Module 01: Intro to Supply Chain Management
Competitive Priorities – How do these relate to almost everything we discussed this semester?
Competitive Priorities are what a business focuses on. While every business would like to be the
leader in every category, usually businesses differentiate themselves by one or two or two of
these qualities. (Ex. Apple vs. Dell. Red Lobster vs. Long John Silver’s. Blockbusters vs.
; types of costs: material costs, production costs (machine and labor), packing,
transportation, storage costs, quality costs (returns, warranties, repairs, rework, errors,
time), customer service costs, organizational costs (marketing, finance, rent, insurance,
legal). Remember the bottled water example.
; types of quality:
DESIGN QUALITY – Product or Service.
Nothing can make-up for bad design
MATERIAL & PRODUCTION QUALITY – This requires well designed
production systems, good materials, and exceptional labor. The result is high
performance, aesthetics, and durability.
QUALITY LEVEL DELIVERED – How does it look when the customer finally
gets it? What it looks like off the assembly line isn’t the only thing that’s
CONSISTENT QUALITY – Is the product the same every time? Remember the
SERVICE QUALITY – Sales, Support, Repairs, Maintenance, Assembly,
; two types:
DELIVERY TIME – Lead Time (Pizza Delivery); From Order Placement to
Order Fulfillment, Supplier Delivery Times, Manufacturing Time, Transport
Time, Inventory Management, Forecasting
ON-TIME DELIVERY (Airline Industry) – Percentage of time delivered when
promised, Understanding Limits of Supply Chain, Developing Schedules, Staying
Three main categories:
PRODUCT OR CUSTOMIZATION FLEXIBILITY – Options Offered,
Built to your Specifications
VOLUME FLEXIBILITY – Coping with Demand Changes, Large and/or
Small Orders (Timely)
MASS CUSTOMIZATION – Both Customization and Volume Flexibility
Six detailed strategies:
DESIGN FLEXIBILITY – Future modifications, Market demands; Easy
to change color, size, features