Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 14

Supply Chain Management

2011-2012

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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

LO1


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

LO1


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

LO1


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.

LO1



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

LO1


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

LO1


Supply Chain Integration

Discuss the concept of supply chain integration

and explain why each of the six types of

integration is important

LO2



Material and Service Supplier Integration

Material and Service Supplier Integration

Internal Operations Integration


Customer IntegrationCustomer Integration

Relationship IntegrationRelationship 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

LO2



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.

LO2

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




Technology and planning integration

The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain

LO2

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.



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

LO2



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

LO3


Key Business Processes

LO3

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


(CRM) Process


(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

LO3


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

LO3


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

LO3


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

LO3


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

LO3


Supplier Relationship Management


Process


Process

Closely related to the

manufacturing flow

management process and

contains several

characteristics that

parallel the customer

relationship management

process

LO3


Product Development and Commercialization


Process


Process

Includes the group

activities that facilitates

the joint development and

marketing of new

offerings among a group

of supply chain partner

firms

LO3


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

LO3


Managing the Logistical Components of the Supply Chain

Discuss the key strategicdecisions supply chain

managers must make whendesigning their companies’

supply chains

LO4


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

LO4


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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tem

LO4


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:

LO4

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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

LO4


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

LO4


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

LO4


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…

LO4


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

LO4


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

LO4


Warehousing and Materials Handling

LO4

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

LO4


Transportation Mode Choice

Cost Transit time Reliability Capability Accessibility Traceability

LO4


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

LO4


Trends in Supply Chain Management

Discuss new technology and emerging trends in

supply chain management

LO5


Trends in Supply Chain Management

Electronic distributionElectronic distribution

Outsourcing of logistics functionsOutsourcing of logistics functions

Advanced computer technologyAdvanced computer technology

LO5


Advanced Computer Technology

Automatic identification systems

- Bar coding

- Radio frequency technology

Communications technology

Supply chain software systems

LO5


Outsourcing Logistics Functions

Outsourcing BenefitsOutsourcing Benefits

Reduce inventories

Locate stock at fewer plants and distribution centers

Provide same or better levels of service

LO5


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…

LO5


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

LO5


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

LO5


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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

Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

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