14Supply Chain Management

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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 OutcomesLearning 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

Learning OutcomesLearning Outcomes

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

Supply ChainSupply ChainThe connected chain of

all of the business

entities, both internal

and external to the

company, that perform or

support the logistics

function

Supply Chains

Supply Chain Management

Supply Chain Management

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 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

Physical flow process that engineers the movement of goods

Physical flow process that engineers the movement of goods

Communicator of customer demand from point of sale to supplier

Communicator of customer demand from point of sale to supplier

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

Material and Service Supplier Integration

Material and Service Supplier Integration

Internal Operations Integration

Internal Operations Integration

Customer IntegrationCustomer Integration

Relationship IntegrationRelationship Integration

Measurement Integration

Measurement Integration

Technology and Planning Integration

Technology and Planning Integration

Firm-to-Firm Social Interactions

Firm-to-Firm Social Interactions

Operational Planning and

Control

Operational Planning and

Control

Customer IntegrationCustomer Integration

Supply Chain Integration

Relationship Integration

Relationship Integration

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

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

Measurement Integration

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

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.

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, value-added offerings to those customers who represent the greatest value to the firm or supply chain

Customer Integration

Supply Chain Integration

Key Processes of Supply Chain Management

Identify the eight key processesof excellent supply chain management and discuss

how each of these processes impacts the end customer

Key Business Processes

1. Customer relationship management2. Customer service management3. Demand management4. Order fulfillment5. Manufacturing flow management6. Supplier relationship management7. Product development and

commercialization8. Returns management

Customer Relationship Management

Customer Relationship Management

(CRM) Process

Customer Relationship Management

(CRM) Process

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

Customer Service Management

Customer Service

Management Process

Customer Service

Management Process

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

Demand Management

DemandManagement

Process

DemandManagement

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

OrderFulfillment

Process

OrderFulfillment

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

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

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

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

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 strategicdecisions supply chain

managers must make whendesigning their companies’

supply chains

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 is…

Logistics

Logistical Components of the Supply Chain

SupplySupplyChainChainTeamTeam

Sourcing & ProcurementSourcing & Procurement

Production SchedulingProduction Scheduling

Order ProcessingOrder Processing

Inventory ControlInventory Control

Warehouse & Materials HandlingWarehouse & Materials Handling

TransportationTransportationLo

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tics

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Sys

tem

Sourcing and Procurement

Plan purchasing strategies

Develop specifications

Select suppliers

Negotiate price and service levels

Reduce costs

The Role of Purchasing:The Role of Purchasing:

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Production Scheduling

Push / Pull Strategy

Traditional Focus

Push

Start of Production

Manufacturing

Inventory-Based

Mass Production

Customer Focus

Pull

Customer-Order Based

Mass Customization

Just-in-Time Manufacturing

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.

JITJIT

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

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

a system whereby orders are entered into the supply chain and filled.

An Order Processing System is…

Inventory Control

InventoryControlSystem

InventoryControlSystem

A method of developing and

maintaining an adequate

assortment of materials or

products to meet a

manufacturer’s or a

customer’s 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

Most manufacturers today have moved to AUTOMATED materials-handling systems to minimize the amount of handling.

a method of moving inventory into, within, and out of the warehouse.

A Materials-Handling System is…

Transportation

Airways

Water

Pipelines

Motor Carriers

Railroads

Transportation Mode Choice

Cost Transit time Reliability Capability Accessibility Traceability

Exhibit 14.1Exhibit 14.1Criteria for Ranking Modes Criteria for Ranking Modes of Transportationof Transportation

Trends in Supply Chain Management

Discuss new technology and emerging trends in

supply chain management

Trends in Supply Chain Management

Electronic distributionElectronic distribution

Outsourcing of logistics functionsOutsourcing of logistics functions

Advanced computer technologyAdvanced computer technology

Advanced Computer Technology

Automatic identification systems

- Bar coding

- Radio frequency technology

Communications technology

Supply chain software systems

Outsourcing Logistics Functions

Outsourcing BenefitsOutsourcing 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.

Electronic Distribution is…

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

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BookChapter 14 Videos

Sephora – Supply Chain Management

How does Sephora manage its supply chain?

What information goes into deciding which suppliers become incorporated?

http://www.cengage.com/marketing/book_content/1439039429_lamb/company_clips/ch14.html