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 items created through processes involving
raw materials, human labor, and machinery. Sourcing these products means
procuring them from suppliers or manufacturers. Common examples are
electronics, vehicles, clothing, and furniture.

Key Challenges:

1. Technical Specifications: Developing technical specifications for

manufactured goods requires careful detailing of size, materials,
components, and performance needs. Accurate specifications are essential
to meet quality and functionality standards.
2. Quality Control: Maintaining uniform quality across different batches
and suppliers is difficult. Changes in raw materials, production
techniques, and quality checks can affect product reliability and customer
satisfaction.
3. Supply Chain Coordination: Managing production timelines, inventory,
and logistics to ensure timely delivery of products is complex. Efficiently
coordinating multiple suppliers and optimizing the supply chain are
ongoing challenges.

Example:
If a company is sourcing laptops for its staff, defining specifications involves
setting requirements for processing power, memory, storage, screen dimensions,
battery duration, and the operating system. Quality standards might include
material durability, performance testing, and warranty terms.

Sourcing Services:
Services refer to intangible activities or benefits offered by one party to another,
often involving specific skills or expertise. Sourcing services involves obtaining
these intangible solutions from external providers. Examples include IT support,
consulting, marketing, and legal services.

Key Challenges:

1. Scope Definition: Specifying service requirements can be subjective,

particularly for customized or abstract services. Clear definitions of
scope, deliverables, deadlines, and performance expectations help prevent
misunderstandings.
2. Evaluating Quality: Assessing service quality is subjective, often based
on expertise, responsiveness, communication, and client satisfaction.
Creating objective quality measures is challenging for consultative or
creative services.
3. Risk Management: Services involve unique risks, such as dependency
on specific skills, confidentiality issues, and regulatory compliance. Risk
mitigation requires thorough vetting, contract agreements, and
contingency plans.

Example:
For a company outsourcing digital marketing, defining the service scope might
include tasks like SEO, content creation, social media management, and
analytics. Quality control would involve setting KPIs, performance benchmarks,
reporting formats, and communication guidelines to monitor results.
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 are dynamic economies that are transitioning from

low-income, less industrialized systems toward modern, developed economies.
They typically exhibit rapid growth, increasingly diversified economies, and a
growing presence in global markets. Countries like Brazil, Russia, India, China,
and South Africa (collectively known as BRICS) are classic examples.
Emerging markets also adopt reforms seen in developed economies, like unified
financial systems, regulatory improvements, and physical infrastructure
development. While these economies promise high growth rates and returns,
they carry inherent risks like political instability, currency volatility, and less
market liquidity.

In recent years, emerging markets have become crucial players in global supply
chains. Here’s how they’re shaping and increasingly influencing supply chains
worldwide:

1. Cost-Effective Manufacturing Hubs: With relatively low labor costs

and extensive workforces, emerging markets provide a cost-effective
alternative for manufacturing, enabling global businesses to reduce
production expenses and maintain competitive pricing. Countries like
Vietnam, India, and Bangladesh have become important centers for
apparel, electronics, and machinery production.
2. Resource Availability: Emerging economies often have rich reserves of
essential natural resources, from minerals and metals to agricultural
products. This resource base makes them vital suppliers for industries
such as technology, automotive, and energy. For instance, Brazil and
 Russia contribute significantly to global raw material supplies, including
metals and oil.
3. Growing Domestic Markets: As these economies grow, so does their
middle class, creating substantial domestic demand. This means emerging
markets are not just supply points but are increasingly also important
end-markets for goods and services. For example, consumer demand in
China and India is reshaping supply chains to meet local needs.
4. Increasing Investment in Infrastructure: Investment in ports,
transportation networks, and technology infrastructure has strengthened
the integration of emerging markets into global supply chains. Modern
ports in countries like Malaysia and improved railway networks in China
expedite shipping and trade, making supply chains faster and more
reliable.
5. Supply Chain Diversification and Risk Mitigation: Recent global
events, such as the COVID-19 pandemic, have underscored the
importance of diversified supply chains. Businesses are increasingly
using emerging markets to reduce dependence on a single region and
mitigate risks. Countries like Mexico, due to its proximity to the U.S.,
and Vietnam, as a nearby alternative to China, are becoming critical for
risk diversification in supply chains.
6. Regional Trade Agreements and Strategic Positioning: Emerging
markets are often positioned in regions with strategic trade advantages.
Trade agreements like the Regional Comprehensive Economic
Partnership (RCEP) in Asia enhance supply chain connectivity, making
these economies attractive for businesses seeking streamlined trade
routes.
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: This strategy involves producing goods in advance and

keeping them in inventory until they're needed.
● Example: Ready-to-buy products, such as soaps, beauty products, soft
drinks, pre-packaged clothing, standard car parts, and airline seats.
FMCG companies like Procter & Gamble and Coca-Cola use MTS to
keep toiletries and beverages stocked and readily available in stores.

Advantages:

● Efficient Resource Planning: MTS allows manufacturers to use demand

forecasts for planning production, which helps allocate resources
efficiently and avoid waste. Knowing how much of each product will be
needed optimizes resource utilization.
● Reduced Production Costs: MTS enables companies to produce goods
in large volumes, which benefits from economies of scale. Large-batch
production can reduce costs by streamlining processes and negotiating
better prices for materials.
● Short Lead Times: Since items are produced in advance, they can be
shipped immediately upon order, significantly reducing customer wait
times.

Disadvantages:
 ● High Inventory Costs: Maintaining large stocks of finished products
requires storage space and incurs costs for utilities, insurance, and
security. Perishable products may also need special conditions.
● Overstocking Risk: MTS relies on accurate demand forecasting. If
demand is overestimated, excess inventory can accumulate, requiring
storage and potentially leading to obsolescence, especially for seasonal or
short-lifecycle products.
● Limited Flexibility: Once items are manufactured and stored, adjusting
to demand changes can be difficult. When demand drops, excess stock
may remain, and when it spikes, shortages may occur.

2. Assemble-to-Order (ATO)

● Definition: In this strategy, products are partially assembled, with

customization added when an order is placed.
● Example: Items like computers, modular furniture, and custom vacation
packages. Dell, for instance, assembles laptops or desktops based on
customer specifications (RAM, storage, processor) using
pre-manufactured components.

Advantages:

● Customization: ATO allows for a high level of product customization,

enabling each customer to select specific features or components,
resulting in a more personalized product.
● Lower Inventory Costs: By focusing on storing parts instead of finished
products, companies can save space, as components generally occupy less
space and are more durable.
● Improved Demand Forecasting: Forecasting for components rather than
finished goods can help better manage demand fluctuations, providing a
buffer against changes in final product demand.
Disadvantages:

● Limited Ready Inventory: Unlike MTS, ATO does not have finished
products readily available, so assembly is required before delivery, which
can lengthen lead times.
● Risk of Component Overstock: While finished goods are not stocked,
companies must keep ample components, which can lead to overstocking
if specific configurations don’t sell as anticipated.
● Extended Wait Times: ATO lead times depend on assembly processes,
meaning customers may experience delays. Higher wait times could drive
customers toward ready-to-buy options.

3. Make-to-Order (MTO)

● Definition: MTO is used for highly customized or infrequently demanded

products, where production only starts after an order is placed.
● Example: Custom clothing, bespoke homes, or personalized services.
Rolls-Royce's Bespoke Program is an MTO example, where customers
can design unique vehicles tailored to their preferences, from upholstery
color and material to special finishes and unique inlays.

Advantages:

● Minimized Waste: Production starts only after an order is received,

aligning output with demand, which helps reduce inventory-related waste
and cost.
● Reduced Inefficiencies: By tailoring production to specific orders, MTO
reduces wasteful use of resources, as products are only made if they’re
already sold.
● High Customization: Since production only begins after an order is
confirmed, MTO products can offer a high degree of personalization,
 which is valued in luxury markets where customers are willing to pay for
uniqueness. This approach builds customer satisfaction and loyalty.

Disadvantages:

● Higher Production Costs per Unit: Producing customized items can be

resource-intensive and more costly on a per-unit basis. In price-sensitive
markets, this may limit competitiveness.
● Complex Production Scheduling: Managing individual orders can be
challenging, as it requires flexible scheduling and skilled workers, often
resulting in increased operational costs.
● Longer Customer Wait Times: MTO typically has extended lead times,
which may be a drawback if customers prefer faster delivery. When
competitors offer faster options, MTO companies must carefully manage
customer expectations on delivery times.

Transitioning from MTS to MTO requires adjustments in production

planning, with a focus on reducing inventory and building a more adaptable
supply chain for custom orders. Companies would also need flexible
manufacturing and forecasting systems to cater to individual customer
requirements effectively.

Shifting from ATO to MTO or MTS involves different trade-offs:

● Moving to MTO would require increased customization, likely reducing

efficiencies from holding components in stock. This could increase
assembly time and customer wait times.
● Moving to MTS would mean standardizing products, managing fully
assembled inventory, and potentially reducing appeal for customers who
value 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: Walmart is known for its low-price strategy, made possible by its
highly efficient supply chain. It leverages economies of scale by purchasing in
bulk, utilizing advanced logistics technologies, and optimizing distribution
centers to reduce costs. Walmart’s focus is on cutting operational expenses and
ensuring products reach customers at the lowest possible prices.

● 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: Amazon Prime emphasizes speed with its promise of same-day,
one-day, or two-day delivery. To achieve this, Amazon has an extensive
network of fulfillment centers located near key markets, allowing for quick
order processing and dispatch. Additionally, Amazon leverages advanced
forecasting, inventory management, and its own delivery services to meet these
rapid timelines.
● Innovation: Businesses that prioritize innovation concentrate on generating
items viewed as "must haves" by customers, drive the product through the
supply chain.
Example: Apple competes on innovation, consistently releasing cutting-edge
products. Apple’s supply chain is designed to support high standards in design
and technology while ensuring a seamless production process. The company
invests in proprietary manufacturing techniques and high-quality components,
while also controlling key aspects of its supply chain for product assembly and
testing to maintain product excellence.

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

premium. Consistency and dependability are critical components of this
competitive goal.
Example: Rolex prioritizes quality and craftsmanship in its luxury watches.
The company has a highly controlled supply chain with most production steps
performed in-house to maintain strict quality standards. By overseeing the
manufacturing process closely, Rolex ensures that each watch meets its
high-quality benchmarks, thus reinforcing its premium brand image.

● 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: The Ritz-Carlton is renowned for its customer service. The company
focuses on personalized service and experiences that meet each guest’s needs.
To support this service priority, the hotel chain invests in staff training,
maintaining a high staff-to-guest ratio, and using guest feedback to
continuously improve service quality. Its supply chain is oriented around
ensuring that products and amenities align with its luxury service standards.
 2. The way that the company's supply chain strategy would need to alter if its
competitive priorities shifted

If Zara were to shift its competitive priority from time (speed) to cost (low
prices), it would need to significantly adjust its supply chain strategy:

● Production: Zara would need to explore cost-saving production

locations, potentially moving some manufacturing to lower-cost regions
and focusing on longer production cycles, reducing flexibility.
● Inventory Management: Instead of small, frequent batches, Zara would
produce larger quantities at once to lower per-unit costs, but this would
reduce its responsiveness to rapid trend changes.
● Logistics: It may seek to reduce express shipping and move to less
expensive logistics options, which could lengthen delivery times but help
cut costs.

This shift would help Zara compete on price but would likely mean a slower
response to fashion trends, affecting its positioning 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?

Enhancement of Order Fulfilment through SCM: SCM enables small firms

to streamline procurement and manufacturing, ensuring smoother operations. It
connects suppliers, distributors, and service providers, improving efficiency in
reaching customers. By coordinating production, logistics, and procurement,
SCM ensures faster, more organized order fulfilment.

Additional Advantages of SCM:

● Access to Supplies: Long-term contracts through SCM guarantee steady

access to critical raw materials, reducing supply chain risks.
 ● Cost Savings: SCM eliminates procurement-related costs and mitigates
price volatility, making budgeting for supplies more accurate.
● Quality Assurance: Standardized quality expectations across the supply
chain improve product consistency, reducing inspection costs and
boosting operational efficiency.
● Flexibility and Speed: SCM increases a business’s ability to respond
quickly to customer demands, ensuring products are delivered faster and
more efficiently.
● Dependability: Real-time data exchange enhances supply chain
visibility, reducing uncertainties like demand forecasting errors and the
bullwhip effect.
● Collaborative Relationships: SCM focuses on building strong,
collaborative partnerships between customers and suppliers, improving
long-term business outcomes. Companies like Toyota and Honda leverage
this approach to outperform competitors.

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 a robust system built around timely,
high-quality deliveries. It relies on four core elements: warehousing, delivery,
technology, and manufacturing.

● Warehousing: Amazon’s supply chain starts with warehousing, enabling

products to be sourced globally. Distribution centers in major cities worldwide
allow Amazon to fulfill orders quickly, dispatching items directly from these
warehouses after order confirmation.
 ● Delivery: Amazon provides multiple delivery options, from standard 6-7 day
shipping to two-day prime delivery, with special services available for
occasions like birthdays. Delivery options also include drones and vans for
faster service.
● Technology: The company’s reliance on technology is evident, as it employs
various robotics and automated systems to pick and pack items efficiently.
● Manufacturing: Through Amazon, third-party sellers can also reach a broader
customer base, helping the platform meet its goal of superior customer service
and competitive advantage.

Walmart: Walmart’s supply chain emphasizes efficiency and strong supplier

partnerships.

● Vendor Partnerships: Walmart’s supply chain is built on strong partnerships

with suppliers, improving communication and fostering better supplier
relationships.
● Cross-Docking Inventory: Walmart employs cross-docking, which enhances
efficiency by allowing goods to be transferred directly from truck to truck,
reducing labor and resource costs.
● Advanced Inventory Technology: Walmart’s inventory technology ensures
quick delivery and a variety of high-quality products, supporting its goal of
providing low-cost, quality products to customers.

Walmart’s supply chain is more extensive than Amazon’s, though their structures are
similar. Amazon’s approach centers around warehouse efficiency, while Walmart
focuses on supplier partnerships.

Exercise 3: Identify key activities of SCM. Identify other drivers not mentioned in the
text.
Coordination: Supply chain management (SCM) involves coordinating the flow of
goods and services from suppliers to manufacturers, then to distributors, and finally to
customers. It also includes the return of goods back up the chain when necessary, as
well as managing the financial transactions involved, such as purchase terms and
payments between buyers and suppliers.

Information Sharing: Effective SCM requires sharing critical information among all
supply chain participants, including demand forecasts, sales data, planned promotions,
and inventory details. For instance, if a retailer plans a large marketing campaign, the
manufacturer needs this information to increase production. Similarly, the
manufacturer’s suppliers must know about production changes to provide adequate
components. Sharing these details ensures smooth operations across the supply chain.

Collaboration: SCM relies on collaboration among supply chain partners for joint
decision-making. This might involve working together on product design, cost
reduction, or quality improvement strategies. Collaborative efforts ensure that
everyone in the chain works towards the same business objectives, strengthening the
entire operation.

Exercise 1: Why do governments have a role in adding value to global supply chains?

Governments play a key role in creating a competitive environment for supply

chains by establishing policies and regulations that support global operations.
Businesses can then focus on achieving their goals with full visibility and an
understanding of how different events impact their operations. With real-time
data, companies can implement continuous improvements, becoming more
responsive and efficient.

Government regulations are crucial drivers of globalization. Favorable trade

policies, standardized technical regulations, consistent marketing rules, and
government-owned competitors or customers all influence global supply chains.
For example, trade agreements like those established by the WTO have
facilitated international trade by encouraging businesses to expand their supply
chains worldwide. Additionally, aligning technological standards, such as the
Global Trade Item Number (GTIN) used in RFID technology, ensures that
product information is accessible across different countries and companies,
simplifying global tracking and transparency.

Exercise 2: How competitive globalization drivers better facilitate global supply

chains?

Competitive drivers play an important role in enhancing global supply chains.

Key factors include high levels of exports and imports, competition from global
companies, international interdependence, and global expansion of competitors.
Increased trade across borders reflects strong integration of economic activities
worldwide, making global supply chain management essential. As products
move through various stages in the supply chain, their components often cross
multiple national borders before reaching the final customer.