Koç University OPSM 305 Supply Chain Management

Koç University OPSM 305 Supply Chain Management Prof. Barış Tan btan@ku.edu.tr, SPRING 2011 Course Description: Supply chain management is concerned with managing the flow of goods and information through a production or distribution network, encompassing all stages from the supplier to the customer. Its reach can go across different functional areas of an organization and beyond the boundaries of several firms. As such, it is not only concerned with the provision of customer service in a single firm, or the meeting of supply and demand in a single facility, but also involves the coordination of these activities across multiple decision makers. In this course, we will discuss selected topics related to strategic and tactical issues faced by a supply chain. The topics that will be covered include strategic issues like manufacturing and distribution network design, capacity expansion and consolidation, formation and development of partnerships, information systems, as well as tactical and operational issues like demand and supply planning, supplier and customer collaboration, production planning, transportation and logistics planning. Objective: The course will emphasize the importance of developing an integrated supply chain strategy. Supply chain practice, and new developments in supply chain management will be explored in the context of cases and examples from industry. The objective of the course is to give a detailed overview of logistics and supply chain management and a framework to think about how to design, manage, and improve supply chains. Furthermore strategic importance of logistics and supply chain management for the competitiveness of a corporation will be emphasized. The course is designed for students who consider working in consulting firms, in sales, marketing, supply chain, and logistics management departments of organizations in different industries, and also for those who consider working in logistics service providers. Text Book Required text book. The following books include chapters related to the topics we will discuss: Design and Managing the Supply Chain by Simchi-Levi and Kaminsky Additional articles will be available in the course pack Topics 1- Introduction Supply Chain and Logistics Management Competitive Advantage through SCM 2- Design of Supply Chains Process-based business models Choosing the right supply chain for the right product

Choosing the right supply chain for the right business model Designing the right supply chain Supply chain network design 3- Logistics Management Transportation Transportation Costs, Pricing Transportation Carrier Characteristics Intermodal Combinations Distribution Planning Routing Case: Vestel : Improving Distribution Management and 3PL Relations Warehousing Warehousing Operations Cross-docking Case: Merloni Ellettrodomestici SpA: The Transit Point Experiment 4- Planning in Supply Chains Inventory Management Inventory management for new products Inventory management for existing products Case: Sport Obermeyer Positioning inventory in a supply chain Safety Stock and Risk Pooling Simulation: Harvard Global Supply Chain Management Simulation 5- Coordination Issues in Supply Chains Bullwhip Effect Coordination Mechanisms Case: Barilla SpA Simulation: Beer Game Effects of Contracts: Exploring the incentive issues 6- Procurement and Outsourcing Strategies Procurement strategies What to outsource? Logistics Outsourcing Managing Outsourcing Relations 7- Strategic Alliances: 3 rd Party Logistics 3 rd Party Logistics 4 th Party Logistics Business models for working with 3 rd Party Logistics providers 8- Future Trends in Supply Chain Management Instructional Methods In order to reach the objectives of this course, we will utilize lectures, case studies, an interactive simulation, and guest speakers.

Lectures Class time will be devoted to lectures concerning important concepts and issues as well as to the analysis and discussion of case studies. In addition, we will have a number of guests who will participate in case discussions and inform us about related issues they are facing at their companies. Students are expected to have read the assigned materials, and carefully analyzed the cases before coming to class. It is essential to take an active role in the class discussions. Because all the cases assigned are taken from the field, they are rich in context, detailed, and often quite complex; therefore students are strongly encouraged to work in study groups, but are expected to present their own analysis and perspective in class. Students are expected to be present and to participate in all class sessions. Class participation will account for 10% of your final grade. Strong participation is founded on adequate preparation. For a case discussion, this requires a thorough quantitative and qualitative analysis of the case, defining the problems, identifying and evaluating trade-offs, and preparing a plan of action. When students are prepared, the class discussion and the learning process are greatly enhanced. What you get from this course depends on what you put in. Preparation involves not just thorough analysis, but also developing a personal position on the issues raised in the cases and readings. Unless you have thought about and adopted a personal position, it is very hard to learn from others contributions in the class. Case Studies We will study 4 cases during the course. Each case introduces a framework or a set of tools and concepts for analyzing operations problems. Each case will be presented by one team. All the teams will submit a case report that addresses the specific questions that will be provided. All the students are expected to be prepared for the case discussions. Merloni Ellettrodomestici SpA: The Transit Point Experiment Harvard Business School Merloni Elettrodomestici is a leading Italian manufacturer of domestic appliances. In 1986, an exposition for Merloni customers is scheduled at its Milano regional warehouse. During the two-month period preceding the event, when the warehouse must be free of inventory, the company conducts a "transit point" experiment. Each day, a truckload of products from the company's central warehouse is sent to Milano, where it is immediately transferred to small trucks for local delivery. At the conclusion of the experiment, the company is considering the replacement of its 17 regional warehouses with transit points. Students are asked to evaluate this proposal and recommend a configuration for Merloni's distribution network. Issues to be considered in the analysis of the case include the impact of different network configurations on customer service and on inventory, labor, operating, and transport costs. Vestel: Improving Distribution Management and 3PL Relations- Koç GSB Case Description : Vestel Durable Goods Marketing is the domestic distribution company of Vestel, the largest television producer of Europe and one of the major white goods producers in Turkey. The case describes Vestel Durable Goods Marketing s initiative to improve its distribution system by implementing an advanced planning and optimization system, Manugistics. The case also depicts how this new system is used to redesign its pricing strategy with Vestel's 3PL provider, Horoz Logistics., and the effects of this system on Vestel's relationship with Horoz Logistics. Vestel's proposal for a strategic alliance with some of its competitors on distribution planning is also presented. The case can be used to address several important topics: i) the complexity of logistic network design and management problems (along with a quantitative exercise to illustrate this to students) ii) the story of a detailed implementation of a supply chain planning tool (Manugistics) and its novel use in pricing iii) the relationship between a company and its 3PL provider illustrating various incentive issues, power, and trust dynamics iv) strategic alliances in logistics along with associated information sharing issues v) an example illustrating the impact of the local context, Turkey, on supply chain management issues. Subjects Durable Goods, Distribution, Third-party logistics (3PL), 3PL Relations, Pricing

Simulation Sport Obermeyer Ltd. Harvard Business School Describes operations at a skiwear design and merchandising company and its supply partner. Introduces production planning for short-life-cycle products with uncertain demand. In addition, provides details about information and material flows that allow one to make recommendations for operational improvements, including comparisons between sourcing products in Hong Kong and China. Barilla SpA - Harvard Business School Barilla SpA, an Italian manufacturer that sells to its retailers largely through third-party distributors, experienced widely fluctuating demand patterns from its distributors during the late 1980s. This case describes a proposal to address the problem by implementing a continuous replenishment program, under which the responsibility for determining shipment quantities to the distributors would shift from the distributors to Barilla. Describes support and resistance within Barilla's different functional areas and within the distributors Barilla approached with the proposal. Teaching Purpose: Allows students to analyze how a company can effectively implement a continuous replenishment system to both reduce channel costs (in this case, inventory and transportation costs incurred by Barilla as well as inventory costs incurred by the distributors) and improve service levels (defined in this case as the percent of retailers' orders filled from distributors' inventory). We will use two simulations in the course: Global Supply Chain Management Simulation and the Beer Game. Grading Global Supply Chain Management Simulation Harvard Business School This interactive online simulation allows students to try their hands at managing the complexities of a global supply chain by putting them in the shoes of the supply chain manager of a mobile phone manufacturer. Students become responsible for the rollout of two models of mobile phones. Illustrates key concepts of supply chain management, such as: creating a balanced supply chain across suppliers with different lead times, building flexibility into the supply chain to avoid stock-outs and excess inventory, and evaluating and using demand forecasts. Student success is measured by company profits as well as through a dynamic evaluation process in which students answer probing questions from the company's board members. Students can use the simulation individually or in teams. The Beer game The production-distribution game or the beer game, as it is often called, has been used in management education and development for more than 30 years. The beer game is a role-playing game where the participants have to minimize costs by managing inventory levels in a production-distribution chain. The beer game consists of 4 sectors: retailer, wholesaler, distributor and factory. You try to minimize the costs by managing inventory levels in this production-distribution chain. That is each week decide how much to order (or how much to produce) to fulfill the demand and to minimize inventory carrying cost. The course grade will be based on classroom participation, two simulation reports, homework assignments, and a final according to the following weight distribution: Item Contribution to the Final Grade Midterm (ind.) 30% Final (ind.) 40% Class Participation (ind.) 10% Assignments (ind.) 20% Total 100% You should come and discuss the topic of the project before you start. This project may fulfill the project requirement of the MBA program.

Reading Material 1. What is the Right Supply Chain for Your Product?, M. Fisher, Harvard Business Review, 1997 2. Which e-business is right for your supply chain, S. Chopra and A. Mieghem, SCM Review 2000 3. Control Your Inventory in a World of Lean Retailing, F.H. Aberbathy, J.T. Dunlop, J.H. Hammond, D. Weil, Harvard Business Review, 2000 4. Making Supply Meet Demand in an Uncertain World, M. Fisher, J.H. Hammond, W.R. Obermeyer, A. Raman, Harvard Business Review, 1994 5. The Triple-A Supply Chain, H. Lee, Harvard Business Review, 2004 6. Aligning Incentives in Supply Chains, V.G. Narayanan and A. Raman, Harvard Business Review, 2004 Optional Articles (in Turkish) o Şirketlerin Hız Yarışı, Capital, August 2004 o Rekabet ve Tedarik Zinciri Yönetimi, B. Tan, Capital, October 2003 o Rekabet İçin İşbirliği, B. Tan,Capital, Mart 2004 o Birlikten Kuvvet Doğar, B. Tan, Capital, Şubat 2006 o Çok Uluslu Ürün Zamanı, Capital, Aralık 2007 o Global Tedarik Kararları Nasıl Alınıyor?, B. Tan, Capital Ocak 2006 o Satın Alma Süreçlerinin Etkin Yönetimi ile Rekabet, B. Tan, Capital, Haziran 2005 o Rekabet için Lojistik, B. Tan, Capital, Nisan 2004 o Rekabet için Lojistikte İnovasyon, B. Tan, Capital, Aralık, 2007 o Tedarik Zincirlerinde Risk Yönetimi, B. Tan, February 2004 o Niçin Dış Kaynak Kullanımı?, B. Tan, Capital Kasım 2003 o Tedarik Zincirinde Sistemin Yapısı Davranışı Belirler, B. Tan, Capital, May 2005 o Tedarik Zincirinde Kârın ve Riskin Paylaşımı, B. Tan, Capital, September 2005 o Stok Azaldı Devir Hızlandı, Capital, August 2004 o Perakendecilik Mühendisliği, B. Tan, Capital, Aralık 2003. o Gelir Yönetimi Yaklaşımı ile Rekabet, B. Tan, Capital, October 2004 Lecture Notes The copies of the material used in the lectures will be available on the web page. Remarks: 1. The academic rules and regulations are in effect (Koç University Catalogue) Academic dishonesty in the forms of cheating, plagiarism or collusion are serious offences and will not be tolerated at Koç University...Cheating includes, but is not limited to, copying from a classmate or providing answers or information, either written or oral, to others... Cheating, plagiarism, and collusion are serious offences resulting in an F grade and disciplinary action: Individual accountability for individual work, written or oral. Copying from others or providing answers or information, written or oral, to others is cheating. Providing proper acknowledgment of original author. Copying from another student s paper or from another text without acknowledgment is plagiarism. Study of project group activity is effective and authorized teamwork. Unauthorized help from another person or having someone else write one s paper or assignment is collusion. 2. Students are responsible for all the announcements made in class. 3. All grades are considered final two weeks after grading.