ch01-intro to supply chain management

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Chapter 1

Introduction to SupplyChain Management

1-1Copyright 2011 John Wiley & Sons, Inc.


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Lecture Outline

What is Supply Chain Management (SCM)?

Boundary Spanning Nature of SCM

The Rise of SCM

Characteristics of a Competitive Supply Chain

Trends in SCM

Careers in SCM and ProfessionalOrganizations

ReviewCopyright 2011 John Wiley & Sons, Inc. 1-2


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What is Supply Chain Management?

Supply Chain Management (SCM) is the designand management of flows of products, information,and funds throughout the supply chain

Copyright 2011 John Wiley & Sons, Inc. 1-3


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Supply Chain Stages

A typical supply chain may involve many

different trading partners, called stages

Stages may include:

Suppliers

Producers

Wholesalers/Distributors

Retailers

Customers



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SCM Activities

SCM activities include:

Coordination

coordinate the movement of goods, services,

and funds through the supply chain

Information Sharing

share forecasts, point-of-sale data, planned

promotional campaigns, and inventory levels Collaboration

jointly plan, operate, and execute business

decisions as one entity



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Managing Flows Through

the Supply Chain

Managing Flows of Products, Information,

and Funds:

Flow of Products

from the beginning to the final customer

Reverse Logistics



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Managing Flows Through

the Supply Chain Continued Flow of Information

simplified supply chains utilize data from

point-of-sale back to suppliers real time information reduces uncertainty

and inventory levels

Flow of Funds funds are transferred in both directions

along the supply chain

supply chain compression



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The Bullwhip Effect

Fluctuation and distortion of information

increases as it moves up the supply chain

each stage of the chain carries progressivelymore inventory

the longer the supply chain, the greater the

opportunity for the Bullwhip Effect

sharing point-of sale information with all

members of the supply chain can combat the

Bullwhip Effect



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Customer Focus

The final customer is the driving force of the

supply chain

products are "pulled" through the supply chain



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The Service Supply Chain

Service Supply Chains

focus more on the interaction between thecustomer and provider

often rely on customers as the supplier ofinputs

tend to be shorter than manufacturingsupply chains

are often more like hubs than chains

do not have inventory as a buffer



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The Boundary-Spanning Nature of SCM

SCM spans and integrates functions within and between enterprises of the supply chainthrough:

IntraOrganizational Integration

CrossEnterprise Integration



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The Boundary-Spanning

Nature of SCM Continued

IntraOrganizational Integration

Marketing links the organization to its customers

Operations organizes the transformation of rawmaterials into finished products and services

Sourcing links the organization to its suppliers

Logistics is responsible for moving and positioninginventory throughout the supply chain

company-wide integration supplants silo mentality



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The Boundary-Spanning

Nature of SCM Continued

CrossEnterprise Integration

various supply chain organizations functioningas a single entity to satisfy the final customer

Keys:

information technology as an enabler

relationship management

collaborative planning

sharing of risks and rewards

win-win strategy



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SCM Versus Logistics

SCM concerns the collaboration between supply

chain partners in a strategic effort to achievesuperior competitiveness

SCM manages different aspects of the

coordination process such as:

information

technology

distribution


products

finances

relationships


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SCM Versus Logistics Continued

Logistics

the part of SCM that is concerned withmanaging the flow of inventory



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The Rise of SCM

SCM evolved in the 1990s and has proven to benecessary for successful global competition

Contributing to the Trend:

companies found savings by planning and

managing their supply chain more effectively

advances in information technology

improvement in transportation methods

greater customer empowerment



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Characteristics of a

Competitive Supply Chain

Key characteristics of a competitive supply

chain include:

Responsiveness

Reliability

Relationship Management



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Responsiveness

The ability to move quickly to

meet customer demands

Agility

Short Supply Chains

Demand-Driven rather than

Forecast-Driven



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Reliability

Uncertainty uncertainty is the main reason why companies

carry safety stock resulting in higher costs

Visibility

visibility improves reliability in supply chains

Supply Chain Coordination

sharing of real-time data and information through

information technology improves visibility and

therefore supply chain reliability



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Relationship Management

SCM is primarily about the management of

relationships across networks of companies

Traditional Adversarial Relationships

Relationship Building and Collaboration

Single-Sourcing



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Trends in SCM

Globalization

Outsourcing

Technology

Postponement

The Lean Supply

Chain

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Managing SupplyChain Disruptions

Supply Chain Security

Sustainability and the

Green Supply Chain

Innovation

The Financial Supply

ChainCopyright 2011 John Wiley & Sons, Inc.


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Globalization

The concept of the Global Marketplace

became possible due to changes in:

Information Technology

Transportation

Government Policies



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Outsourcing

Outsourcing

hiring a third party to perform a set of tasks for

a fee

Increased Competitive Pressure

forces companies to focus on what they do

best and outsource other activities

Core Competencies

create superior value by managing core

competencies better than competitors



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Technology

Information Technology can be viewed asan enabler of SCM

Internet

Enterprise Resource Planning (ERP)

Software

Wireless and Satellite Communication

Global Positioning Systems (GPS)

Radio Frequency Identification (RFID)



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Postponement

Postponement

completion of the final product is

postponed to the last possible moment till

local demands are known

strategy for companies to reach diverse

geographic areas while still providing

local customization



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The Lean Supply Chain

Lean Supply Chain

the set of all organizations directly linked by

upstream and downstream flows of products,services, finances, and information that

collaboratively work to reduce cost and waste



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Managing Supply Chain Disruptions

Increased Risk Global Sourcing

Lean Operations

Supply Chain Disruptions

Transportation Delays

Industrial Plant Fires

Work Stoppages

Natural Disasters

Terrorist Attacks



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Managing Supply Chain Disruptions

Continued

Strategies

Backup Suppliers

Excess System Capacity

Screening Suppliers for Risk

Developing Disruption Plans

Anticipating Disruption Costs



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Supply Chain Security

The study of ways to protect security whilemaintaining efficiency is now a key issue

Government Regulations

Customs-Trade Partnership AgainstTerrorism (CTAT)

Container Security Initiative (CSI)

Supply Chain Security Theft and Product Tampering

Electronic Seals

RFID and GPS



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Sustainability and the "Green"

Supply Chain

Environmental Concerns climate change, energy use, environmental

contamination, resource depletion

Sustainable Supply Chains design processes to use environmentally friendly

inputs and create outputs that can be recycledand that do not contaminate the environment

Examples Smart Packages

Filling Trucks as full as Possible



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Innovation

Designing new products

new cost-cutting production processes

more efficient product delivery mechanisms

Competing on Innovation

typically shorter supply chains

involve suppliers early in design process

utilize supplier product and process

improvement ideas



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The Financial Supply Chain

There is a trend to redesign entire supply chainsand search for less costly sources of supply

Strategies

Global Sourcing

Production Outsourcing

Outsourcing Noncore Activities

Cash-to-Cash Cycle

the time it takes to convert an order into cash


C i SCM d


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Careers in SCM and

Professional Organizations

Examples of SCM job duties:

Entry-Level Management Positions

conduct product evaluations, generate forecast

reports, perform online replenishment

Middle Level Management Positions

responsible for accurate and timely product

movement throughout the supply chain

Senior Executive Positions

document and execute a global SCM plan



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Review

1. SCM is the design and management of flows

of products, information, and funds

throughout the supply chain. A supply chain

is the network of all entities involved inproducing and delivering a finished product to

the final customer.

2. The bullwhip effect is the fluctuation and

distortion of information as it moves up the

supply chain, from retailer, manufacturer, to

supplier.



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Review Continued

3. SCM activities involve coordination,

information sharing, and collaboration.

4. Intra-organizational integration is participation

and coordination of activities between differentorganizational functions within the

organization.

5. Cross-enterprise integration is theparticipation and coordination of activities

between different organizations that comprise

the supply chain.



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Review Continued

6. Logistics, in contrast to SCM, consists of thetasks involved in moving and positioning

inventory throughout the supply chain.

7. Competitive supply chains are responsive,

reliable, and engage in relationship

management with members of the supply chain.

8. Trends that impact todays supply chain include

globalization, outsourcing, technology,postponement, lean, supply chain disruptions,

security, sustainability or green, innovation,

and the financial supply chain.1-36Copyright 2011 John Wiley & Sons, Inc.


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Copyright 2011 John Wiley & Sons Inc 1 37

Copyright 2011 John Wiley & Sons, Inc.

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