SCM 460 GLOBAL SUPPLY CHAIN STRATEGY
Dr. Alex Rodrigues
Logistics / Manufacturing Interface
& Lean Logistics
Describe the steps of Design For Logistics (DFL)
Understand the philosophy of Lean
• Continuous Supply: Stockouts of raw
materials or components can stop
production and result in extreme cost.
• Minimize Inventory Investment: One goal
of modern procurement is to maintain
continuous supply with minimum inventory
• Quality Improvement: The quality of
finished goods and services is dependent
upon the quality of materials and parts used
• Supplier Development: Successful
procurement depends on locating or
developing suppliers, analyzing their
capabilities, and selecting and working with
them to achieve continuous improvement.
• Lowest Total Cost of Ownership: Modern
procurement recognizes that although the
purchase price of a material or item remains
very important, it is only one part of the total
cost equation. Service costs and life cycle costs
must also be considered.
• Purchase Price and Discounts: Inventory holding
costs must also be considered. Economic Order
Quantity (EOQ) can help analyzing trade-offs.
• Service Pricing and Debundling: Purchase price
must be debundled from the price of valueadded services (delivery) under consideration (menu pricing).
• Life Cycle Costs: The total cost of materials or
items extends beyond the purchase price.
• Brand Power: The measure of a customer’s
preference based on a manufacturer’s reputation,
product quality, and supply chain capabilities. The
higher the brand power, the higher the
• Volume: The traditional perspective is to treat
volume in terms of economy of scale. In volumesensitive industries, high capital investment coupled with high changeover costs tends to
encourage extremely long production runs.
• Variety: Other production technologies feature
flexibility. Manufacturing processes that feature
variety rapidly switch production from one
product to another while retaining efficiency
(economy of scope)
• Constraints: All manufacturing processes reflect
a balance between economy of scale and
economy of scope. Three primary constraints
influence manufacturing operations: capacity,
equipment, and setup/changeover.
• Leadtime Requirements: Any given