CHAPTER 13

Supply Chain Management

CHAPTER OUTLINE

13.1 Supply Chains

13.2 Supply Chain Management

13.3 Information Technology Support for Supply Chain

Management

LEARNING OBJECTIVES

1. Describe the three components and the three flows of a supply chain

2. Identify popular strategies to solving different challenges of supply chains

3. Explain the utility of each of the three major technologies that supports supply chain management

13.1 Supply Chains

The Flows of the Supply Chain

• Material flows

• Information flows

• Financial flows

13.2 Supply Chain Management

Supply Chain Management

• Supply chain management (SCM)

• Interorganizational information system (IOS)

• Push and Pull Model

Problems Along the Supply Chain

• Poor customer service

• Poor quality product

• High inventory costs

• Loss of revenues

Solutions to Supply Chain Problems

Using inventories Just-in-time inventory

Information sharing Vendor-managed inventory

13.3 Information Technology Support for Supply Chain Management

EDI Benefits

• Minimize data entry errors• Length of messages are shorter• Messages are secured• Reduces cycle time• Increases productivity• Enhances customer service• Minimizes paper usage and storage

EDI Limitations

• Significant initial investment to implement• Ongoing operating costs are high due to

the use of expensive, private VANs• Traditional EDI system is inflexible• Long startup period• Multiple EDI standards exist

Types of Extranets

• A company and its dealers, customers or suppliers

• An industry’s extranet

• Joint ventures and other business partnerships

Closing Case #1 IT Helps Cannondale Manage Its Complex Supply Chain

• The Problem

• The Solution

• The Results

Closing Case #2 Driving Innovation

• The Problem

• The Solution

• The Results