Chapter 13 Supply Chain Management 2014

Lamb, Hair, McDaniel
Chapter 13
Supply Chain
Management
2013-2014

Define the terms supply chain and supply chain
management, and discuss the benefits of supply
chain management
Discuss the concepts of internal and external supply
chain integration and explain why each of these
types of integration is important
Identify the eight key processes of excellent supply
chain management and discuss how each of these
processes affects the end customer
© 2013 by Cengage Learning Inc. All Rights Reserved. 2
1
2
3

Understand which key functional areas of a
business impact supply chain success, and
how
Discuss new technology and emerging
trends in supply chain management
4
5

Define the terms supply chain
and supply chain management,
and discuss the benefits
of supply chain management
Supply Chains and
Supply Chain Management
© 2013 by Cengage Learning Inc. All Rights Reserved.4
1

Supply Chain
The connected chain of all of the
business entities, both internal and
external to the company, that perform
or support the logistics function
1

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
1

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
1

Discuss the concepts of internal
and external supply chain
integration and explain why each
of these types of
integration is important
Supply Chain Integration
2

• A systems approach where the
overall performance of the chain is
greater than the sum of its parts
• Occurs when multiple functional
areas coordinate business
processes to seamlessly link to one
another.
2

Internal Integration
• Occurs with a management
orientation toward demand-supply
integration
– DSI is a philosophy that integrates the
supply management and the demand
generating functions in an
organization.
2

External Supply Chain
Integration
Material and Service
Supplier Integration
Customer Integration
Relationship Integration
Measurement
Integration
Technology and
Planning Integration
Firm-to-Firm Social
Interactions
Operational
Planning and
Control
Customer
Integration
2

Relationship
Integration
The ability of two or more
companies to develop social
connections that serve to
guide their interactions when
working together.
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
Measureme
nt
Integration
2

Technology
and
planning
integration
The creation and maintenance
of information technology
systems that connect
managers across and through
the firms in the supply chain
Material
and service
supplier
integration
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.
2

A competency that enables firms to
offer long-lasting, distinctive, value-
added offerings to those customers
who represent the greatest value to
the firm or supply chain
Customer
Integration
2

Identify the eight key processes
of excellent supply chain
management and discuss
how each of these processes
impacts the end customer
Key Processes of
3

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

Customer Relationship
Management
CRM allows companies to prioritize their
marketing focus on different customer
groups according to each group’s long-
term value to the company or supply
chain
3

Customer
Service Management
The customer service management
process presents a multi-company, unified
response system to the customer
whenever complaints, concerns,
questions, or comments are voiced
3

Demand Management
The 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
3

Order Fulfillment
The order fulfillment process is 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
3

Manufacturing Flow
Management
The manufacturing flow management
process is 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
3

Supplier Relationship
Management
The supplier relationship management
process supports manufacturing flow by
identifying and maintaining relationships
with highly valued suppliers
3

Product Development and
Commercialization
The product development and
commercialization processes include the
group activities that facilitates the joint
development and marketing of new
offerings among a group of supply chain
partner firms
3

Returns Management
The 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
3

Understand which key
functional areas of a
business impact supply
chain success, and how
How Business Logistics Functions Impact
the Supply Chain
4

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.
Logistics
4

Logistical Components
of the Supply Chain
Supply
Chain
Team
Sourcing & Procurement
Production Scheduling
Order Processing
Inventory Control
Warehouse & Materials Handling
Transportation
LogisticsInformationSystem
4

Sourcing and Procurement
 Plan purchasing strategies
 Develop specifications
 Select suppliers
 Negotiate price and service
levels
 Reduce costs
The Role of Purchasing:
4

Inventory Control
A method of developing and
maintaining an adequate assortment
of materials or products to meet a
manufacturer’s or a customer’s
demand
4

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
4

Order Processing
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)
4

Production Scheduling
Push / Pull
Strategy
Traditional Focus
Push
Start of
Production
Manufacturing
Inventory-
Based
Mass Production
Customer Focus
Pull
Customer-Order
Based
Mass Customization
4

Postponement
A hybrid strategy that takes
advantages from Build-to-Stock and
Build-to-order strategies.
• Product based on generic forecasts
• Shipped to locations near major
customers
• Customer places order and
manufacturing is completed to
customer’s specifications.
4

Warehousing and Materials
Handling
Most manufacturers today have moved
to AUTOMATED materials-handling
systems to minimize the amount of
handling.
Materials-
Handling
System
a method of moving
inventory into, within, and
out of the warehouse.
4

Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
4

Transportation Mode Choice
 Cost
 Transit time
 Reliability
 Capability
 Accessibility
 Traceability
4

Exhibit 13.1
Criteria for Ranking Modes of
Transportation
Relative
Cost
Air Truck Rail Pipe Water
Transit Time Water Rail Pipe Truck Air
Reliability Pipe Truck Rail Air Water
Capability Water Rail Truck Air Pipe
Accessibility Truck Rail Air Water Pipe
Traceability Air Truck Rail Water Pipe
Highest Lowest

Supply Chain Technology
Logistics Information System
– The link connecting all the logistics
functions of the supply chain.
Smart RFID
– Inventory handling and tracking
system that submits product
information
– Uses radio-frequency electromagnetic
fields in an electronic tag
4

Discuss new technology
and emerging trends in
supply chain management
Trends in Supply Chain Management
5

Trends in Supply Chain
Management
Electronic distribution
Supply Chain Risk, Security,
and Resilience
Sustainable Supply Chain management
Outsourcing Logistics Functions
5

Outsourcing Logistics
Functions
 Reduce inventories
 Locate stock at fewer plants and
distribution centers
 Provide same or better levels of
service
Outsourcing Benefits
5

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.
Three-dimensional printing is the newest
method for distributing products. Special
printers create products based on a digital file
using liquefied raw materials shipped to the
printer’s location.
5

Sustainable Supply Chain
Management
• Requires integrating environmentally
conscious 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
5

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
5

Chapter 13 Video
Geoffrey B. Small
Geoffrey B. Small, a super-luxury fashion designer,
discusses how he sources the materials needed to
develop his clothing lines. He also discusses how he
makes distribution decisions based on his micro
production process and global distribution channels.
CLICK TO PLAY VIDEO

Chapter 13 Supply Chain Management 2014

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Chapter 13 Supply Chain Management 2014