Supply Chain Management: Strategy, Planning, and Operation.

Supply Chain Management: Strategy, Planning, and Operation Sunil Chopra, and Peter Meindl. NY: Prentice Hall, 2001.

Supply Chains to Virtual Integration Ram Reddy and Sabine Reddy. NY: McGraw Hill, 2001.

Reviewed by Menberu Lulu, Howard University, Washington, DC.

Fierce global competition, global markets, global sourcing, globally and regionally distributed production, and heightened customer expectation for quality and service characterize the state of business. The pressure to cut costs, to be efficient and agile across enterprises has forced business to adapt holistic approaches to managing and optimizing the supply chain. A supply chain is a group of firms that work together in a coordinated fashion to procure, manufacture and deliver finished products to customers. Supply chain management is a set of approaches utilized to plan, produce, coordinate, and deliver products, while satisfying multiple objectives such as maximized efficiency, maximized agility and flexibility, and maximized customer satisfaction. To borrow a mathematical notion, the two books reviewed here are mutually complementary. In the main, Chopra and Meindl provide a range of operations research models as tools for tactical planning and managing all aspects of the supply chain, while Reddy and Reddy present a framework for systems level structuring and integration of supply chains. Reddy and Reddy is best utilized to serve the information needs of managers and conceptualizers, while Chopra and Meindl is a full-fledged academic textbook.

The stated objective of Chopra and Meindle is to provide a solid understanding of the analytical tools necessary to solve supply chain problems. They have achieved this objective in six modules divided into fifteen chapters. Module topics include strategic framework for supply chain management, demand and supply planning, planning and managing inventories, logistics and information technology, supply chain coordination and the role of e-business, and financial factors influencing supply chain decisions. As a text, each chapter has the full complement of challenging qualitative questions, problems and cases. Self-learning is enhanced by numerous illustrative solved problems and spreadsheet models.

The strategic framework module provides an interesting and powerful theoretic construct for formulating supply chain strategies (degree of responsiveness) as a function of implied demand uncertainty. Efficient supply chain and responsive supply chain constitute the two extremes of the responsiveness spectrum. The zone of strategic fit is defined as a mapping of implied demand uncertainty spectrum into the responsiveness spectrum.

The book by Reddy and Reddy is an eight-chapter, state of the art treatment of organizational, business process, and technology issues of supply chains that are broadly classified as market economy and network economy models. The market economy model is defined as a vertically integrated supply chain that `pushes' products to the customer based on forecasted demand. They refer to this model as the "push" model that describes what they refer to as the second evolutionary stage of the business enterprise. The goal of the "push" system is efficiency. Viewed in the theoretic formulation of Chopra and Meindl, the "push" model is a strategic fit for a market condition of low implied demand uncertainty. The network economy model, which is also referred as a "pull" model, describes the web of collaborating firms that come together to satisfy the strategic desire of competitive flexibility. In the network economy model, customers "pull" products that are customized to their individual needs. The "pull" model constitutes the third evolutionary stage of the business enterprise. Again invoking Chopra and Meindl, the network economy model is a strategic fit for a market condition of high-implied demand uncertainty.

Reddy and Reddy make a clear and enlightening distinction of the role of information technology in these systems. In the push system, information technology enables operational optimization and is generally geared toward generating better forecasts, and synchronizing sourcing, production, and distribution within the focal firm (channel master) and across the supply chain. Information technology is utilized to drive a preexisting supply chain structure to maximum efficiency. On the other hand, in the network economy model, information technology such as the Internet has enabled disparate information systems to interact with one another, facilitating the structuring of supply chains.

In their chapter entitled avoidable costs, Reddy and Reddy invoke the "iceberg metaphor," a cousin of Shiego Shingo's "rocks in the river metaphor," to shed light on invisible costs that may impair the effectiveness of the supply chain. They describe the emerging business models, a la amazon dot com, as virtual integration. In contradistinction to vertical integration where the firm owns the productive processes needed to produce the raw materials and components, virtual integration refers to a supply web where the channel master provides the necessary infrastructure to allow the raw materials and component manufacturer to integrate with the focal firm. Other chapters compare and contrast the push and pull models with respect to information flow, material flow, customer service structures, and aspects of functional integration.

The contents of both books offer students a wide spectrum of knowledge and insights. Indeed, Reddy and Reddy provide state-of-the art information concerning supply chain integration and infrastructure. Their coverage should encourage theoretical and applied research in the areas of performance evaluation, design of service chains, and dynamic reconfiguration of supply chains.