Scope of Supply Chain Configuration Problem

Abstract

As firms position themselves to stay competitive, they face the challenge of transforming their operations from a static to a dynamic business environment. An obvious choice for transformation is supply chain operations because of their potential impact on almost every aspect of the business encompassing the extended enterprise. This is a complex undertaking because supply chain management entails managing the following under the umbrella of a common framework:

Appendix. SCCB Case Description

SCC Bike is a sample bicycle manufacturing company and it is used throughout the book to illustrate various concepts and methods. The sample company reminisces real-life bicycle companies and the example is particularly influenced by the GBI and Shimano cases (Magal and Word 2012; Chang 2006). Factual information is derived from industry reports provided by Bicycle Retailer² and other professional publications.

The company is headquartered in Midwest USA, where it has a frame plant and an assembly plant. It manufactures medium to high end bicycles and offers around 20 different end-products manufactured out of around 250 parts. The manufacturing volume is around 250,000 bicycles a year. The bicycle production life-cycle is 150 days. Bicycle parts are categorized as non-moving, mechanical, and other industry parts. Examples of non-moving parts are saddle, rims, and handlebar. Examples of mechanical part are drivetrain, brakes, and gears. The other industries suppliers supply, for example, tires. A detailed bill-of-materials used in bicycle manufacturing is described by (Galvin and Morkel 2001). Parts are sourced from suppliers around the world and distributed through a set of specialist wholesalers and retailers. It is assumed that suppliers specialize in providing one specific category of parts and they provide a set of parts (as opposed to providing individual items). Suppliers are not necessarily manufacturers of the parts they provide. Specialist wholesalers and retailers collectively referred to as customers represent a specific sales area, the unit is responsible for.

The company’s mission is to provide high quality bicycles at lower than premium pricing for cycling enthusiasts. It also focuses on providing professional customer care and direct collaboration with a limited number of specialist sellers. The demand for bicycles is growing continuously and supply chain configuration activities are driven by the need to provide an adequate customer service in new locations, which are currently only served by limited amount of bicycles sold over the Internet. Therefore, the main configuration objective is location of new distribution facilities and allocation of supplies to these distribution facilities. At the same time the manufacturing facilities are relatively stable. The company also continuously works with its suppliers to improve products and services. Some of the components can be sourced from several alternative suppliers.

Figure 2.3 shows the supply chain network of SCC Bike . The supply chain units in the figure are shown using their short names and Table 2.3 defines abbreviations used. The focal point of the supply chain is frame factory located in US MW and it supplies both assembly plants with hand-made carbon and aluminum frames. The suppliers deliver parts to the assembly plants, and each assembly plant is served by its regional set of suppliers. The customers are served from the regional distribution centers. The US DC is responsible for handling web sales. The SCC Bike has a bundling deal with cycling mobile app developers.

Fig. 2.3

The SCC Bike supply chain network

Table 2.3 Description of supply chain units for the SCC bike case