). Kristen's Cooky Company (A). Harvard Business School Case No. 9-686-093, Harvard Business School Publishing, Boston, MA 02163. 11 Session 3: Exercise lecture Lecturer: Masoud Mirzaei/prof.dr. M.B.M. de Koster When: Friday, September 5, 2014, 9:00 - 12:00 Topics This class is non-compulsory. We treat some OM theory, particularly related to formulas of the formula sheet (see BB: inventory management, bottleneck analysis, Little‟s formula). The remainder of the class is used to practice some quantitative exercises on elementary operations management/ supply chain topics you might want to apply in further classes and games (see BB). Guideline to Preparation - Prepare the exercises posted on blackboard prior to coming to class. Some additional time will be offered in class to make them. 12 Class 4: Managing product variety Case: Grolsch – aligning manufacturing and marketing strategy Lecturer: Prof.dr. M.B.M. de Koster When: Tuesday, September 9, 2013, 9:00-11:45 Topic We build on the analyses performed and insights obtained in the first session to deepen our understanding of the role manufacturing plays in various supply chain management issues and challenges, specifically related to managing product variety. The Grolsch case serves as the metaphor to discuss the relevant issues. Grolsch, the second largest brewery in the Netherlands, sees its operational performance degrading as a result of the shift from market push to market pull. It responds to the required shorter and shorter lead-times by the customers, particularly the supermarket chains, the shorter product life cycles and the increase in product variety by stocking more and more, in order to be able to deliver in time. Yet, its delivery performance is declining, its responsiveness is faltering, and the inventories go literally through to the roof. Should Grolsch build or hire extra warehouse capacity, or are there other ways to respond to these supply chain management challenges? Preparation: Read Fisher’s paper and prepare the Grolsch Case. Update your knowledge of the EOQ formula. Prepare the following questions: 1. What are the issues at Grolsch? 2. What are the reasons for Grolsch to carry such a large product portfolio? 3. Diagnose the difficulties for Grolsch to sustain its current product portfolio. 4. Do you agree with the claim that a changeover costs $800 each time? 5. Identify and evaluate the options to improve Grolsch‟ performance. 6. Make a substantiated recommendation for improvement. Literature B M. Fisher (1997), What is the right supply chain for your product?, Harvard Business Review, 75(2), 105-116. B R. Suri (2000). Quick response manufacturing: a competitive strategy for the 21 st century. Quick Response Manufacturing 2000 Conference Proceedings, editor R. Suri, Society of Manufacturing Engineers Press, Dearborn, MI 2000. (will be posted on BB after class) B N. Kumar (2003). Kill a brand, keep a customer. Harvard Business Review, Dec. Can be read afterwards B Callioni, G., De Montgros, X., Slagmulder, R., Van Wassenhove, L.N., Wright, L. (2005), Inventory-driven costs, Harvard Business Review, March. Can be read afterwards B SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 rd edition, ISBN: 978-0-07-110750-1, Section 2.2 (EOQ) Heizer, J., Render, B. 2011. Operations Management, Pearson-Prentice Hall, Upper Saddle River, 10 th edition, ISBN 0-13-511143-9. Ch.12, Ch.15, Ch.16 - 13 Session 5: Understanding the impact of variability Lecturer: Prof. dr. M.B.M. de Koster When: Friday, September 12, 2013, 9:00-11:45 Topics The first part of this class will serve as a debrief of the CEMS Productions game. The winning team will present its strategy. In addition, the last team has to present their major lessons learned. This second part of the session builds on Class 2: Performance measurement and improvement and introduces basic system dynamics and system physics. What happens to the performance of a system if the supply of raw material varies? And what if the processing times vary? We use a small example setting (the radio car assembly plant) to understand and assess the impact of these sources of variability on the performance of an operating system. Preparations Read the paper of Schmidt and scan the reader on Deterministic performance estimation. Literature G.M. Schmidt (2005), Applicability of the OM triangle to health care, Excerpt from OMER 1(1), 87-103. De Koster, Roodbergen, Deterministic performance estimation (can be read afterwards) Heizer, J., Render, B. 2011. Operations Management, Pearson-Prentice Hall, Upper Saddle River 14 OPTIONAL EXERCISES Self-test exercises on Quantitative OM exercises. Around class 6 I will post a test on Blackboard of about 10 quantitative exercises (with subquestions) on operations management topics related to supply chain management. The topics are similar to the exercises treated in the exercise class (queuing, bottleneck analysis, inventory management, reorder points, single-period inventory models, layout; or chapters 9, 12, Module D of the book of Heizer and Render). The exercises are meant as self-practice and do not have to be submitted. 15 Class 6: Retail Operations Strategy and Operational Excellence Case: Wal-Mart Lecturer: Prof.dr. M.B.M. Koster When: Tuesday, September 16, 9.00-11.45 Topic Wal-Mart is the world‟s largest company. In the words of Wal-Mart CFO Tom Schoewe, Wal- Mart's 2003 sales are equal to "one IBM, one Hewlett Packard, one Dell computer, one Microsoft and one Cisco System -- and oh, by the way, after that we got $2 billion left over." Learning objectives To understand the fundamental choices in company strategy and its impact on supply chain strategy (1) To understand the trade-offs to be made in this fundamental choice Guideline to Preparation 1. View the documentary “Is Wal-Mart good for America?”, online accessible at http://www.pbs.org/wgbh/pages/frontline/shows/walmart/. The documentary is not about supply chain management per se, but it is an exemplary of the recent trends and developments in the marketplace and how operations and supply chain management strategy and practices (specifically in the areas of purchasing, manufacturing, distribution, logistics) are tied in with corporate and marketing strategy. It shows the impact that global supply chains have on business models, and as such it serves as a very rich (and controversial) reference material. 2. Read the papers by Gue (2001) and Mohan Chandran (2003) 3. Prepare the following questions: a. Define the core elements of Wal-Mart‟s distribution and logistics systems (for the type of core elements see the decision triangle on blackboard). b. Explain how operations management/supply chain strategy contributed to Wal-Mart‟s competitive advantages. Literature B K. Gue, Crossdocking: just-in-time for distribution, 2001 B M.B.M. de Koster, J. Neuteboom, The logistics of supermarket chains, Elsevier, Doetinchem, 2001. Chapters 1, 2 (developments), 5 (distribution), 6 (application at Albert Heijn). ISBN 90 5439 106 5 (Chapter 4, 5 and 6 will be put on the Blackboard). B P. Mohan Chandran, Wal-Mart’s supply chain management practices, ICFAI., 2003. B Decision triangle (Distribution strategy decisions) - SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 rd edition, ISBN: 978-0-07-110750-1, Ch.6, section 15.5. (Partly) similar to 2 nd edition, chapter 5 - Heizer, J., Render, B. 2011. Operations Management, Pearson-Prentice Hall, Upper Saddle River, 10 th edition, ISBN 0-13-511143-9. Ch.2 16 Class 7: Supply Chain Planning and Execution Case: Sport Obermeyer Lecturer: Prof.dr. M.B.M. de Koster When: Thursday 18 September 2014, 9.00-11.45 Today‟s case describes forecasting, planning, and production operations at Sport Obermeyer and its supply partner. Sport Obermeyer, a high-end fashion skiwear design and merchandising company headquartered in Aspen, Colorado, sells its products through U.S. department stores and ski shops. Although the case company has a global supply network most of its critical outerwear products are sourced through the Hong Kong based company Obersport, a joint venture between Sport Obermeyer and a Hong Kong partner, who manages supply and production operations in Hong Kong and China. The case introduces production planning processes for short-life-cycle products with uncertain demand and allows you to analyze a reduced version of the company's production planning problem. In addition, it provides details about information and material flows that allow you to make recommendations for operational improvements, including comparisons between sourcing products in Hong Kong and China. In addition to the logic of the retail supply chain, we will discuss supply chain planning and execution in general. For example, how new technologies including advanced planning systems can support companies in dealing with demand and supply uncertainty, and how sales and operations planning (S&OP) can create more value for the business. Learning objectives To discover how to match supply with demand for products with high demand uncertainty and a globally dispersed supply chain. To refresh your knowledge on inventory management concepts (e.g. the newsvendor problem). To understand the potential of sales and operations planning (S&OP). Guideline to preparation 1. Prepare answers to the following study questions of Sport Obermeyer): a. Using the sample data given in Table 2-20 (see SKS book!), make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong, and that Obermeyer‟s initial production commitment must be at least 10,000 units. (Ignore price differences among the styles in your initial analysis.) Describe your analysis and explain your recommendation. b. What operational changes would you recommend to Wally to improve performance? c. How should Sport Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong versus China? Literature All papers mentioned below can be read afterwards B M. Fisher, A. Raman & A. Sheen McClelland, 2000. Rocket Science Retailing is Almost Here - Are You Ready?, Harvard Business Review, 78(4), 115-124. B M. Muzumdar & J. Fontanella, 2006. The Secrets to S&OP Success, Supply Chain Management Review, 10(3), 34-41. B M. Fisher, J. Hammond, W. Obermeyer, A. Raman, 1994, Making supply meet demand in an uncertain world, Harvard Business review May-June, 83-93. B N. Rudi & D. Pyke, 2000. Teaching Supply Chain Concepts with the Newsboy Model. in Supply Chain Management: Innovations for Education. (D.F. Pyke and M.E Johnson, eds.). POMS Series in Technology and Operations Management, Volume 2, POMS SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 nd edition, Chapter 2. 17 Class 8: Demand Variability and Information Sharing Case: Barilla SpA Lecturer: Prof.dr. M.B.M. de Koster When: Tuesday, 23 September 2014; 9:00-11:45 Topic Suppliers plan their operations based on the demand information given by their customers in the form of orders or other signals. Especially in multi-stage systems, however, a bullwhip effect can distort the demand information and lead to tremendous inefficiencies when transmitted up the chain. We discuss the bullwhip effect, its main causes and ways to tackle it. Moreover, the benefits of information sharing in the supply chain context will be explored. It will be discussed who benefits, how and why. Today‟s case, Barilla SpA, is a classic one, and some of you may have discussed it in your home university. It describes the challenges Barilla SpA, the largest pasta manufacturer in the world, faced in the late 1980s. Barilla SpA sells its products to retailers largely through third- party distributors and experiences widely fluctuating demand patterns from its distributors. The case will help you to understand the issue of channel coordination, estimate the costs of poor coordination, and assess collaboration initiatives in the supply chain context, to name a few. Learning objectives To recognize the sources of information distortion in the supply chain context. To understand the benefits of information sharing. To learn to estimate the business benefits of new technologies and visibility in the supply chain context. Guideline to preparation 1. Read the Barilla SpA (A) case (SKS, Ch.5) and prepare answers to the study questions (p.152). 2. Read the literature indicated below and be prepared to discuss key learning points of the articles. Literature B Lee, H., V. Padmanabhan & S. Whang, 1997. The Bullwhip Effect in Supply Chains, Sloan Management Review, 38(3), 93-102. B V.G. Narayanan and A. Raman (2000). Aligning incentives for supply chain efficiency. Harvard Business School Note No. 9-600-110. SIMCHI-LEVI, D., P. KAMINSKY & E. SIMCHI-LEVI, 2008. Designing and Managing the Supply Chain, McGraw-Hill, 3 nd edition, Ch.5. 18 Class 9: Soft management factors Case: Gazogle (B) Lecturer: Prof.dr. M.B.M. de Koster When: Thursday, September 25, 2013; 9:00-11:45 Topic In the class of today, we will apply the concepts learned in all previous classes to our small company which manufactures Gazogles. You have to source materials, receive them, assemble products, sell them to customers and make a profit. You have to turn your bleeding company into a profitable one. You can apply any improvement method you like. It will show that not only hard management factors play a role, but also more soft factors. Guideline to preparation Read (again) the article of Suri (2000) (class 4) and the material of class 1 Learning Objectives Both OM/SCM techniques and soft factors contribute equally to company success. Literature B G.M. Schmidt, Applicability of the OM triangle to health care, Excerpt from OMER 1(1), 87-103, 2005 B R. Suri (2000). Quick response manufacturing: a competitive strategy for the 21 st century. Quick Response Manufacturing 2000 Conference Proceedings, editor R. Suri, Society of Manufacturing Engineers Press, Dearborn, MI B Hammer, M. (2007), The process audit, Harvard Business Review, April 2007, 111-123. Can be read afterwards 19 Between the 9 th and the 12 th class your team will play the ‘Supply Chain game’ Assignment 3 (group). All teams must submit a ppt slide presentation as hand-in report illustrating decisions taken. Please take it with you at the class of 9 Oct. This report will be graded. The final score achieved accounts for 10% of the grade. Further details of the assignment will be posted on Blackboard. The winning team will have the opportunity to present its strategy in session 6. The team ending last will be asked to share the lessons learned. Final scores will be announced on Blackboard. 20 Class 10: Purchasing and global sourcing Case: Pick your own! Lecturer: Dr. M. Akin Ates When: Tuesday, 30 September, 2014, 9:00-11:45 Topics Purchasing has developed from an administrative, clerical activity into a strategic business function. Purchasing plays a key liaison role between external suppliers and internal organizational customers in creating and delivering value to external customers. In an increasingly international competitive environment, sourcing and supply management have become global activities in many organizations. For multinational companies there can be considerable value in coordinating purchasing & supply management (PSM) at the global level. After a short general introduction of purchasing as a business function, we will focus on international purchasing and global sourcing in the supply chain context. We will also discuss the sustainability aspect of global sourcing. Learning objectives To understand the role of purchasing & supply management (PSM) in the organization To understand the key concepts about global sourcing To understand the specific challenges related to global sourcing Guideline to preparation 1. Read the assigned literature and be prepared to discuss key learning points of the articles. 2. “Pick your own!”: Find an example from practice 2 where the advantages/disadvantages of global sourcing or success/failure stories are discussed. Be prepared to discuss this example during class. Literature B Kraljic, P. (1983). Purchasing must become supply management, Harvard Business Review (Sept-Oct), 109-117. B Trent, R.J. and Monczka, R.M. (2003). Understanding integrated global sourcing, International Journal of Physical Distribution & Logistics Management, 33(7), 607-629. B Hollos, D., Blome, C. and Foerstl, K. (2012). Does sustainable supplier co-operation affect performance? Examining implications for the triple bottom line, International Journal of Production Research, 50(11), 2968-2986. (optional) 2 A useful website is: http://www.supplymanagement.com/. You can also check general search engines. 21 Class 11: Supplier involvement in new product development (NPD) Case: Thomas Medical Systems Outsourcing Policy (A) Lecturer: Dr. M. Akin Ates When: Thursday, 2 October 2014, 9:00-11:45 Topics In the previous lecture we discussed tactical, operational, and strategic purchasing processes. During this lecture we discuss one of the strategic purchasing processes in detail: supplier involvement in new product development (NPD). In the first part of the lecture, we will discuss the advantages & disadvantages of supplier involvement in NPD, examine some supplier involvement models, elaborate on success factors, and finally comment on current trends/issues on this topic. In the second part of the lecture, we will discuss the Thomas Medical Systems Outsourcing Policy case (Individual Purchasing Assignment). Learning objectives To be aware of the different supplier involvement models To understand the success factors in involving suppliers in NPD Guideline to preparation 1. Read the assigned literature and be prepared to discuss key learning points of the articles. 2. Individual Purchasing Assignment: Read Thomas Medical Systems Outsourcing Policy (A) case and answer the following questions: a. What are the problems encountered in working with Wolfsberg Machine Werks on the Tannhauser Project? b. What are the requirements (and changes) for TMS to further implement supplier collaboration in future product development projects? Answer each question separately. You might consider referring to relevant, previous studies (in addition to the ones mentioned below) to support your arguments. The total length of the assignment must not exceed five pages. Use 11pt font size, and 1.5 line spacing. Submit your assignment via the link on Blackboard (to be announced) by Thursday October 2 nd , 9:00 A.M. Please bring a soft/hardcopy with you to the class. Literature B Thomas Medical Systems Outsourcing Policy (A) case (link will be made available via Blackboard) B Wynstra, F. and ten Pierick, E. 2000. Managing supplier involvement in new product development: A portfolio approach. European Journal of Purchasing and Supply Management, 6(1), 49-57. B Johnsen, T.E. (2009). Supplier involvement in new product development and innovation: Taking stock and looking to the future. Journal of Purchasing and Supply Management, 15(3), 187-197. 22 Class 12: Supply Chain design and Tailor-made or standard? Case: Supply Chain Game, Vanderlande Industries Lecturers: prof. M.B.M. de Koster When: Thursday October 9, 2014; 9:00-12:00 NOTE: this session is subject to changes. Final program to be determined Check out Blackboard for details Topic We start with a debrief of the supply chain game. Two groups (the first and last teams) will present their approach. In the second part of the class we discuss the Vanderlande Industries case. Vanderlande Industries produces tailor-made conveyor systems, adapted to the wishes of the customers. In this they pursue a project strategy. However, this means its products are relatively expensive. The opportunity arises to supply standard, cheaper, products. Should the company switch from tailor-made to standard products, in other words, switch from a project to a product strategy? Guideline to preparation 1. Read the assigned literature and the case and be prepared to discuss key learning points of the articles. 2. Prepare the following questions: 1. Should Vanderlande consider moving from a project to a product strategy? 2. What are the consequences for the different departments if Vanderlande would standardize processes? Think of procurement, engineering, logistics, production and finance. 3. Could services be combined with a standardized product offering? Think of maintenance, spare-parts, performance support and of potential new services. In your preparation, please look back into the frameworks of Frei (for handling variability in services) and Fisher (dealing with uncertainty) Literature B VanderLande Industries. Parcel & Postal Predicaments, RSM Case Development Centre, 2014. B F.X. Frei (2006), Breaking the trade-off - Between efficiency and service, Harvard Business Review 84(11), 93-101. B M. Fisher (1997), What is the right supply chain for your product?, Harvard Business Review, 75(2), 105-116. Can be read afterwards 23 Class 13: Behavioral SCM and Q&A on all subjects Lecturer: Prof.dr. M.B.M. de Koster When: Tuesday, 14 October 2014; 9:00-11:45 Topic The first part of this session is on behavioral operations/SCM. I present some research related to: Can managers influence company performance? What is the impact of worker behavior on company performance? This second part of the session is non-compulsory and used for Q&A; you can ask anything related to the subjects treated. Literature (background reading) B De Koster, M.B.M., D. Stam, B. Balk (2011), Accidents happen: The influence of safety-specific transformational leadership, safety consciousness, and hazard reducing systems on warehouse accidents, Journal of Operations Management 29, 753-765 B De Vries, J., De Koster, M.B.M., D. Stam (2014), Making the Right Pick: Aligning Order Picking Methods, Incentive Systems and Regulatory Focus to Increase Picking Performance, working paper, Rotterdam School of Management, Erasmus University Open book EXAM Monday 20 October 2014