1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 14 Prepared by Amit Shah Frostburg State.

1Copyright ©2009 by Cengage Learning Inc. All rights reserved

Designed by Eric Brengle B-books, Ltd.

CHAPTER

14

Prepared byAmit Shah

Frostburg State University

MarketingLamb, Hair, McDaniel

10

Supply Chain Management

Copyright ©2009 by Cengage Learning Inc. All rights reserved

Learning Outcomes

2

LOI

LO2

LO3

Define the terms supply chain, supply chain management, and supply chain orientation, and discuss the benefits of supply chain management

Discuss the concept of supply chain integration and explain why each of the six types of integration is important

Identify the eight key processes of excellent supply chain management, and discuss how each of these processes impacts the end customer


Learning Outcomes

3

Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains

Describe the logistical components of the supply chain

Explain why supply chain performance measurement is necessary and important

Discuss new technology and emerging trends in supply chain management

LO5

LO6

LO4

LO7


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

LOI


Supply Chains

5

Supply ChainSupply Chain

LOI

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


Supply Chains

6



LOI

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 Chains

7

LOI


Supply Chain Managers

8LOI

Supply chain managers are responsible for

Making strategic decisions

Management of information through supply chain

Coordinating relationships between company and external partners


Benefits of Supply Chain Management

9LOI

Supply chain oriented companies commonly report:

• Lower inventory, transportation, warehousing, and packaging costs

• Greater supply chain flexibility

• Improved customer service

• Higher revenues

• Increased profitability


REVIEW LEARNING OUTCOMESupply Chain Management

10

LOI


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

LO2

System ApproachSystem

Approach

A key principle of supply chain management – that multiple firms work together to perform tasks as a single, unified system, rather than as several individual companies acting in isolation.

A key principle of supply chain management – that multiple firms work together to perform tasks as a single, unified system, rather than as several individual companies acting in isolation.



When multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.

When multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.



13

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



14

LO2

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.

Role Specificity

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.

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.



15LO2

•High relationship integration allow entire supply chain to perform at a higher level

•Tend to be managed by formal or informal social guidelines

•Tend to be open to information sharing across firm/business unit boundaries

•Tend to practice equitable risk/reward sharing



16

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

Activity-Based costing (ABC)

An accounting method used in measurement integration to assess the costs associated with each supply chain activity



17LO2

•Managers in all firms and units must conduct functional assessments

•Firms in supply chain should agree on and commit to principles of ABC

•Must be a widely agreed upon set of supply chain metrics that are standards


Technology and Planning Integration

18

LO2

Technology and planning integration

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


Technology and Planning Integration

19LO2

Several firm-level and supply chain-level capabilities must be developed

•Firms in supply chain must become experts at information management

•Packets of information must be available in real-time

•Supply chain managers need strong internal communications capability



20

LO2


Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements



21LO2

Five distinct groups of activities:

• Firm must become cross-functionally unified

• Firm should seek to standardize operations/work processes

• Work processes should be simplified

• Process standards should be developed for internal benchmarks

• Overall logistical network of firm should be reconfigured


Customer Integration

22

LO2

CustomerIntegrationCustomerIntegration

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

ABC Segmentation

The supply-chain process whereby customers are placed into groups A, B, and C according to their overall long-term value to the firm and to the extent to which the firm can serve their desires


Customer Integration Drivers

23LO2

•Understand not all customers are alike

•Should use market segmentation

•Select customer groups for whom to provide highest levels of service


REVIEW LEARNING OUTCOMESupply Chain Integration

24

LO2


Key Processes of Supply Chain Management

25

Identify eight key processes of excellent supply chain

management, and discuss how each of these processes

impacts the end customer

LO3


Key Processes

26

LO3


Customer Relationship Management

27

LO3


Process


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.


Customer Service Management

28

LO3

Customer Service

Management Process

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.


Demand Management

29

LO3

DemandManagement

Process

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.


Order Fulfillment

30

LO3

Order FulfillmentProcess

Order FulfillmentProcess

A supply chain management

process that involves

generating, filling, delivering,

and providing on-the-spot

service for customer orders.


Manufacturing Flow Management

31

LO3

Manufacturing Flow

Management Process

Manufacturing Flow

Management Process

A process that ensures that

firms in the supply chain have

the resources they need


Supplier Relationship Management

32

LO3


Process


Process

A supply chain management

process that supports

manufacturing flow by

identifying and maintaining

relationships with highly

valued suppliers


Product Development and Commercialization

33

LO3


Process


Process

The group of activities that

facilitates the joint

development and marketing of

new offerings among a group

of supply chain partner firms.


Returns Management

34

LO3

Returns Management

Process

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.


REVIEW LEARNING OUTCOMEKey Processes of Supply Chain Management

35

LO3


Strategic Supply Chain Management Decisions

36

Discuss the key strategic decisions supply chain managers must make when designing their

companies’ supply chains

LO4



37

LO4

Lean Supply Chain

Management

Lean Supply Chain

Management

Agile Supply Chain Management

Agile Supply Chain Management

The strategy that focuses primarily

on the removal of waste from the

supply chain to achieve the lowest

total cost to the members of the

supply chain system

The supply chain strategy that focuses primarily on the ability of the firm to fulfill customer demand, even if this means somewhat higher costs

The supply chain strategy that focuses primarily on the ability of the firm to fulfill customer demand, even if this means somewhat higher costs


Lean versus Agile Supply Chain Management

38

LO4


Mapping The Supply Chain

39LO4


REVIEW LEARNING OUTCOMELogistics Function in the Supply Chain

40

LO4


Managing Logistical Components

41

Describe the logistical components of the

supply chain

LO5


Logistical Components of the Supply Chain

42

LO5

SupplySupplyChainChainTeamTeam

Sourcing & ProcurementSourcing & Procurement

Order ProcessingOrder Processing

Inventory ControlInventory Control

Warehouse & Materials HandlingWarehouse & Materials Handling

TransportationTransportationLo

gis

tics

Info

rma

tio

n S

yste

mL

og

isti

cs In

form

ati

on

Sys

tem


Sourcing and Procurement

• Plan purchasing strategies

• Develop specifications

• Select suppliers

• Negotiate price and service levels

• Reduce costs

43

LO5

The Role of Purchasing:The Role of Purchasing:


Order Processing

44

ElectronicData

Interchange

ElectronicData

Interchange

LO5

Information technology that

replaces paper documents

that accompany business

transactions with electronic

transmission of the

information.

http://www.walmartstores.com

Online


Inventory Management and Control

45

LO5

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 Management and Control

46

LO5

MaterialsRequirement

Planning(MRP)

MaterialsRequirement

Planning(MRP)

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

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

DistributionResourcePlanning

(DRP)

DistributionResourcePlanning

(DRP)

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

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


Inventory Replenishment Example

47

LO5

MRP

Sleep Right MattressRetail Store

Sleep Right MattressRetail Store

Sleep Right Distribution Center

Sleep Right Distribution Center

ABC MattressWholesaling Company

ABC MattressWholesaling Company

Great MattressCompany

Great MattressCompany


Materials Handling Functions

48

LO5

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort, and label goods


Transportation

49

LO5

Airways

Water

Pipelines

Motor Carriers

Railroads


Transportation Mode Choice

50LO5

Cost Transit time Reliability Capability Accessibility Traceability


Criteria for RankingModes of Transportation

51

LO5

Relative Cost

TransitTime

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


Supply Chain Performance Measurement

52

Explain why supply chain performance measurement is necessary and important

LO6


Supply Chain Performance Measurement

53

LO6

A good metric is characterized by five qualities:

•Creates understanding of strategic objectives and tactical plans

•Promotes behaviors that are consistent with achieving these objectives

•Allows for recording of actual results/outcomes

•Allows companies to compare themselves to competitors and customer expectations

•Motivates continuous improvement


The Balanced Scorecard Approach

54LO6


REVIEW LEARNING OUTCOMEWhy is Supply Chain Performance Measurement

Important?

55

LO6


Trends in Supply Chain Management

56

Discuss new technology and emerging trends in

supply chain management

LO7


Trends in Supply Chain Management

57

LO7

Electronic distributionElectronic distribution

Outsourcing of logistics functionsOutsourcing of logistics functions

Advanced computer technologyAdvanced computer technology

Globalization of supply chain managementGlobalization of supply chain management

Outsourcing of logistics functionsOutsourcing of logistics functions


Advanced Computer Technology

• Automatic identification systems– Bar coding

– Radio frequency technology

• Communications technology

• Supply chain software systems

58LO7


Outsourcing Logistics Functions

• Reduce inventories

• Locate stock at fewer plants and distribution centers

• Provide same or better levels of service

59

Outsourcing BenefitsOutsourcing Benefits

LO7


REVIEW LEARNING OUTCOMEEmerging trends in supply chain management

60

LO7

1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 14 Prepared by Amit Shah Frostburg State.

Documents

supply chain management

terms supply chain

supply chain orientation

supply chain members

rights reserved supply

connected chain

cengage learning

chain oriented companies