Hello everyone welcome back. This is our sixth lecture. And today we start really, you know, interesting discussion on supply chain management. Of course all the subjects and topics we discussed so far, are part of supply chain management and keeping them in our mind. Let's get in to the actual details of supply chain management. First, I want to talk about strategy dimensions of supply chain management. You recorded in the earlier part of this lecture, in the part of, in the early part of this course. We talked about two objectives of supply chain management. One is efficiency driven value and responsiveness driven value. So, the goal or objective of supply chain management must be to maximize both okay? Not just one. At the cost together. Both efficiency driven and responsiveness driven value at the same time. So supply chain management must try to maximize this two values at the same time. And the question is, how can company accomplish its goal or accomplish its objective? The company must design its supply chain effectively, you know the words, you must design supply chain effectively and master many of the supply chain. So, there are two dimensions, two dimensions of supply chain design. We call that as structural dimension and also infrastructural dimension. So now let's look at what are the, you know, the actual elements or factors that belong to each one of these dimensions. Before discussing element by element, I want to talk about, I want to, you know, define the overall characteristics of this structural dimension and infrastructural dimension. Structural dimension involves investment in physical facilities, materials, and systems. So somehow, more or less, these elements infrastructure dimension related with the physical products or physical materials. So we can see sometimes, we can touch, or at least we can you know, visualize with relatively ease. So when we talk about the four specific elements in the structure dimension, one is configuration and then the connection, inventory and logistics or transportation. If we compare structure dimension to computer hardware, there is another, that you know, can be compared to computer software, and that's actually coordination. So when we say infrastructural dimension of supply chain management, it is actually about coordination. Coordination, you know, there are several different very specific areas which the companies should try coordinating with each other. But basically it is a very different from this structural dimension. In that, the coordination or infrastructural dimension involves some intangible, invisible, or implicit factors such as communication, information, collaboration, and some other intrinsic factors and intrinsic activities. So let's first think about this structure dimension. As I mentioned already, we talk about four elements of a structural dimension. Configuration. Configuration is about the physical placement of of a value chain activities. Where should I locate my supplies? Where should I have my plans? Operations? Where should I have my warehouses or you know, which logistics companies should I use and so on and so forth. And also we can think about in the physical sense, where are my customers? Are my customers in China, in Korea, in the US or in Japan and Europe, right? So, same thing for the suppliers. Suppliers where, where are my suppliers? I used my suppliers in China, in Russia, in Poland, and you know, UK, France, and EU countries or should I have my supplies in East Asian you know, countries or South East Asia and countries, Philippines, Indonesia, or even Korea and Japan, so on and so forth. And where should I have my plant? For instance, let's think about a Hyundai Motor, a Korean car maker. Hyundai Motor uses a lots of supplies all across the world. They have supplies in you know, Europe, in Asia and in the, in North America, in Japan, and so on and so forth. And then the company has a multiple plants across the world. Obviously Hyundai Motors has its, you know, automobile assembly plants in Korea, but it also it has, several plant in China and also it has plant in the US, Alabama. And it also you know, thinking about building new ones in other areas as well. Obviously, you know, the company will also have some warehouses and those dealerships, dis, you know, distribution options. And then, Hyundai Motors has its own target customers. Customers in the US, or in North America, in Europe and so on and so forth. So configuration is about this physical placement of a value chain activities probably across the globe. Where should I have my supplies? Where should I have my plant? Where should I have my distribution options? Where should I have my target customers? And obviously configuration involves a really long-term commitment, right? Think about this Hyundai Motor case, then they decide to build this plant in the US. That decision involves probably longer than ten years commitment. Okay? You build your plant you know today, and then tomorrow you say oh, I make a mistake. So I want to move my plant to another place. That's not possible. So configuration requires really you know, big amount of investment in physical facilities and you know, it come down to machinery, and so on so forth. In that sense, configuration requires a really long time strategic thinking, right? You have to think about what kind of a workforce you can use if you build your plant in that particular place. What about this tariff issues and you know, tariff drawbacks and you know, tax issues and you know in long-term, environmental issues, and so on and so forth. So I would just say that configuration is pretty much strategic decision making. And now, think about this one. You, you make a decision about this physical placement of activities, physical placement of functions all around the world. And now, you have to have some relationship between these or among these scattered activities and scattered functions. Let's say Hyundai Motor has its plant in China, which suppliers they should supply the Hyundai Motors plant in China. What about which suppliers should supply to the plant in Korea? What about the suppliers for Hyundai Motors plant in the US, Alabama. So there's gotta be some connections. There's gotta be some matching issues, right? Between all these value chain activities scattered all around the world. What kind of principle should I have? Probably the relationship, the connection. The connection between these physical facilities is all you know, value chain activities, it's pretty long-term, right? And we have to think about some issues like what about the stability of the relationship. Whether we can trust them or whether there is too much, you know, transportation cost or too much uncertainty. So, we gotta think about many factors. In that sense, connection is also pretty strategic or very important strategic issue. But not as much as configuration. Sometimes you can change connection depending on certain situations. For example, we use a supplier A for our operations in Korea. And a supplier B for our operations in China. But you know, something happens to supplier B and therefore supplier B can no longer supply my operations in China, at least for a short time. And if that happens, then we might want to utilize our supplier A. Maybe we use some overtime or we you know, extend or you know, expand the plant capacity of supplier A and so that the supplier A supplies not only our operations in Korea but also our operations in China. So connection is a pretty you know, long-term or strategic element, but at the same time, depending on the uncertainty. Depending on some unanticipated events or unanticipated you know, things happening. If that is the case then there might be some changes. And therefore we will just say that probably a little bit operational aspect also part of this you know, these connection issues. And, we have inventory as another structural dimension of element. Inventory, we're you know, discussing inventory a little further, because it is very important. Very, very important topic, inventory. But basically, inventory is, is [UNKNOWN] to buffer, to buffer against uncertainty. Buffer against uncertainty. In other words, inventory occurs because of these uncertainties. The inventory, we, we needed to hold inventory in order to cope with uncertainty. So, uncertainty issues about where should I have my inventory and how much should I have? Okay? That's the issue. Where, where should I have my inventory, and how much inventory should I have? And all these questions because of this uncertainty, right? Uncertainty. And therefore, the location and the amount of inventory depends on the uncertainty. Uncertainty is current, usually. And therefore we would just say that the constant that we need to adjust the level of inventory. And therefore, we can say that the due to matching, inventory distance pretty much the operational. Of course it has some some strategy elements as well, so we will discuss this part a little further. And finally, as, as all of the elements of you know structure dimension, the company must decide what kind of a transportation options we want to use. What kind of transportation options we want to use? Do we want to use fast transportation options? Or we may use a little slow transportation options. Although it's not exactly one to one you know, corresponding relationship but usually we can say, the faster transportation option is more expensive, right? Probably using a airplane and, very fast you know, trucks or express lines, and so on and so forth. Whereas a slow transportation option is usually inexpensive. And the, therefore we would do, set it to somehow this transportation decision is also right to do with other structural dimension factors, or structural dimensional elements. But usually the logistical of transportation option, or transportation decision is pretty much operational instrument. So these are the four basic elements of structural dimension. And as we, you know, see from this table, we can say that as we move toward the configuration, the decision is more long term orientation. Whereas if we move to logistic or transportation options, it becomes shorter term orientation. Strategic means that it is a really long term, long term and involving lots of investment whereas operational is more short and day-to-day basis. All right. So, this is the summary of those, elements in this structure dimension. But I think that I want to expand this a little bit using some, you know, graphics. And also I want to. I want to have a little more detailed explanation for each one of these elements. [BLANK_AUDIO]
