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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*LEARNING OBJECTIVESYou should be able to:
Describe a supply chain and define supply chain management.
Describe the objectives and elements of supply chain management.
Describe local, regional, and global supply chain management
activities among services and manufacturing companies. Describe a
brief history and some of the trends of supply chain management.
Understand how the bullwhip effect impacts supply chain
members.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*CHAPTER OUTLINEIntroduction Supply Chain
Management DefinedThe Importance of Supply Chain ManagementThe
Origins of Supply Chain Management in the U.S.The Foundations of
Supply Chain ManagementSome Current Trends in Supply Chain
Management
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*What is a Supply Chain?A supply chain consists
of the flow of products and services from:Raw materials
manufacturersComponent and intermediate manufacturersFinal product
manufacturersWholesalers and distributors andRetailers
Connected by transportation and storage activities,
andIntegrated through information, planning, and integration
activities Many large firms are moving away from in-house
Vertically Integrated structures to Supply Chain Management
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*What is a Supply Chain? (continued)Reverse
logistic activities: Intermediate and end customers may need to
return products, obtain warranty repair or may just throw products
away or recycle them.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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What is a Supply Chain? (continued)Supply chain definition: The
series of companies eventually making products and services
available to consumers including all of functions enabling the
production, delivery and recycling of materials, components, end
products and services.2012 Cengage Learning. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.*
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*What is Supply Chain Management (SCM)?The
design and management of seamless, value-added processes across
organizational boundaries to meet the real needs of the end
customer.Institute for Supply ManagementThe coordinated set of
techniques to plan and execute all steps in the global network used
to acquire raw materials from vendors, transform them into finished
goods, and deliver both goods and services to customers.
Logistics and Supply Chain Management SocietyThe planning and
management of all activities involved in sourcing and procurement,
conversion, and all logistics management activities also includes
coordination with channel partners, which can be suppliers,
intermediaries, third party service providers, and customers.
Council of Supply Chain Management Professionals
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*What is Supply Chain Management?
(continued)Old paradigm - Firm gained synergy as a vertically
integrated firm encompassing the ownership and coordination of
several supply chain activities. More traditional organizational
cultures emphasize short-term, company focused performance.
(conflict with the objectives of SCM)
New paradigm - Firm in a supply chain focuses activities in its
area of specialization and enters into voluntary and trust-based
relationships with supplier and customer firms. All participants in
the supply chain benefit. Boundaries are dynamic and extend from
the firms suppliers suppliers to its customers customers (i.e.,
second tier suppliers and customers).Supply chains now deal with
reverse logistics to handle returned products, warranty repairs,
and recycling.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Importance of Supply Chain ManagementFirms
have discovered value-enhancing and long term benefits
Who benefits most? Firms with: Large system inventoriesLarge
number of suppliersComplex products assembeliesCustomers with large
purchasing budgets
How do they benefit?Lower purchasing and inventory costsImproved
qualityHigher levels of customer service
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Importance of Supply Chain Management
(continued)Firms using Supply Chain Management:
Start with key suppliersMove on to other suppliers, customers,
and shippersIntegrate second tier suppliers and customers (second
tier refers to the customers customers and the suppliers
suppliers)
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Importance of Supply Chain Management
(continued)Cost savings and better coordination of resources are
reasons to employ Supply Chain Management.
Reduced Bullwhip Effect - the magnified reduction of safety
stock costs based on coordinated planning and sharing of
information- Collaborative planning, forecasting, and replenishment
activities reduce the Bullwhip Effect and lead to better customer
service, lower inventory costs, improved quality, reduced cycle
time, better production methods, and other benefits.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Origins of Supply Chain Management1950s &
1960sU.S. manufacturers focused on mass production techniques as
their principal cost reduction and productivity improvement
strategies1960s-1970sIntroduction of new computer technology lead
to development of Materials Requirements Planning (MRP) and
Manufacturing Resource Planning (MRPII) to coordinate inventory
management and improve internal communication
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Origins of Supply Chain Management
(continued)1980s & 1990sIntense global competition led U.S.
manufacturers to adopt the following techniques to offer
lower-cost, higher-quality products along with higher levels of
customer service.
Supply Chain Management (SCM) Just-In-Time (JIT)Total Quality
Management (TQM) Business Process Reengineering (BPR) Manufacturers
utilized:- JIT & TQM to improve quality, manufacturing
efficiency and delivery times.- BPR or radical rethinking and
redesigning of business processes to reduce waste and increase
performance.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Origins of Supply Chain Management
(continued)2000s and BeyondCompanies will focus on relationships,
sustainability, and social responsibility
Companies will focus on improving supply chain capabilities with
initiatives such as:Third-party service providers (3PLs) (to ensure
a continuous, uninterrupted supply of goods)Integrating logistics
Using transportation to facilitate rapid response
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Origins of Supply Chain Management
(continued)
2012 Cengage Learning. All Rights Reserved. May not be scanned,
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*The Foundations of Supply Chain Management
Supply (Ch. 2&3&4)Supply base rationalization, supplier
alliances, SRM, global sourcing, ethics and
sustainabilityOperations (Ch. 5&6&7&8)Demand
management, CPFR, MRP, ERP, inventory visibility, lean systems, Six
Sigma quality systemsLogistics (Ch.
9&10&11&12)Logistics management, customer relationship
management, network design, RFID, global supply chains,
sustainability, service response logisticsIntegration(Ch.
13&14)Risk and security management, performance measurement,
green supply chains
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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*The Foundations of Supply Chain Management (continued)Supply
Elements:Supplier management - improve performance through Supplier
evaluation (determining supplier capabilities)Supplier
certification (third party or internal certification to assure
product quality and service requirements)
Strategic partnerships - successful and trusting relationships
with top-performing suppliers
Ethics and sustainability - recognizing suppliers impact on
reputation and carbon footprint.2012 Cengage Learning. All Rights
Reserved. May not be scanned, copied or duplicated, or posted to a
publicly accessible website, in whole or in part.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Important Elements of Supply Chain Management
(continued)Operations Elements:Demand management - match demand to
available capacityLinking buyers & suppliers via MRP and ERP
systemsUse lean systems to improve the flow of materials to reduce
inventory levelsEmploy Six Sigma to improve quality compliance
among suppliers
One of the important aspects of using lean systems and Six Sigma
is use of a continuous stream of small ideas from front-line
employees.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Important Elements of Supply Chain Management
(continued)Logistics Elements:Transportation management - trade-off
decisions between cost & timing of delivery (i.e. customer
service via trucks, rail, water & air)Customer relationship
management (CRM) - strategies to ensure deliveries, resolve
complaints, improve communications, & determine service
requirementsNetwork design - creating distribution networks based
on trade-off decisions between cost & sophistication of
distribution system
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Important Elements of Supply Chain Management
(continued)Integration Elements:Supply Chain Process Integration -
when supply chain participants work for common goals. Requires
intra-firm functional integration. Based on efforts to change
attitudes & adversarial relationships, reduce conflicts,
etc.Supply Chain Performance Measurement - Crucial for firms to
know if procedures and certain strategies are working as
expected.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Current Trends in Supply Chain
ManagementExpanding the Supply ChainU.S. firms are expanding
partnerships and building facilities in foreign marketsRight
shoring for maximum flexibility and minimum cost
The expansion involves: Breadth - foreign manufacturing, office
& retail sites, foreign suppliers & customersDepth - second
and third tier suppliers & customers
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Current Trends in Supply Chain Management
(continued)Increasing Supply Chain ResponsivenessFirms will
increasingly need to be more flexible and responsive to customer
needs Supply chains will need to benchmark industry performance and
meet and improve on a continuous basisBenchmarking is the measure a
rival's product according to specified standards in order to
compare it with and improve one's own product.Responsiveness
improvement will come from more effective and faster product &
service delivery systems
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*Current Trends in Supply Chain Management
(continued)The GREENING of Supply Chains (sustainable supply
chain)Purchasing, producing, packaging, moving, storing,
repackaging, delivering and other supply chain activities can be
harmful to the environment.Supply chains will work harder to reduce
environmental degradation
Large majority (75%) of U.S. consumers influenced by a firms
environmental friendliness reputation
Recycling and conservation are a growing alternative in response
to high cost of natural resources
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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*Current Trends in Supply Chain Management (continued)Reducing
Supply Chain Costs
Cost reduction achieved through:Reducing purchasing and product
distribution costs, waste, excess inventory, and non-value added
activities2012 Cengage Learning. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
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Current Trends in Supply Chain Management (continued)Reducing
Supply Chain Costs (continued)
Continuous improvement through
Benchmarking - improve over competitors performanceTrial &
errorIncreased knowledge of supply chain processes Software to
streamline (simplify and organize) the supply chain and hiring
third-party spend management consultantsLogistics functions through
better design of distribution networks, use of software and
third-party logistics service providers.
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
in whole or in part.*
2012 Cengage Learning. All Rights Reserved. May not be scanned,
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AssignmentQ1. What is the role of service providers in a supply
chain? Q2. What are the impacts of IT (Information Technology) on
SCM?
Note: Please answer the questions in only one page.2012 Cengage
Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or
in part.*
2012 Cengage Learning. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website,
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*