1

Lamb, Hair, McDaniel

CHAPTER 14

Supply Chain Management

2010-2011

2

LO 1 Define the terms supply chain, supply chain management, and supply chain orientation, 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 for excellent supply chain management and discuss how each of these processes impacts the end customer

Learning OutcomesLearning Outcomes

3

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

4

Supply Chains and Supply Chain Management

4

Define the terms supply chain, supply chain management,

and supply chain orientation, and discuss the benefits

of supply chain management

LO1

5

Supply Chains

5

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

LO1

6

Supply Chains

6

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

LO1

7

Supply Chain Management

Physical flow process that engineers the movement of goods

Communicator of customer demand from point of sale to supplier

LO1

8

Supply Chains

8LO1

9

Supply Chain Managers

9

Supply chain managers are responsible for : Making strategic decisions Management of information

through supply chain Coordinating relationships

between company and external partners

LO1

10

Benefits of Supply Chain Management

10

Supply chain oriented companies commonly report:

• Lower inventory, transportation, warehousing, and packaging costs

• Greater supply chain flexibility• Improved customer service• Higher revenues• Increased profitability

LO1

11

Supply Chain Integration

11

Discuss the concept of supply chain integration

and explain why each of the six types of

integration is important

LO2

12

Supply Chain Integration

12

Material and service supplier IntegrationInternal Operations

Integration

Customer Integration

Relationship Integration

Measurement Integration

Technology and planning Integration

Firm-to-Firm Social Interactions

Operational Planning and

Control

Customer Integration

LO2

13

Supply Chain Integration

13

Relationship Integration

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

Role Specificity

When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which

firms are the followers, and which responsibilities are assigned to

each firm.

LO2

14

Measurement Integration

14

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

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

1515

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

LO2

Internal Operations Integration

16

Key Processes of Supply Chain Management

16

Identify eight key processes of excellent supply chain

management, and discuss how each of these processes

impacts the end customer

LO3

17

Key Processes

17LO3

18

Customer Relationship Management

18

Customer Relationship Management

Process

The prioritization of a firm’s marketing focus on different customer groups according to each group’s long-term value to the company or supply chain; designed to identify and build relationships with good customers.

LO3

19

Customer Service Management

19

Customer Service

Management Process

A multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; designed to ensure that customer relationships remain strong.

LO3

20

Demand Management

20

DemandManagement

Process

The alignment of supply and demand throughout the supply chain to anticipate customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior.

LO3

21

Order Fulfillment

21

Order FulfillmentProcess

A supply chain management process that involves generating, filling, delivering, and providing on-the-spot service for customer orders.

LO3

22

Manufacturing Flow Management

22

Manufacturing Flow

Management Process A process that ensures

that firms in the supply chain have the resources they need

LO3

23

Supplier Relationship Management

23

Supplier Relationship Management

Process

A supply chain management process that supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers

LO3

24

Product Development and Commercialization

24

Product Development and Commercialization

Process

The group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms.

LO3

25

Returns Management

25

Returns Management

Process

A process that enables firms to manage volumes of returned product efficiently, while minimizing costs and maximizing the value of the returned assets to the firms in the supply chain.

LO3

26

Key Processes of Supply Chain Management

26LO3

27

Managing Logistical Components

27

Describe the logistical components of the

supply chain

LO4

28

Logistical Components of the Supply Chain

SupplySupplyChainChainTeamTeam

Sourcing & Procurement

Production Scheduling

Order Processing

Inventory Control

Warehouse & Materials Handling

TransportationLogi

stic

s In

form

atio

n Sy

stem

LO4

29

Sourcing and Procurement

Plan purchasing strategies

Develop specifications

Select suppliers

Negotiate price and service levels

Reduce costs

The Role of Purchasing:

LO4

30

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

31

Just-in-Time Manufacturing

A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line.

JIT

LO4

32

Benefits of JIT

Reduces raw material inventoriesShortens lead timesCreates better supplier relationshipsReduces production and storeroom

costsReduces paperwork

LO4

33

Materials Handling Functions

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort, and label goods

LO4

34

TransportationAirways

Water

Pipelines

Motor Carriers

Railroads

LO4

35

JIT Requirements

Receive high-quality parts

Meet supplier delivery commitments

Have a crisis management plan

LO4

36

Order Processing

Information technology that replaces paper documents that accompany business transactions with electronic transmission of the information.

ElectronicData

Interchange

http://www.walmartstores.com

Online

LO4

37

Order Processing

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

InventoryControlSystem

LO4

38

Order Processing

MaterialsRequirement

Planning(MRP)

An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.

DistributionResourcePlanning

(DRP)

An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.

LO4

39

MaterialsHandling Functions

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort, and label goods

LO4

40

Transportation

Airways

Water

Pipelines

Motor Carriers

Railroads

LO4

41

Transportation Mode Choice

41

Cost Transit time Reliability Capability Accessibility Traceability

LO4

42

Criteria for RankingModes of Transportation

42

Relative CostTransitTime

Reliability

Capability

Accessibility

Traceability

HighestHighest LowestLowest

Air WaterPipeRailTruck

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water

Water

Truck

Rail Truck Air Pipe

Rail Air Water Pipe

Air Truck Rail Water Pipe

LO4

43

Trends in Supply Chain Management

43

Discuss new technology and emerging trends in

supply chain management

LO5

44

Trends in Supply Chain Management

44

Electronic distribution

Outsourcing of logistics functions

Advanced computer technology

Globalization of supply chain management

Outsourcing of logistics functions

LO5

45

Trends in Supply Chain Management

Electronic distribution

Outsourcing of logistics functions

Advanced computer technology

LO5

46

Advanced Computer Technology

Automatic identification systems- Bar coding- Radio frequency technology

Communications technology

Supply chain software systems

LO5

47

Outsourcing Logistics Functions

Outsourcing Benefits

Reduce inventories

Locate stock at fewer plants and distribution centers

Provide same or better levels of service

LO5

48

Green Supply Chain Management

• Requires integrating green thinking into all aspects of the supply chain– Green materials sourcing– Environmental impact of packaging,

shipment, use– Incorporate end of life management

• Recycling• Clean disposal

LO5

49

AMR Research Healthcare Top 25

Ranked based on building supply chain excellence and innovation to drive business results in demand-driven supply chains

1. Johnson & Johnson2. Sisters of Mercy3. Cardinal Health4. Owens & Minor5. McKesson6. CVS Caremark7. Abbott8. Novartis9. BD (Becton, Dickinson)

10. Wyeth11. GlaxoSmithKline12. AstraZeneca13. AmerisourceBergen14. Walgreens15. Covidien16. Cleveland Clinic17. Merck

18. Genentech19. Alcon Laboratories 20. Medtronic 21. Boston Scientific22. BJC HealthCare23. Roche24. Amgen25. Mayo Clinic

Source: http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-49119 LO5