Stevenson

15

Supply Chain
Management
 Learning Objectives
 Explain what a supply chain is.
 Explain the need to manage a supply chain and
the potential benefits of doing so.
 State the objective of supply chain management.
 List the elements of supply chain management.
 Describe the bullwhip effect and the reasons why
it occurs.

11-2
 Supply Chain Management

 Supply Chain: the sequence of

organizations - their facilities,
functions, and activities - that are
involved in producing and delivering
a product or service.

Sometimes referred to as value chains

11-3
 Facilities

 Warehouses
 Factories
 Processing centers
 Distribution centers
 Retail outlets
 Offices

11-4
 Functions and Activities
 Forecasting
 Purchasing
 Inventory management
 Information management
 Quality assurance
 Scheduling
 Production and delivery
 Customer service

11-5
 Typical Supply Chains
Purchasing Production Distribution

Receiving Storage Operations Storage

Supplier

Supplier

Supplier
}
Storage Mfg. Storage Dist. Retailer Customer

}
Supplier
Storage Service Customer
Supplier
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Bullwhip Effect

11-7
 Bullwhip Effect

Demand

Initial Final Customer

Supplier

Inventory oscillations become progressively

larger looking backward through the supply chain

11-8
 Elements of Supply Chain
Management
Element Typical Issues
Customers Determining what customers want
Forecasting Predicting quantity and timing of demand
Design Incorporating customer wants, mfg., and time
Processing Controlling quality, scheduling work
Inventory Meeting demand while managing inventory costs
Purchasing Evaluating suppliers and supporting operations
Suppliers Monitoring supplier quality, delivery, and relations
Location Determining location of facilities
Logistics Deciding how to best move and store materials

11-9
Benefits of Supply Chain Management
 Lower inventories
 Higher productivity
 Greater agility
 Shorter lead times
 Higher profits
 Greater customer loyalty
 Integrates separate organizations into a
cohesive operating system

11-10
 Global Supply Chains
 Increasingly more complex
 Language
 Culture
 Currency fluctuations
 Political
 Transportation costs
 Local capabilities
 Finance and economics
 Environmental

11-11
 Logistics

 Logistics
 Refers to movement of materials, services,
cash and information in a supply chain
 Includes movement of materials and
information within a facility, overseeing
incoming and outgoing shipments of goods
and materials, and information flow
throughout the supply chain

11-12
 Logistics
• Movement within the facility
• Incoming and outgoing shipments
• Bar coding
• EDI
• Distribution
• JIT Deliveries

214800 232087768

11-13
 E-Business
 E-Business: the use of electronic
technology to facilitate business
transactions
 Applications include
 Internet buying and selling
 E-mail
 Order and shipment tracking
 Electronic data interchange

11-14
 Advantages of E-Business
 Companies can:
 Have a global presence
 Improve competitiveness and quality
 Analyze customer interests
 Collect detailed information
 Shorten supply chain response times
 Realize substantial cost savings
 Create virtual companies
 Level the playing field for small companies

11-15
 Effective Supply Chain
 Requires linking the market, distribution
channels processes, and suppliers
 Supply chain should enable members to:
 Share forecasts
 Determine the status of orders in real time
 Access inventory data of partners

11-16
 Successful Supply Chain
 Trust among trading partners
 Effective communications
 Supply chain visibility
 Event-management capability
 The ability to detect and respond to
unplanned events
 Performance metrics

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 SCOR Model
Supply Chain Operations Reference Model
Plan
Source
Make
Deliver
Manage returns

11-18
 SCOR Metrics

Perspective Metrics
Reliability On-time delivery
Order fulfillment lead time
Fill rate (fraction of demand met from stock)
Perfect order fulfillment
Flexibility Supply chain response time
Upside production flexibility

Expenses Supply chain management costs

Warranty cost as a percent of revenue
Value added per employee
Assets/utilization Total inventory days of supply
Cash-to-cash cycle time
Net asset turns

11-19
 CPFR
 Collaborative Planning, Forecasting, and
Replenishment
 Focuses on information sharing among
trading partners
 Forecasts can be frozen and then
converted into a shipping plan
 Eliminates typical order processing

11-20
Supply Chain Performance Drivers
1.Quality
2.Cost
3.Flexibility
4.Velocity
5.Customer service

11-21
 Creating an Effective Supply
Chain
1.Develop strategic objectives and tactics
2.Integrate and coordinate activities in the
internal supply chain
3.Coordinate activities with suppliers with
customers
4.Coordinate planning and execution
across the supply chain
5.Form strategic partnerships
11-22