Supply Chain Decisions

Supply chain decisions can be categorized into two categories:

1. Temporal Decisions
2. Functional Decisions

 A.       TEMPORAL DECISIONS:

Temporal decisions can be classified into three categories: strategic, tactical, and operational according to the time horizon of the decisions.

• Strategic decisions are made on Organizational level and focus on long term objectives of a supply chain and guide the supply chain policies from a design and planning perspective. Typically these decisions are not reviewed before a time horizon of a few to several years expires but the time horizon depends on a variety of factors.
• Tactical decisions are made on managerial level and focus on effectively manage the supply chains configured according to strategic level decisions. The time intervals of tactical decisions could range from weeks to months.
• Operational decisions are made on functional level and focus on short term decisions and are generally focused on the real-time activities of a supply chain. 

B.      FUNCTIONAL DECISIONS:

Functionally, there are four major decision areas in supply chain management:

• Procurement Decisions
• Manufacturing Decisions
• Distribution Decisions
• Logistics Decisions
• Global Decisions

The scope of global decisions extends over multiple functions. There are strategic, tactical, and operational questions in each of these areas.

Procurement Decisions

• Supplier selection: Where should we source raw materials, components, and sub-assemblies from? (strategic)
• Direct delivery from suppliers: Can intermediate warehouses be eliminated so that materials can be delivered directly into manufacturing plants? (strategic)
• Vendor managed inventories: Should the inventories at the plants be vendor-managed? (strategic)
• Optimal procurement policy: What are the cost and service tradeoffs in alternative procurement strategies? (strategic/tactical)

Manufacturing Decisions

• Plant location: How many manufacturing plants should be set up and where should they be located? (strategic)
• Product line selection: What products should be produced at each manufacturing location? (strategic/tactical)
• Capacity planning: How much capacity is needed in each plant? (strategic)
• Capacity allocation: How do we allocate plant capacity to products? (tactical)
• Inventory decisions: What raw materials/WIP/finished goods inventory should be stocked in each center? (strategic/tactical)
• Optimal manufacturing strategy: What are the cost and service tradeoffs in alternative manufacturing strategies? For example, what would be the best policy among make-to-stock, make-to-order, and assemble-to-order? (strategic/tactical)
• Input control: How do we introduce work into the plant? (strategic/tactical/operational)
• Production scheduling: How do we schedule the production to maximize throughput and minimize cycle time? (tactical/operational)
• Constrained Supply: How do we optimize resource utilization when the supplies are not enough to fulfill the requirements? (tactical) 

Distribution Decisions

• Configuration of distribution facilities: What types of distribution centers are required? (Warehouses, cross-docks, drop-lots, etc.) (strategic/tactical)
• Location: Where should distribution facilities be located? (strategic)
• Customer allocation: Which customers should a facility service? (strategic/tactical)
• Facility configuration: What product should be handled by each facility? What products and in how many quantities should be stocked at each facility? What should be the replenishment strategy? (strategic/tactical)
• Optimal distribution strategy: What are the cost and service tradeoffs of alternative distribution strategies? (tactical) 

Logistics Decisions

• Logistics mode selection: What transport modes and lanes should be used to move products throughout the network? (strategic)
• Selection of ports: Which ports should be used to bring product into and out of a country? (strategic)
• Direct delivery: Which products should move directly from manufacturing centers to customers? (strategic/tactical)
• Optimal transportation strategy: What are the cost and service tradeoffs of alternative transportation strategies? (tactical)

Global Decisions

• Product and process selection: What product quantities, by facility, by process, should be produced and stored in each period to support customer demands? What products to sell and to which customers to maximize profits? (tactical)
• Planning under uncertainty: What are the implications associated with seasonal or cyclical demand, capacity availability, cost fluctuations, or raw material availability? (tactical/operational)
• Global optimization of operations: What are the cost and service tradeoffs among procurement, manufacturing, distribution, and logistics alternative strategies? (strategic/tactical)
• Real-time monitoring and control: How can the orders be dynamically routed and scheduled through the supply chain in reaction to occurrence of real-time events? (operational)