Strategy—Supply chains should support an organization’s strategy, mission, and competitive priorities. In

Strategy—Supply chains should support an organization’s strategy, mission, and competitive priorities. In Chapter 3, we provided an overall framework for developing corporate, marketing, and operations strategy and subsequent design decisions. Executives, for example, might choose a supply chain that is highly efficient versus one that is more flexible for its particular industry and market. Different types of supply chains may better fit the slower growth of industrialized countries or the more rapid growth of emerging economies.
Control—A second supply chain design decision is centralization versus decentralization. The operational structure of a supply chain is the configuration of resources such as suppliers, factories, warehouses, distributors, technical support centers, engineering design and sales offices, and communication links. Different management skills are required for different operational structures. For example, Walmart’s global supply chain, though very large, is focused on purchasing and distribution, and is controlled from a centralized location in Bentonville, Arkansas. In contrast, General Electric’s supply chain, which encompasses such diverse businesses as medical imaging, jet engines, and electrical power generation, are all quite different. Each business is a profit center with its own unique market and operating conditions. Consequently, the operational structure is decentralized globally.
Location—The location of facilities in a supply chain has a significant impact on cost and customer service. Later in this chapter we will discuss how to evaluate location decisions and present some simple approaches and quantitative models that aid in these decisions.
Sustainability—Sustainability is a key issue in supply chains, and we often hear about this in the media (often quite negatively). We introduced the basic ideas of sustainability in Chapter 1. Sustainability issues, concepts, and methods are highlighted throughout this book. Upward of 60 to 70 percent of a company’s carbon footprint is found along their supply chains.
Technology—Dealing with intellectual property is an important issue for multinational enterprises. Technology often provides a competitive edge, and licensing it to firms in other countries can lead to risks. Protecting and honoring patents from other countries is also a constant topic in global trade negotiations. And, as noted in Chapter 1, patents do not protect services.
Digital content—Digital content in goods and services is becoming increasingly important. Products such as automobiles, appliances, or cell phones are often enhanced with digital content by means of the “Internet of Things.”
Sourcing—Selecting suppliers from whom to purchase is a key design decision that also ties closely with the location decision. A key sourcing decision is whether to use a single source or multiple sources. A single supplier often provides economies of scale and the ability to form close partnerships; however, multiple suppliers lower the risk of a supply disruption.
A single supplier often provides economies of scale and the ability to form close partnerships; however, multiple suppliers lower the risk of a supply disruption.
 
Logistics and transportation—Transportation is more complex in global supply chains. Global shipments often require multiple modes of transportation, such as water shipping, air, rail, and truck. The transportation infrastructure may vary considerably in foreign countries. The coast of China, for example, enjoys much better transportation, distribution, and retail infrastructures than the interior of the country.
Outsourcing—Many companies outsource activities such as manufacturing, logistics and transportation, information systems, and technical support to suppliers either domestically or abroad. These decisions have a major impact on product and supply chain cost and control, and the trade-offs are seldom easy to make.
Managing risks—In Chapter 12, we discuss risk management of the supply chain. These risks are both strategic and tactical and require every company to develop a risk mitigation strategy and plan.
Measuring performance—Almost every chapter contains concepts and methods for measuring performance at all levels of the organization.