CHAPTER 1.

OVERVIEW OF SUPPLY CHAIN MANAGEMENT

Supply chain = consists of flow of products and services from:
- Raw materials manufacturers
- Component and intermediate manufacturers
- Final product manufacturers
- Wholesalers and distributors and
- Retailers
Connected by transportation and storage activities, and Integrated through
information, planning, and integration activities (Wisner et al, 2018)

>> A basic supply chain có thể chỉ có 3 partners, bao gồm supplier (tìm kiếm
materials), producer (nhận component từ supplier, sản xuất finished goods) và
customer
“A supply chain consists all parties involved, directly or indirectly, in fulfilling a
customer request. The supply chain includes not only the manufacturers and
suppliers, but also transporters, warehouses, retailers, and even customers
themselves” (Chopra & Meindl, 2010)
A supply chain involves the constant flow of information, product, and cash between
different stages.
Differences between Logistics and Supply chain?
Logistics khá similar to supply chain vì nó cover các activities về raw materials,
finished goods,… Trên thực tế có rất nhiều company về logistics nhưng không có
firm gọi là supply chain firm, vì sao? Đó là bởi logistics được provide for 1 or some
activities, còn supply chain là nó phải cover toàn bộ activities, cover toàn
profitability, vậy nên thường các công ty không thể làm được điều này.
What is logistics procedures? Không có term này, logistics không hoàn toàn chỉ là
import hay export, vậy nên có transport procedures, import/export procedures,
nhưng logistics thì không >> Logistics không phải một hoạt động mà bao gồm
nhiều hoạt động, nên không được dùng logistics procedures.
Supply chain sẽ gắn với firm, ví dụ như Department of Supply chain management,
các phòng ban này sẽ quản lý toàn bộ các hoạt động supply chain của cả một firm.
Ví dụ: Logistics của Samsung có thể được vận chuyển bởi nhiều công ty logistics
khác nhau, nhưng
việc sản xuất của
Samsung phải hoàn
toàn dựa vào
Samsung (chính là
một phần của Supply
chain)
Không có công ty
quản lý hoặc vận
hành supply chain
mà chỉ có các thể loại
tư vấn, hỗ trợ…:
supply chain
consultant
3 flows in SC: Information > Product > Financial

Information Flow Product Flow Financial Flow

Invoice Materials Payments of products

Sales literature Components Supplies
Specification Services
Receipts Finished goods
Orders
Rules and Regulations
Product flow luôn từ supplier, Information thì kiểu between partners (xem lại cái
model), Financial thường là từ customer
Những thông tin nào transfer từ supplier to customer? Purchase or delivery
status/data, Product details (pricing, payment method, etc.)
Những thông tin nào transfer từ customer to supplier? Maybe Complaints, Reverse
logistics
1. Describe Vinamilk’s supply chain?
2. What is the most important elements in Vinamilk’s suppy chain?
Most important sẽ là focal firm, sẽ là hoạt động production của chính firm.
…
Why firms with large system inventories will gain the most from successful SCM?
Can đáp ứng nhu cầu everywhere and everytime, nói chung là không thiếu hàng
Also sẽ có inventory turnover phù hợp, cũng không thừa hàng. Hàng thừa thì sẽ mất
giá trị, lỗi thời,… Hàng thừa không bán được thì sẽ làm mất cả material cost,
production cost
Origins of SCM?
Mass production techniques là gì? Để tạo economies of scale. Sản xuất hàng loạt
cùng một loạt hàng hoặc sản phẩm (unchanged large volume of products) (like
batch production)
> Bắt đầu focus từ Mỹ vào 1950s. Một ví dụ bây giờ vẫn dùng là…
> Hàng hóa này không differ, vì vậy không có nhiều lựa chọn và không cá nhân hóa
cho khách hàng > hard to extremely meet the customer demands
SCM lần đầu xuất hiện vào 1982.
Collaborate SC
How to use collaborate supply chain? Case?
Homework: Analyze case giữa Apple và Intel?
4PL? an independent logistic provider – tìm hiểu thêm về 1PL, 2PL, 3PL, 4PL, 5PL,
6PL và sự khác biệt của chúng
Lean SC (SC tinh gọn): low cost & high reliability
…
Lead time là thời gian từ lúc … tới lúc nhận hàng. Với push strategy thì hàng hóa
available nên nếu muốn short lead time > push!? Check lại nhé
Customization level thì pull hay push?
Standardization level
Casestudy: Dell – pioneers in mass customization
Dell Technologies is today one of the world's largest technology companies and
comprises seven industry leading brandy one fie, DedislocolA, Secureorks.
Virtustream and Mare. The brands, narely Bein is Me, Pa ral ef, eurosy sectors from
cloudl com-puting to hardware manufacture. One ofthe or a sation's most significant
milestones was when Dell and EMC joined forces in september 201 in one of the
largest technology mergers in history. Our interest in this case, however, extends to
much earlier than this and focuses in particular on its pioneering new way of
manufacturing and delivering computers and related devices since the
establishment of Dell in 1984 by a young medical student in Texas, Michael Dell.
Today those products are manufactured in the Dell division/brand within Dell
Technologies and comprise not only desktop computers but also laptops, 2-in-ls and
thin clients, as well as monitors and other peripherals; services too are provided
such as security solutions. Dell ascribed much of its success to its expertise in
supply chain management and the velocity with which it is able to process and
deliver orders - in the personal computer sector where competitors often take
weeks to build and ship product, Dell's metrics are hours and days. Its successful
production model has been imitated by many other companies both in the
technology sector and other sectors too.
DIRECT TO CUSTOMER
Central to Dell's phenomenal success is its distribution strategy: since it started to
build its own machines in 1985 (prior to this the company had focused on upgrading
old IBM machines), it has sold direct to the customer, disintermediating any
'middlemen' and getting product faster to the customer. The computers themselves
were viewed by some as not particularly remarkable from a technological
perspective, so much so that in 1996 The Economist magazine described Dell as
'selling PCs like bananas'. The business market segment is highly important to Dell,
and the company has invested in CRM in order to stay close to key customers, while
also evaluating the cost-to-serve different customer segments and designing
product offerings accordingly. Finished products are delivered by third-party
logistics partners direct from the manufacturing plants to customers, often merging-
in-transit with peripherals.
FULL VISIBILITY AND PARTNERSHIPS WITH SUPPLIERS
The Internet is central to Dell's strategy, allowing direct communication with
customers and real-time visibility of purchasing patterns. Indeed, a key attribute of
the Dell supply chain is full visibility along the chain with sales and production
systems linked to suppliers who supply components just-in-time, usually direct to
the production line and often with very short lead times (sometimes even as little as
one hour!). Consequently, Dell needs limited warehouse space for inbound raw
materials. These preferred suppliers and their expertise in vendor managed
inventory (VMI) play a key role in Dell's success.
FOCUSED MANUFACTURING AND BUILDING TO ORDER
Dell pioneered the adoption of standardisation and postponed manufacturing (also
known as mass customisation) in the electronics industry (Figure I). This involves
producing a small number of common platforms which are then customised
according to customer demands (the customer generally recognises more so what
is different among products, not what is the same!). Before standardisation (left
side of Figure 1), there are multiple product lines at both the upstream and
downstream ends, whereas after standardisation (right side of Figure 1) the number
of different product lines upstream reduces considerably and products are only
customised (i.e. configured into different products) at the downstream end (once
customer orders are visible). The benefits of this strategy are many and include
sharing of common components across product lines, thus reducing the number of
stock keeping units (SKUs) which have to be carried. This strategy is now
increasingly also adopted across a range of other sectors including the automobile
(e.g. Volkswagen Group) and fashion (e.g. Zara) sectors.

Dell's 'manufacturing associates' can assemble desktop computers at a rate of 16 to

17 per day using 'single person build' rather than traditional assembly line
techniques. This leads to both increased job satisfaction and product quality.
Modular manufacturing using standardised components is employed to build the
'vanilla products' which are then customised for market.
Increasingly, Dell is moving into higher value offerings and markets. In their view,
they sell solutions, not products. The company has not, however, been immune to
problems. For example, difficulties in the past associated with faulty laptop
batteries, which attracted a lot of negative publicity to the company, led to some
product recalls. Intense competition combined with rapid changes in technology are
ongoing challenges that characterise the sectors within which Dell now operates.
QUESTIONS
1. What are the fundamental reasons for Dell's success in the personal computer
market?
2. What should Dell do next to maintain their competitive advantage in this market?

1. Fundamental Reasons for Dell's Success in the Personal Computer

Market
a. Direct-to-Customer Model:
Dell's disintermediation of middlemen allows faster delivery, reduced costs, and
direct communication with customers. This model has made Dell highly efficient in
fulfilling customer demands quickly, as competitors often take weeks while Dell
takes hours or days.

b. Focus on Supply Chain Management:

Dell's supply chain is a critical strength, characterized by:

 Full Visibility: Real-time data integration between sales, production, and

suppliers.
 Just-in-Time Inventory: Preferred suppliers deliver components directly to
production lines with minimal lead times, reducing warehousing needs.

c. Postponement and Mass Customization:

Dell pioneered standardization and postponement manufacturing. By producing
common platforms and customizing only at the final stage (after customer orders
are visible), Dell:

 Reduces stock-keeping units (SKUs).

 Shares common components across product lines.
 Enhances flexibility and responsiveness to customer-specific demands.

d. Internet-Centric Approach:
The integration of the internet into operations provides Dell with:

 Direct communication with customers.

 Insights into purchasing patterns, enabling tailored product offerings and
inventory optimization.

e. Efficient Manufacturing Processes:

Dell employs:

 Modular manufacturing with standard components.

 "Single-person build" techniques for higher productivity, job satisfaction, and
quality.

f. CRM and Business Focus:

Dell’s investment in customer relationship management helps maintain strong
relationships with key business customers and customize product offerings to meet
their needs.

2. Strategies for Dell to Maintain Competitive Advantage

a. Expand into Higher-Value Offerings:

As competition in standard PCs intensifies, Dell should focus on:

 Advanced solutions (e.g., cloud computing, AI, IoT integration).

 Services (e.g., cybersecurity, enterprise IT solutions).
b. Strengthen R&D Investment:
Dell should continue innovating in areas like:

 Sustainable product design.

 Emerging technologies (e.g., AI-based customization, quantum computing).

c. Focus on Customer-Centric Innovations:

Dell should enhance its customization capabilities using AI and machine learning to
predict customer preferences and reduce lead times even further.

d. Expand Partnerships and Ecosystems:

Building stronger alliances with technology innovators and third-party logistics
providers will support:

 Faster delivery times.

 Seamless integration of Dell products into broader technological solutions.

e. Address Challenges Proactively:

Dell must address:

 Competition: By differentiating its products through software and services.

 Product recalls: By investing more in quality control and robust testing.

f. Emphasize Sustainability and CSR:

To stay relevant in a market increasingly concerned with environmental impact, Dell
should:

 Adopt greener manufacturing techniques.

 Offer recycling programs and energy-efficient products.

By leveraging its existing strengths and focusing on innovation and customer-

centric strategies, Dell can continue thriving in the highly competitive personal
computer market.

III. Decision: Insourcing or OUTsourcing

Example:

Dell Computer Company:

• Until 2005, selling and transporting directly to customers (Drop-shipping)

→ Change: Since 2007, starting outsource Wall-Mart to sell private computer. Why?

Ford：

• In the early years, Ford Motor made nearly everything for its cars.
→ Change: Now, all automobile companies primarily engage in engine production
and assembly of the final product

> Why this case happened? The reason for change of supplier?

 Tối ưu hiệu suất & tiết kiệm năng lượng: Chip Apple Silicon mạnh hơn,
tiêu hao ít điện năng hơn so với Intel.
 Kiểm soát chuỗi cung ứng: Giảm phụ thuộc vào Intel, chủ động hơn trong
sản xuất.
 Giảm chi phí: Tự sản xuất giúp tiết kiệm chi phí, tăng lợi nhuận.
 Công nghệ & tùy chỉnh: Chuyển sang kiến trúc ARM, tích hợp AI, GPU riêng
giúp Mac mạnh hơn.
 Đồng bộ phần cứng & phần mềm: Tối ưu macOS ngay từ khi thiết kế chip,
giúp hệ thống chạy mượt hơn.
 Kết quả: Mac nhanh hơn, pin lâu hơn, Apple kiểm soát công nghệ tốt hơn. 🚀

Outsourcing: Buying materials and components from suppliers instead making them
in-house. The trend has moved toward outsourcing.

The Make or Buy decision is a strategic decision

Reasons for Buying or Outsourcing

– Cost advantage– Especially for components that are non vital to the
organization’s operations, suppliers may have economies of scale

– Insufficient capacity – A firm may be at or near capacity and subcontracting

from a supplier may make better sense
– Lack of expertise– Firm may not have the necessary technology and expertise

– Quality– Suppliers have better technology, process, skilled labor, and the
advantage of economy of scale

Reasons for Making

– Protect proprietary technology

– No competent supplier

– Better quality control

– Use existing idle capacity

– Control of lead-time, transportation, and warehousing costs

– Lower cost

>>>> Câu hỏi, sự khác biệt về cost advantage giữa BUY và MAKE?

1. Khi BUY (Outsource) có cost advantage vì:

 Nhà cung cấp có economies of scale: Họ sản xuất số lượng lớn cho nhiều
khách hàng, giúp giảm giá thành trên mỗi đơn vị sản phẩm.
 Chia sẻ chi phí R&D và công nghệ: Nhà cung cấp có thể đã đầu tư công
nghệ tiên tiến và phân bổ chi phí này trên nhiều khách hàng → chi phí
mỗi đơn hàng thấp hơn.
 Tránh chi phí đầu tư ban đầu: Nếu doanh nghiệp tự sản xuất, họ phải đầu
tư nhà máy, máy móc, nhân công, điều này tốn kém hơn so với mua
ngoài.
 Giảm chi phí cố định: Mua từ nhà cung cấp giúp doanh nghiệp chuyển chi
phí cố định (fixed costs) thành chi phí biến đổi (variable costs), linh
hoạt hơn khi nhu cầu thay đổi.

2. Khi MAKE (Tự sản xuất) có cost advantage vì:

 Không phải trả lợi nhuận cho nhà cung cấp: Khi mua ngoài, nhà cung
cấp vẫn cần có lợi nhuận, còn tự sản xuất thì doanh nghiệp cắt giảm được
phần lợi nhuận này, giúp chi phí thấp hơn.
 Tận dụng công suất dư thừa: Nếu doanh nghiệp có máy móc, nhà xưởng
nhàn rỗi, tự sản xuất sẽ giảm chi phí trên mỗi đơn vị sản phẩm.
 Kiểm soát chi phí logistics: Tự làm giúp doanh nghiệp giảm chi phí vận
chuyển, lưu kho, và thời gian giao hàng, đặc biệt quan trọng nếu chuỗi
cung ứng gặp gián đoạn.
 Chủ động tối ưu quy trình: Khi tự sản xuất, doanh nghiệp có thể tinh
chỉnh quy trình để tăng hiệu suất và giảm chi phí.
👉 Tóm lại:

 Buy có lợi thế chi phí khi nhà cung cấp sản xuất quy mô lớn, có công
nghệ tốt hơn, và giúp doanh nghiệp tránh chi phí đầu tư ban đầu.
 Make có lợi thế chi phí khi doanh nghiệp có thể tận dụng tài nguyên có
sẵn, kiểm soát logistics tốt hơn, và không phải trả lợi nhuận cho nhà
cung cấp.

Doanh nghiệp phải so sánh lợi ích và chi phí của từng lựa chọn để quyết định
đâu là giải pháp tối ưu. 🚀

D = 15.000

Outsourcing costs = FC + VC x D = 100.000

Insourcing costs = 105.000

>> Nên self-produce

> Đi thi nên vẽ đồ thị nhe

Roles of Supply Base

Supply Base - list of suppliers a firm uses to acquire its materials, services, supplies,
and equipment

– Emphasis on long-term strategic supplier alliances, consolidating volume into one

or a few suppliers, resulting in a smaller supply base

Preferred suppliers provide:

– Product and process technology & expertise to support buyer’s operations

– Information on latest trends in materials, processes, designs, and the supply

market

– Capacity for meeting unexpected demand

– Cost savings due to economies of scale

Supplier selection

The process of selecting suppliers, is complex and should be based on multiple

criteria:

– Product and process technologies

– Willingness to share technologies & information

– Quality – Reliability – Order system & cycle time

– Cost – Capacity – Communication capability

– Location – Service

CASE STUDY of supplier selection

Case Study Background

At a time when the entire children's fashion company, Tots & Teens, was
celebrating the financial year's success—retail operations for children's clothing in
New Jersey had increased profits by 5%—the Chief Operating Officer, Jim Zappa,
invited T&T’s CEO, Laura Cronenberg, to deliver a shocking piece of news: A
garment factory in Bangladesh, which specialized in manufacturing and packaging
goods for T&T and other retailers, had collapsed.

Laura and Jim immediately booked flights to Dhaka for the next morning, then
rented a car to reach the disaster site. Confronted with a scene of devastation,
where more than 2,000 workers had lost their lives and many others were injured,
Laura had to represent the company in finding ways to support the victims and their
families while tightening supply chain management.

The Key Question:

Should the company choose another contractor in Bangladesh to continue

production, or should they shift operations to a factory in China that they had
previously used—considering that this product line, which accounts for 80% of
T&T’s revenue, was scheduled to go into production in just two weeks?

Trade-offs in the Supply Chain: How Did T&T Handle It?

Tots & Teens had initially chosen Bangladesh as a manufacturing location for
several key reasons:

 Low labor and transportation costs

 Relatively good quality production
 Factories concentrated in a designated industrial area
  Bangladesh was exempt from export taxes when shipping to the
European Union, an advantage that neither China nor African countries
had. This tax exemption aligned well with the company’s five-year expansion
plan, which targeted growth in the UK, France, and Spain.

However, continuing to source from another supplier in Bangladesh posed

significant risks due to two major concerns:

1. While the country had laws, standards, and regulations regarding

worker safety, these rules were often ignored.
2. At that time, Tots & Teens was unable to verify whether alternative
production facilities met long-term requirements or if they harbored
hidden risks that could disrupt production.

Faced with this dilemma, COO Jim proposed shifting production to their facility in
China. However, even this option wasn’t risk-free. Although a large portion of Tots &
Teens’ production already took place in China, increasing order volumes raised a
crucial question:

Would the Chinese contractor be able to handle the additional orders quickly?

This concern was particularly critical in the fast fashion industry, where competition
was fierce, customer demands were complex, and many of T&T’s product lines were
redesigned every four weeks.

> My answer?
Giải thích chi tiết đoạn Terms

 Supplier 1: 2/10 net 30

Điều khoản này có nghĩa là:
 o Nếu doanh nghiệp thanh toán trong vòng 10 ngày kể từ ngày nhận
hóa đơn, họ sẽ được chiết khấu 2% trên tổng số tiền.
o Nếu không tận dụng ưu đãi này, toàn bộ số tiền sẽ phải được thanh
toán trước 30 ngày.
 Supplier 2: 1/10 net 30
Điều khoản này tương tự nhưng mức chiết khấu chỉ là 1%, áp dụng khi thanh
toán trong 10 ngày đầu tiên. Nếu không, doanh nghiệp phải thanh toán đủ
trong vòng 30 ngày.