14 Supply Chain Management

Professor Close

Learning Outcomes
LO 1 Define the terms supply chain and supply chain management, and discuss the benefits of supply chain management LO 2 Discuss the concept of supply chain integration and explain why each of the six types of integration is important
LO 3 Identify the eight key processes of excellent supply chain management and discuss how each of these processes impacts the end customer

Learning Outcomes

LO 4 Discuss the key strategic decisions supply chain managers must make when designing their companies supply chains
LO 5 Discuss new technology and emerging trends in supply chain management

Supply Chains and Supply Chain Management

Define the terms supply chain and supply chain management, and discuss the benefits of supply chain management

Supply Chains
The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function

Supply Chain

Supply Chains
A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value

Supply Chain Management

Supply Chain Managers

The philosophy behind supply chain management is that by visualizing the entire supply chain, supply chain managers can maximize strengths and efficiencies at each level of the process to create a highly competitive, customer-driven supply system that is able to respond immediately to changes in supply and demand.

Supply Chain Management

Communicator of customer demand from point of sale to supplier

Physical flow process that engineers the movement of goods

Benefits of Supply Chain Management

Supply chain oriented companies commonly report:
Lower inventory, transportation, warehousing, and packaging costs

Greater supply chain flexibility

Improved customer service Higher revenues Increased performance and profitability

Supply Chain Integration

Discuss the concept of supply chain integration and explain why each of the six types of integration is important

Supply Chain Integration

Relationship Integration Measurement Integration Technology and Planning Integration Material and Service Supplier Integration Internal Operations Integration Customer Integration Customer Integration Firm-to-Firm Social Interactions Operational Planning and Control

Supply Chain Integration

Relationship Integration
The ability of two or more companies to develop social connections that serve to guide their interactions when working together.

Measurement Integration

The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals

Supply Chain Integration

Technology and planning integration

The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain
Requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline processes and provide quality customer experiences.

Material and service supplier integration

Supply Chain Integration

Internal Operations Integration Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements A competency that enables firms to offer long-lasting, distinctive, valueadded offerings to those customers who represent the greatest value to the firm or supply chain

Customer Integration

Key Processes of Supply Chain Management

Identify the eight key processes of excellent supply chain management and discuss how each of these processes impacts the end customer

Key Business Processes

1. 2. 3. 4. 5. 6. 7. 8. Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management

Customer Relationship Management

Customer Relationship Management (CRM) Process
Allows companies to prioritize their marketing focus on different customer groups according to each groups long-term value to the company or supply chain

Customer Service Management

Customer Service Management Process
Presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced

Demand Management
Demand Management Process
Seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior

Order Fulfillment
Order Fulfillment Process a highly integrated process, often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time

Manufacturing Flow Management

Manufacturing Flow Management Process Concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process

Supplier Relationship Management

Supplier Relationship Management Process Closely related to the manufacturing flow management process and contains several characteristics that parallel the customer relationship management process

Product Development and Commercialization

Product Development and Commercialization Process

Includes the group activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms

Returns Management
Returns Management Process
Enables firms to manage volumes of returned product efficiently, while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain

Managing the Logistical Components of the Supply Chain

Discuss the key strategic decisions supply chain managers must make when designing their companies supply chains

Logistics
Logistics is
the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption.

Logistical Components of the Supply Chain

Logistics Information System Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Materials Handling Transportation

Supply Chain Team

Sourcing and Procurement

The Role of Purchasing:

Plan purchasing strategies

Develop specifications Select suppliers Negotiate price and service levels Reduce costs
iStockphoto.com/Maria Toutoudaki

Production Scheduling
Traditional Focus Customer Focus

Push / Pull Strategy

Start of Production Manufacturing

Push
InventoryBased Mass Production

Pull
Customer-Order Based Mass Customization

Just-in-Time Manufacturing

JIT A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials at the precise time they are needed on the production line.

Benefits of JIT
For manufacturers: reduces raw material inventories; immediate shipping of products For suppliers: daily or hourly deliveries rather than weekly For customers: lower costs; shorter lead times; products tailored to customer needs

Order Processing
An Order Processing System is
a system whereby orders are entered into the supply chain and filled.

Order processing is becoming more automated through the use of computer technology known as ELECTRONIC DATA INTERCHANGE (EDI).

Inventory Control
Inventory Control System
A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturers or a customers demand

Inventory Control
Tools for managing inventory include:
materials requirement planning (MRP) or materials management supplier to manufacturer distribution resource planning (DRP) manufacturer to end user automatic replenishment programs minimal forecasting

Warehousing and Materials Handling

A Materials-Handling System is
a method of moving inventory into, within, and out of the warehouse. Most manufacturers today have moved to AUTOMATED materials-handling systems to minimize the amount of handling.

Transportation
Airways Water

Pipelines
Motor Carriers Railroads

Transportation Mode Choice

Cost Transit time Reliability Capability Accessibility Traceability

Exhibit 14.1
Criteria for Ranking Modes of Transportation

Trends in Supply Chain Management

Discuss new technology and emerging trends in supply chain management

Trends in Supply Chain Management

Advanced computer technology
Outsourcing of logistics functions Electronic distribution

Advanced Computer Technology

Automatic identification systems - Bar coding - Radio frequency technology Communications technology Supply chain software systems

Outsourcing Logistics Functions

Outsourcing Benefits

Reduce inventories
Locate stock at fewer plants and distribution centers Provide same or better levels of service

Electronic Distribution

a distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber-optic cable or through satellite transmission of electronic signals.

Green Supply Chain Management

Requires integrating green thinking into all phases of the supply chain Green materials sourcing Environmental impact of packaging, shipment, use Incorporate end-of-life management Recycling Clean disposal

Global Logistics and Supply Chain Management

Logistical challenges of global markets:
Understanding and coping with the legalities of trade in other countries Uncertainty regarding shipping

Chapter 14 Videos
Beyond the Book
Sephora Supply Chain Management
How does Sephora manage its supply chain? What information goes into deciding which suppliers become incorporated?

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