UNIVERSITY OF SOUTH CAROLINA MOORE SCHOOL OF BUSINESS MGSC 876 SUPPLY CHAIN MANAGEMENT

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1 TERM Spring 2011 UNIVERSITY OF SOUTH CAROLINA MOORE SCHOOL OF BUSINESS MGSC 876 SUPPLY CHAIN MANAGEMENT CLASSROOM BA 302 (January 12 March30); BA 701 (April 6 April 20) CLASS TIME PROFESSOR Wed, 10:00 AM 12:30 PM Dr. Anand Nair OFFICE BA 706 PHONE NO I.D. OFFICE HOURS Nair@moore.sc.edu will be the primary mode of communication for the class. It is your responsibility to make sure that your i.d. in Blackboard is valid and is the one that you regularly access for academic work. Mondays and Tuesdays 1:00 PM 2:00 PM, and by appointment In case the formal office hours do not work as per your schedule, I encourage you to set up an appointment; I will try my best to accommodate your request for an alternate time COURSE OBJECTIVES Even as companies have learnt to squeeze efficiencies out of their manufacturing plants through concepts like just in time replenishment, statistical process control, and lean manufacturing practices, they still find that moving goods and services through several layers of their global supply chains is time consuming and costly. Logistics and supply chain management has become one of the last frontiers that still remain to be conquered by most businesses in the twenty first century. Yet this cannot be done unless all managers and supervisors, irrespective of their functional orientation and current job responsibilities, fundamentally understand their supply chains and how their effective functioning flows right down to the bottom line. Since today it is not uncommon to see companies develop a product in one country, manufacture it in another, and sell it to a third country, the complexities associated with global trade must be accounted for in designing and managing supply chain. In addition, new products could be introduced in several countries almost simultaneously, and suppliers with special expertise and technology could collaborate with manufacturers in different countries to create global products. As the world moves toward an international economy, the battle cry for corporations is increasingly becoming one of global operations and supply chain management. While globalization promises enormous strategic benefits by coordinating operations located in different countries, it is imperative for managers to develop a perspective

2 that can fully understand and exploit the intricacies of the global marketplace. Managing manufacturing and service operations across cultural, economic, and political boundaries is a formidable challenge, because of which many globalization efforts are falling far short of their promise. This class will help the students to learn concepts, insights, practical tools, and decision support systems important for the effective management of the supply chain. The course will help understand the linkage between a firm s supply chain strategy and business strategy by means of case analysis and discussions, illustrate supply chain decision making using a simulation framework in which students will utilize firm resources more effectively, and coordinate the manufacturing and movement of goods and services through different echelons of supply chains to create a competitive advantage. More specifically, the course will promote the following learning objectives: Understand the linkage between the coordination of the global supply chain and other functional areas of the firm. Understand progressive approaches to decision making in integrated supply chain management. Understand approaches to plan and manage inventories in a supply chain. Understand some key factors in the design of supply chain networks. Learn supply chain planning approaches. Learn key aspects associated with transportation, warehousing, material handling and packaging. Learn supply contract models for supply chain management. Understand the value of information and the importance of supply chain integration Learn operations and financial performance measurement Understand issues pertaining to global logistics and risk management With the help of a state-of-the-art enterprise resource planning software (SAP) understand the value of information and the importance of supply chain integration Apply the concepts and tools learnt in the course in the context of a supply chain simulation game. COURSE MATERIALS Required Materials: 1. Class Notes: Class notes are extremely important for doing well in this class. Attendance in class is therefore critical. For some reason, if you are unable to attend a particular class, it is your responsibility to get the notes from other students who were present in class. An outline of the lectures will be uploaded on the blackboard one week in advance. You are encouraged to use these outlines for taking notes in class. 2. Two cases to be purchased from Harvard Business School Publishing website: (Further information on pages 4-5 of the syllabus) 3. LINKS Supply Chain Simulation Manual. (Available on Blackboard) You will 2

3 have to register and pay for the simulation experience on Links simulation website (click on Pay for Links ). Cost per student is $45. (Further information on pages 5-7 of the syllabus) Recommended Text Books: Designing and Managing the Supply Chain 3 rd Edition By Simchi-Levi, Kaminsky and Simchi-Levi Manufacturing Planning & Control Systems for Supply Chain Management By Vollman, Berry, Whybark & Jacobs Other Optional Material My blog: contains a repository of some interesting business and management issues. You might find several posts related to Operations & Supply Chain Management. ASSESSMENT GUIDELINES Component Date or Due Date Weight (% of course grade) Grade Type Exam 1 Wednesday; February 23, % Individual Exam 2 Wednesday; April 13, % Individual ERP Project Monday; May 2, % Individual using SAP Case Analysis and in-class discussions Case 1 report due on Friday, Feb 11 Case 2 report due on Friday, Mar 25 25% Group Supply Chain Simulation Game Due date and times are listed in the schedule (see pages 8 and 9 of the syllabus) 20% Group Simulation Monday; April 8, % Group Game Report The teams for case analyses will be formed on January 19, In case you are absent or have not formed a team, I will assign you to a team. Note that all group effort grades are contingent upon team member evaluations. Individual grades will take into account a peer review from each group member of other members in the group. It is extremely important and part of the honor code that each member of a group contributes to the case analysis. If any individual has not contributed for a particular group task, (s)he should not append his/her name to the case report but submit a separate report on their own. It will also be the group s responsibility to ensure that this happens. Grading Scale A = 90 or higher B+ = B = C+ = C = D+ = D = F = under 60 3

4 EXAMS The two exams will be closed-book and will be administered in class. Please refer to the schedule for dates of each exam. Students should bring a calculator, #2 pencil and eraser to the exam. No other materials are allowed. Where needed, a formula sheet will be provided with the exam. The format for all exams will be multiple-choice. The only excused reasons for missing an exam are those listed as official University excuses. If you fail to inform the instructor before the exam or if you do not have an official excuse, you will receive a zero for the exam. You must turn in your excuse to your instructor within a week from the date of the missed exam. ENTERPRISE RESPOURCE PLANNING PROJECT USING SAP SOFTWARE You must use the concepts and instructions provided in the five in-class SAP labs to complete this assignment. Details regarding the project will be provided to you on April 20. CASE ANALYSES AND OUTLINES Two cases will be assigned for write-up by each team. All members of a team should be involved in analyzing the case and leading the discussion in the class. I will request each team member to hand-in a summary sheet at the end of term that evaluates the relative contribution of each team member. Use of any notes or material from any other course in which any of the cases might have been discussed, including discussions with a former student or consulting a previous case report, is strictly prohibited and will be considered a serious violation of the honor code. Each team will be responsible for: (i) submitting the reports for the two case analyses, and (ii) contributing to the in-class case discussions. NOTE: The cases must be purchased from Harvard Business School Publishing website: On the website you can search for the cases using the case numbers. Please note that as a part of the copyright requirements, every student is required to purchase the two cases. Case # 1: Halloran Metals (HBS Case ). Use the following questions when preparing your case report. [1] What are the differences in logistics/operating strategies and structure between Halloran and Allied? What impact do those differences have on the kind of business they are and the way they operate? [2] What are the strengths and weaknesses implicit in Allied s operating stance? What are the strengths and weaknesses implicit in Halloran s operating stance? A priori, how would you expect an economic downturn to affect the two firms? How would an upturn affect the two firms? [3] What economic risks are implicit in Halloran s logistics choices? How has the firm endeavored to reduce these? How successful have they been? [4] What should Jim Rochleau recommend to the president? 4

5 Case # 2: Merloni Elettrodomestici SpA (HBS# ). Use the following questions when preparing your case report. [1] What are the costs and benefits of Merloni s current distribution system? [2] What are the costs and benefits of a transit-point-based distribution system? [3] Should Merloni replace its network of regional warehouses with transit points? [4] What contingency plans and support systems are necessary to support the logistics network comprising of transit-points? [5] If transit-point distribution system is not recommended what changes, if any, would you recommend Merloni make to its distribution system? LINKS SUPPLY CHAIN MANAGEMENT SIMULATION: One of the main learning tools for this course is an Internet based simulation. The best ways to understand how to manage a business and understand the strategic underpinnings of supply chain management is to do it. The simulation game allows you to undertake the strategic and operational management of a manufacturer of high technology set-top boxes with limited risk (either to investors, your bank account, or your career). The simulation will span throughout the semester and each round of the simulation requires analysis similar to a detailed case study. We will be covering various aspects of managing the global supply chain by means of tutorials that are related to the simulation game. Specifically, some of the following aspects of global supply chain management will be covered within the context of the LINKS Supply Chain Simulation Game: - Profit & Loss Statements - Forecasting - Balance Sheets - Reconfiguration - Inventory or Emergency Production - Inventory tracking - Distribution alternatives - Postponed production Key Learning Objectives 1. Application: Over the course of time, you have learned many functional business concepts and skills. While you have applied many of these skills to business cases, you never had to live with the results of your proposed actions. LINKS gives you a chance to move from textbook concepts and tools to actual application in an environment where you will see the supply chain results of your ideas and actions. 2. Integration: While the courses integrate business functions around key business decisions, there is still a natural tendency to think in functional silos. LINKS will help you see how firm level decisions, although efficient, affect the chain of suppliers 5

6 and retailers. Your success will require decisions that are globally based and provide the best results for all entities in the supply chain. 3. Strategic thinking: We will be running 8 decision periods in LINKS. Rather than approach each of these decision periods independently, you will likely perform far better if you first step back and, based on your analysis of the supply chain and your company, develop a general guiding strategy. 4. Inference making: You have at your disposal a large volume of market research reports and various performance reports reflecting your firm s results. All teams in your industry have access to the same information. The issue then is which team is best able to apply that information. 5. Quantitative analysis: Related to #4 above, the data you have to work with will allow you to apply many of the quantitative tools. 6. Organizational Structure: The simulation will begin in a basic mode with a few options. As the term progresses, new options will be introduced that will increase the complexity of your decision-making. As the simulation becomes more dynamic, you will need to become more efficient at reading and interpreting your reports. Assigning specific tasks and responsibilities to each team member will help improve your results. The simulation is dynamic and outcomes for each period depend upon decisions made by all teams in each industry, collectively. You will need to maintain a journal of deliberations and decisions including interpretations of industry dynamics, assumptions, strategic actions, the outcomes of those actions, and changes that may be necessary. LINKS Presidential Review Meeting: On Mar 14 th and Mar 15 th (teams will be responsible to schedule a meeting on Mar 14 th and Mar 15 th ) As a part of the LINKS Presidential Review Meetings, teams will review their LINKS decisions till date. The instructor will assume the role of a coach and will discuss their strategy and decisions. LINKS Final Report (as a Word document via ) LINKS Final Report (2-3 pages; single spaced; 12 pt Times New Roman) should contain the following: (i) Describe and analyze your strategies, tactics and performance, (ii) Identify the two most successful parts of your supply chain management strategy and tactics, (iii) Identify the one thing you would change if you were going to participate in the simulation again and explain your reasoning, (iv) Identify and discuss three to six major learning opportunities that your team gained from the LINKS simulation program (v) Describe any limitations of your learning experience Academic Integrity: You are expected to practice the highest possible standards of academic integrity. Any deviation from this expectation will result in a minimum of your failing the assignment, and may result in additional, 6

7 more severe disciplinary measures. This includes improper citation of sources, using another student s work, and any other form of academic misrepresentation. The first tenet of the Carolinian Creed is, I will practice personal and academic integrity. SCHEDULE The rest of the syllabus gives a tentative schedule. We may be ahead or behind the schedule in different weeks. Please take this into consideration when preparing for a given class day. We will also calibrate and benchmark our progress with respect to this schedule on a regular basis. SCHEDULE Session Date Readings Submission/ Deadline 1 (Wed) Jan 12 Syllabus and Course Outline Lecture 1: Introduction to Supply Chain Management Introduction to LINKS Simulations 2 (Wed) Jan 19 Lecture 2: Inventory Management and Risk Pooling (Simchi-Levi Chapter 2) Team Assignments 3 (Wed) Jan 26 Lecture 2: Inventory Management and Risk Pooling Contd. Assignment Start reading the LINKS Manual provided on Blackboard Read the LINKS Manual provided on Blackboard (By the end of this week you should have skimmed through the LINKS manual) LINKS 1 - P&L Statements; Balance Sheet; Forecasting 4 (Wed) Feb 2 LINKS 1 - P&L Statements; Balance Sheet; Forecasting LINKS 2 Inventory, Distribution, Production 5 (Wed) Feb 9 LINKS 2 Inventory, Distribution, Production Lecture 3: Network Planning 6 (Wed) Feb 16 Lecture 3: Network Planning Case 1- Discussion 7 (Wed) Feb 23 Exam 1 Lecture 4: Manufacturing Planning & Control + Demand Management 8 (Wed) Mar 2 Lecture 5: Sales and Operations Planning + Master Production Scheduling Contd. Links 1 st Decision Feb. 9 by 5:00 PM Links 2 nd Decision Feb 16 by 5:00 PM Links 3 rd Decision Feb 23 by 5:00 PM Case 1 report due on Feb 11 by 5:00 PM Links 4 th Decision Mar 2 by 5:00 PM SPRING BREAK 9 (Wed) Mar 16 Lecture 6: Distribution Requirement Planning Links 5 th Decision Mar 16 by 5:00 PM 10 (Wed) Mar 23 Lecture 7: Value of Information, Supply Chain Integration Links 6 th Decision Case 2 report due 7

8 & Supply Contracts 11 (Wed) Mar 30 Lecture 7: Value of Information, Supply Chain Integration & Supply Contracts Contd. Case 2 - Discussion 12 (Wed) Apr 6 ERP Lab: Module # 1 (Master Data I: Material Masters) ERP Lab: Module # 2 (BOMs and Routings) ERP Lab: Module # 3 (Forecasting and Sales & Operations Planning) 13 (Wed) Apr 13 ERP Lab: Module # 4 (Master Scheduling and Material Requirements Planning) ERP Lab: Module # 5 (Purchasing and Financial Accounting) Exam 2 14 (Wed) April 20 LINKS Discussion of Results Positioning the SAP Project Mar 23 by 5:00 PM Links 7 th Decision Mar 30 by 5:00 PM Links 8 th Decision Apr 6 by 5:00 PM on Mar 25 by 5:00 PM LINKS Final Report Due on April 8 by 5:00 PM SAP Project Due on May 2 by 5:00 PM. 8

9 BIOGRAPHICAL SKETCH OF THE INSTRUCTOR Anand Nair is a faculty member in the Department of Management Science at the University of South Carolina. He earned his Ph.D. degree in Business Administration from The Eli Broad Graduate School of Management at Michigan State University. Professor Nair's current research interests are in the areas of innovation management (administrative and technological innovations) and inter-firm relationships. He is particularly interested in examining issues that are at the intersection of innovation management and inter-firm relationships. The administrative innovation research theme focuses on operations strategy, quality management practices, just in time practices, practices leading to agile and lean operations, postponement strategy, flexibility-oriented operational practices and integrated supply chain management. The technological innovation research theme investigates issues related to product innovation, new product development, research and development strategy, enterprise information systems and technological evolution. In the inter-firm relationships research theme, he is examining complexity, adaptation and risk in supply networks and how these aspects influence lock-in situations, bargaining power, collaboration and opportunism behavior. Dr. Nair's methodological orientation for research include empirical analysis using econometric and psychometric methods, behavioral experiments, computational experiments using complexity theory and complex adaptive systems approach, Monte Carlo simulations, data envelopment analysis and mathematical modeling using game theory, optimal control theory, theory of differential games, and stochastic processes. His research articles have been published or are forthcoming in Journal of Operations Management, Decision Sciences, European Journal of Operational Research, IEEE Transactions on Engineering Management, International Business Review, International Journal of Operations & Production Management, International Journal of Physical Distribution and Logistics Management, International Journal of Production Research, International Journal of Production Economics, Supply Chain Management An International Journal and others. Dr. Nair is an Area Editor for Operations Management Research and serves on the Editorial Review Board for the Journal of Operations Management and the International Journal of Integrated Supply Management. He serves as a reviewer for the Decision Sciences Journal, IEEE Transactions on Engineering Management, Production and Operations Management Journal and others. Dr. Nair holds the Certified Fellow in Production and Inventory Management (CFPIM) designation from APICS The Association for Operations Management and the Certified Quality Engineer (CQE) designation from ASQ American Society of Quality. He is a member of the Academy of Management, American Society of Quality, Association of Operations Management, Council of Supply Chain Management Professionals, Decision Sciences Institute, Institute for Operations Research and Management Science, Manufacturing and Service Operations Management and Production and Operations Management Society. 9