Question 1 (3.

0): Explain the differences between sourcing manufactured

products versus services. Identify some key challenges that would occur in
defining service specifications versus manufacturing specifications. Provide
an example of each.

Sourcing Manufactured Products:

Manufactured products are physical goods produced through a series of steps
involving raw materials, labor, and machinery. The process of sourcing these
products involves securing them from suppliers or manufacturers, with
examples such as electronics, vehicles, clothing, and furniture.

Primary Challenges:

1. Detailed Specifications: Outlining specifications for manufactured

products includes specifying size, materials, components, and functional
requirements. Precise specifications are essential to ensure the product
meets quality and performance standards.
2. Quality Consistency: Achieving consistent quality across various
batches and suppliers can be challenging. Fluctuations in materials,
production processes, and quality control can affect product dependability
and customer satisfaction.
3. Supply Chain Management: Organizing production schedules, stock
levels, and logistics to ensure timely delivery of products is complex.
Effective coordination of multiple suppliers is key to supply chain
success.

Example:
A company sourcing laptops would specify detailed technical requirements,
such as processor type, RAM, storage, screen size, battery capacity, and
operating system. To ensure quality, the company would set standards for
material quality, durability, performance testing, and warranty coverage.
Sourcing Services:
Services refer to intangible offerings that involve specialized knowledge or
skills, provided from one party to another. Sourcing services means obtaining
these non-physical offerings from external vendors, examples being IT support,
consulting, marketing, and legal assistance.

Primary Challenges:

1. Scope Clarity: Defining requirements for services can be more

subjective, especially with customized or abstract services. Clear
specifications of scope, deliverables, timelines, and performance
expectations help avoid misunderstandings.
2. Quality Evaluation: Assessing the quality of services is subjective, often
reliant on expertise, communication, and client satisfaction. Establishing
concrete quality measures is difficult for consultative services.
3. Risk Mitigation: Services come with inherent risks, such as reliance on
expertise, confidentiality, and legal compliance. Addressing these risks
requires thorough research, strong contracts, and contingency planning.

Example:
For outsourcing digital marketing, a company would define the scope to include
SEO, content creation, social media management, and analytics. Quality control
would include KPIs, performance standards, regular reporting, and
communication protocols.
Question 2 (2.0): How do you think emerging markets are? Explain the
increasingly role of the emerging markets in global supply chains.

Emerging markets represent economies undergoing a transition from

low-income, lesser-developed stages to becoming more modern and
industrialized. These economies, such as Brazil, Russia, India, China, and South
Africa (collectively known as BRICS), are known for their rapid growth and
expanding roles in global trade. By adopting reforms like stronger financial
systems, regulatory improvements, and better infrastructure, emerging markets
attract global interest. However, they are also marked by risks such as political
and currency instability and lower market liquidity compared to developed
economies.

Emerging markets have become indispensable in global supply chains for the
following reasons:

● Cost-Effective Production: With lower labor expenses and sizable

workforces, emerging markets provide affordable production options for
global businesses. Countries like India, Bangladesh, and Vietnam are
significant players in apparel, electronics, and machinery, enabling firms
to cut costs and remain competitive.
● Natural Resource Availability: These regions often hold large reserves
of essential natural resources like metals, minerals, and agricultural
products, making them critical suppliers for industries such as technology,
automotive, and energy. Brazil and Russia, for example, are major
contributors of metals and oil to the global market.
● Growing Consumer Base: As their economies expand, the middle
classes in emerging markets grow, creating substantial demand within
 these countries. China and India’s rising consumer markets are reshaping
supply chains as they become end markets as well as production hubs.
● Infrastructure Development: With investments in modern ports,
railways, and tech infrastructure, emerging markets are more integrated
into global supply chains. Infrastructure improvements in countries like
Malaysia and China have enhanced shipping speed and reliability,
bolstering supply chains.
● Supply Chain Flexibility and Risk Reduction: Recent events like the
COVID-19 pandemic emphasized the need for diversified supply chains.
Emerging markets offer alternative sources, reducing reliance on single
regions. For example, Mexico and Vietnam have become essential links
for U.S. and global firms aiming to diversify.
● Regional Trade Access: Emerging markets frequently benefit from
strategic trade agreements. For instance, the Regional Comprehensive
Economic Partnership (RCEP) in Asia strengthens trade networks,
making these countries more attractive to global businesses looking for
efficient trade paths.

Question 3 (2.0): Provide business examples of the three operations strategies:

make-to-stock, assemble-to-order, and make-to-order. Explain what it would
take for a company to move from a make-to-stock strategy to make-to-order,
and vice versa. What are the advantages and disadvantages of each strategy?

1. Make-to-Stock (MTS)
○ Definition: A strategy where products are produced and stocked in
advance, ready for immediate purchase.
 ○ Example: Common products like soaps, drinks, cosmetics,
off-the-shelf clothing, generic auto parts, and scheduled airline
flights. FMCG brands like Procter & Gamble and Coca-Cola use
MTS to keep items like personal care products and beverages on
store shelves for immediate sale.
2. Advantages:
○ Efficient Resource Allocation: By forecasting sales, MTS helps
allocate resources efficiently, reducing waste and optimizing
production.
○ Lower Production Costs: MTS allows for bulk production,
lowering costs through economies of scale. This approach
streamlines processes and may allow for better pricing on
materials.
○ Quick Delivery Times: With products already in stock, orders can
be shipped immediately, minimizing customer wait time.
3. Disadvantages:
○ High Storage Costs: Large inventory needs storage, insurance, and
maintenance, which all add up. Special conditions may also be
needed for perishables.
○ Risk of Excess Stock: Overestimating demand leads to surplus
inventory, requiring extra storage and increasing risk of
obsolescence, especially for seasonal or fast-moving products.
○ Limited Agility: With items pre-made and stored, reacting quickly
to demand changes is difficult, leading to potential stockouts or
surplus inventory.
4. Assemble-to-Order (ATO)
○ Definition: Items are partially pre-assembled, with final
customization added per order.
 ○ Example: Products like computers, modular furniture, and
vacation packages. Dell, for instance, customizes its computers to
customer specs (RAM, storage) but stocks basic components.
5. Advantages:
○ Greater Customization: ATO allows for significant product
customization, letting customers personalize key features for a
tailored product.
○ Reduced Inventory Costs: ATO stores only parts, not full
products, which saves space and may extend shelf life.
○ Improved Forecasting: With a focus on demand for components
instead of finished products, companies can better buffer against
fluctuations.
6. Disadvantages:
○ Low Immediate Availability: Unlike MTS, ATO items require
final assembly, so inventory can’t be immediately shipped, leading
to longer lead times.
○ Component Overstock Risk: Although finished products aren’t
stocked, companies must keep enough components, which can lead
to excess if demand drops.
○ Extended Wait Times for Customers: Production time may deter
customers who expect immediate fulfillment, especially if
competitors offer faster options.
7. Make-to-Order (MTO)
○ Definition: Tailor-made products produced only after an order is
placed, usually for high customization or low demand items.
○ Example: Custom clothing, bespoke homes, and personalized
services. Rolls-Royce offers an MTO option where customers can
design their cars from upholstery to finishes and interior inlays,
making each vehicle unique.
 8. Advantages:
○ Minimal Waste: MTO production is triggered by confirmed
orders, aligning supply with actual demand and reducing waste.
○ Reduced Inefficiency: MTO limits production to items that are
already sold, helping avoid resources spent on unsellable products.
○ High Customization Potential: MTO allows for a high degree of
personalization, valuable for luxury markets and customer loyalty.
9. Disadvantages:
○ Higher Unit Costs: One-off production is labor-intensive and
costly, potentially limiting MTO to premium markets where
customers will pay more for personalization.
○ Challenging Production Planning: Managing individual orders
requires careful scheduling and skilled labor, increasing operational
complexity.
○ Longer Delivery Times: MTO typically means waiting for
production, which may be a disadvantage if customers expect fast
delivery.

Switching from MTS to MTO requires changes in production planning,

reduced inventory, and a more adaptable supply chain for custom orders. More
flexible production and forecasting systems would be essential for adapting to
individual customer requirements.

Transitioning from ATO to MTO or MTS involves various considerations:

● Moving to MTO: Requires more customized production, possibly

affecting efficiencies gained from holding stock of components and
extending assembly time.
 ● Moving to MTS: This change requires standardizing products and
managing fully assembled inventory, possibly reducing appeal for
customers wanting customization.

Question 4 (3.0): Provide business examples of companies that compete on

each one of the identified competitive priorities. Explain how their supply
chain strategies are different based on their specific competitive priority.
Select one of the business examples you provided and explain how the
company would need to change its supply chain strategy if it shifted its
competitive priority.

1. Five primary competitive priorities

● Cost: If a business's objective is to compete on price, the supply chain strategy
must reflect this. Cost-cutting businesses sell their items at the lowest attainable
price. These organizations are either defending their market position in a
commodities market or delivering attractive pricing to cost-conscious clients.
Example: Dollar Tree’s entire business model revolves around keeping costs
low, with all items priced at or near $1. Its supply chain is optimized for
low-cost procurement by sourcing a high percentage of products from low-cost
manufacturers, often in bulk, which reduces per-unit costs. Dollar Tree also
minimizes overhead by using efficient distribution centers and maintaining a
straightforward product assortment, further reducing operational expenses.

● Time: Time is one of the primary ways in which businesses compete nowadays.
Businesses across all sectors compete to offer high-quality items in the shortest
amount of time feasible.
Example: Domino’s focuses on fast delivery, aiming to deliver pizzas within
30 minutes or less. Its supply chain strategy is built around ensuring fresh,
prepared ingredients are consistently available at local stores. The company has
 a streamlined distribution network and relies on predictive ordering technology,
allowing stores to preemptively prepare and quickly fulfill customer orders.
This time-centric model has helped Domino’s build a reputation for speed in
food delivery.

● Innovation: Businesses that prioritize innovation concentrate on generating

items viewed as "must haves" by customers, drive the product through the
supply chain.
Example: Samsung is known for its focus on innovation, especially in
consumer electronics. The company’s supply chain strategy includes significant
investments in research and development and high-tech manufacturing
facilities. Samsung also has a vertically integrated supply chain, which allows
it to produce many of its components, such as memory chips and displays,
in-house. This enables Samsung to introduce new technologies quickly and
maintain control over quality and cost, supporting its innovation-driven market
positioning.

● Quality: Competing on quality establishes a company's goods and services as

premium. Consistency and dependability are critical components of this
competitive goal.
Example: Patagonia’s focus on quality is coupled with environmental
sustainability, ensuring that each product is durable and ethically produced.
Patagonia sources high-quality, often organic or recycled materials, which are
designed to last for years. The company’s supply chain includes partnerships
with suppliers who adhere to strict environmental and labor standards. By
prioritizing durability and sustainability, Patagonia aligns its supply chain with
its commitment to quality and long-term value for customers.

● Service: Competing on service implies that a business knows the characteristics

of excellent service that its target consumers define and has decided to design
 its goods to fulfill those unique demands. A critical component of this approach
is that these businesses often cultivate client loyalty, which frequently ensures
continuing revenue.
Example: American Express competes on exceptional customer service,
particularly in its premium credit card offerings. To support this, the company
has a service-focused supply chain that includes well-trained customer service
representatives, 24/7 support, and additional perks like concierge services.
American Express’s supply chain is designed to deliver seamless customer
support experiences, helping build brand loyalty and differentiating it from
other credit card providers that may compete more on cost or rewards rather
than service.

2. The way that the company's supply chain strategy would need to alter if its
competitive priorities shifted

H&M (Shift from Time to Cost)

Production:
H&M would move production to lower-cost regions and increase production
runs to lower unit costs, sacrificing speed and flexibility.

Inventory Management:
H&M would produce larger batches, increasing the risk of overstocking and
reducing its ability to react quickly to trends.

Logistics:
H&M would opt for cheaper shipping methods, increasing delivery times but
lowering costs.

Impact on Positioning:
The shift would lower prices but slow response to trends, weakening H&M's
position as a fast-fashion leader.
Exercise 1: Identify the primary ways in which SCM has improved the order
fulfilment process. What other benefits has SCM provided to businesses?

SCM’s Role in Improving Order Fulfilment: Supply chain management improves

order fulfilment for small businesses by better coordinating procurement, production,
and logistics activities. By creating a collaborative network between suppliers,
manufacturers, and customers, SCM ensures that products are delivered in a more
timely and efficient manner.

Other Business Benefits of SCM:

● Reliable Access: Through long-term supplier contracts, SCM ensures

businesses can depend on consistent access to essential resources.
● Cost Reductions: SCM minimizes procurement costs and shields companies
from price fluctuations, making budgeting more predictable.
● Quality Consistency: Uniform quality standards within the supply chain
ensure that products maintain consistent quality, reducing the need for
extensive quality control.
● Agility: SCM enables companies to quickly adapt to customer demands,
leading to faster lead times and more responsive service.
● Predictability: By enhancing visibility and providing real-time data, SCM
helps businesses better forecast demand and avoid uncertainties like the
bullwhip effect.
● Partnerships: SCM promotes cooperation and long-term relationships with
suppliers, leading to cost savings, innovation, and improved responsiveness, as
demonstrated by Toyota and Honda.
Exercise 2: Identify two competing enterprises and their supply chains (e.g., Dell
Computer versus Apple; K-Mart versus Wal-Mart; Toyota versus GM; UPS versus
FedEx). Identify the elements of each chain from source of supply to final customer,
and explain how the two chains are meeting (or not meeting) business objectives.
Which supply chain appears longer? Does the structure of one appear simpler than
the other?

Amazon Inc.: Amazon’s supply chain is designed for speed and high-quality service,
structured around four main areas: warehousing, delivery, technology, and
manufacturing.

● Warehousing: Amazon’s operations start with warehousing, allowing it to

source products globally. Distribution centers in major metro areas enable
quick fulfillment, shipping items out as soon as orders are verified.
● Delivery: Amazon offers flexible shipping, including standard, two-day prime,
and special occasion delivery. Drone and van options further enhance delivery
speed.
● Technology: The company integrates robotics and automation into its logistics,
optimizing item selection and packing.
● Manufacturing: Amazon also provides a platform for third-party sellers to
reach new markets, supporting Amazon’s focus on excellent customer service
and market leadership.

Walmart: Walmart’s supply chain highlights efficiency through vendor partnerships,

inventory management, and advanced technology.

● Strategic Partnerships: Walmart collaborates closely with suppliers,

streamlining communication and building stronger supplier relationships.
● Cross-Docking: Walmart’s cross-docking process allows goods to be
transferred efficiently between trucks, saving on labor and time.
 ● Inventory Technology: Walmart uses advanced inventory systems to ensure
fast delivery and diverse product quality, in line with its objective to offer
affordable, quality goods worldwide.

Compared to Amazon, Walmart’s supply chain is more extensive. While both

companies prioritize similar structures, Amazon’s chain is more warehouse-oriented,
and Walmart’s is built around strategic partnerships.

Exercise 3: Identify key activities of SCM. Identify other drivers not mentioned in the
text.

Coordination: In SCM, coordination means managing the flow of goods and services
from the suppliers, through manufacturers and distributors, and finally to the end
customers. This also includes handling returned items and organizing financial
exchanges, such as purchasing terms and payments between buyers and suppliers.

Information Sharing: Successful SCM depends on open information sharing

between supply chain partners, such as demand projections, sales records, promotional
activities, and inventory status. For example, if a retailer plans an ad campaign, they
need to inform the manufacturer to ensure enough product availability, and suppliers
need updates on production needs. This information exchange keeps all parts of the
supply chain aligned.

Collaboration: SCM requires close collaboration among supply chain members,

allowing them to make decisions together on important matters, from product design
and process improvements to quality standards and cost-saving measures. This
collaboration ensures that the entire chain moves toward shared goals and optimizes
overall performance.
Exercise 1: Why do governments have a role in adding value to global supply chains?

Governments contribute to the effectiveness of global supply chains by fostering a

supportive ecosystem. This enables businesses to concentrate on their core objectives,
benefiting from improved organizational visibility and understanding of operational
impacts. With these insights, companies can introduce systems for continuous
improvement, enhancing responsiveness and efficiency.

Regulatory policies are fundamental to the globalization of supply chains.

Government policies that promote trade, align technical standards, and support
consistent marketing regulations help integrate international operations. For instance,
WTO trade agreements have accelerated global commerce, encouraging companies to
extend their supply chains internationally. Compatibility in technology, such as the
Global Trade Item Number (GTIN) in RFID systems, further aids global supply chains
by standardizing product tracking, enabling easy access to information, and reducing
barriers across different regions.

Exercise 2: How competitive globalization drivers better facilitate global supply

chains?

Competitive drivers significantly support global supply chains by boosting activities

like high export and import volumes, international competition, and cross-country
dependencies. With rising interdependence among countries, supply chains now
involve complex exchanges across borders, requiring efficient coordination.
Components for products often pass through multiple countries before they’re
completed and reach the customer, highlighting the importance of global supply chain
management.