Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

Course 2 – Supply Chain Design: Business Relations and Risks

Intended learning outcomes: Explain concepts such as the make-or-buy decision, tariff-orientation and total cost of ownership in a global supply chain. Differentiate strategic design options for the relationships with and the selection of suppliers. Disclose strategies for intensive cooperation in the supply chain. Describe identification, assessment and handling of supply chain risks.


For the design and manufacturing of products of a certain degree of complexity, the value added is distributed among different companies or organizational units of a company, which become parts of the supply chain. Only in this way are the necessary competencies brought together for high-quality, rapid, and profitable value adding.

Supply chain design is the determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems (cf. [APIC16]).

Section 2.1 introduces various ways of thinking and initial tools for supply chain design. The topic is why and how companies form, why and how they change in their boundaries to the outside and change in their inner structure, and how global trade supply chains should be handled with regard to tariffs. All of these factors must be included in an assessment of the total cost of ownership.

Section 2.2 deals with strategic procurement and shows criteria and design possibilities for the relationships with and the selection of suppliers.

Section 2.3 then delves into the designing of intensive cooperation with suppliers, which is required when the focus is not on a company in compe­tition with its direct suppliers but instead on the entire supply chain in competition with another supply chain for the favor of the end customer.

Finally, Section 2.4 turns to risk management of supply chains.



Course 2: Sections and their intended learning outcomes

  • Course 2 – Supply Chain Design: Business Relations and Risks

    Intended learning outcomes: Explain concepts such as the make-or-buy decision, tariff-orientation and total cost of ownership in a global supply chain. Differentiate strategic design options for the relationships with and the selection of suppliers. Disclose strategies for intensive cooperation in the supply chain. Describe identification, assessment and handling of supply chain risks.

  • 2.1 Ownership and Trade in a Global Supply Chain

    Intended learning outcomes: Present the concept of the make-or-buy decision in detail. Explain the value content requirements and tariff-orientation in a global supply chain. Describe the total cost of ownership in a global supply chain.

  • 2.2 Strategic Procurement

    Intended learning outcomes: Produce an overview on strategic procurement. Differentiate between traditional market-oriented relationship and Customer-Supplier Partnership. Describe strategic procurement portfolios. Explain strategic selection of suppliers. Present basics of supplier relationship management and e-procurement solutions.

  • 2.3 Designing a Partnership Relationship

    Intended learning outcomes: Present target area strategies for intensive cooperation. Explain the Advanced Logistics Partnership (ALP) model with concepts such as building trust, working out collaborative processes in the supply chain, avoiding the bullwhip effect. Describe the virtual enterprise and other forms of coordination among companies.

  • 2.4 Supply Chain Risk Management

    Intended learning outcomes: Produce an overview on supply chain risk management. Explain the identification of supply chain risks. Describe the assessment of supply chain risks. Disclose how supply chain risks can be handled.

  • 2.5 Summary

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