Supply Chain Ch.01 OMIS3200

Supply Chain

Consists of the flow of products and Services from raw materials, components and intermediate manufacturers, final product manufacturers, wholesalers, distributors, and retailers

Connected

By transportation and storage activities

Intergrated

Though information, planning, and integration activities

Vertically Integrated

Firms moving away from this due to high cost and difficulty managing diverse units

Institute for Supply Management

The design and management of seamless, value added processes across organizational boundaries to meet the real needs of the end costumer

Business Dictionary

Management of material and information flow in a supply chain to provide the highest degree of costumer satisfaction at the lowest possible cost.

Traditional organizational cultures

Emphasized short-term, company focused performance can conflict with the objectives of supply chain management

Successful supply chain management requires…

High levels of trust, cooperation, collaboration, and accurate communication

Firms w/ large system inventories gain..

The most successful SCM. lower purchasing and carrying costs, better product quality, higher customer service levels, increased sales and profits

Firms using supply chain management…

Start with key suppliers, move on to other suppliers, customers, and logistics services. And lastly, integrate second tier suppliers and costumers

Reduced Bullwhip effect

Defined as erratic demand causing forecasts to include safety stock, which in turn magnify suppliers forecasts and cause production, planning problems. SCM reduced safety stocks and costs due to coordinated planning and better sharing of information.

1950s - 1960s

U.S. manufacturers focused on mass production techniques as their principal cost reduction and productivity improved strategies

1960s-1970s

Introduction of new computer technologies lead to development of materials requirement planning (MRP) and manufacturing resource planning (MRPII) to coordinate inventory management and improve internal communication

1980s-1990s

Intense global competition led U.S. manufacturers to adopt:

• supply chain management (SCM)

• Just in time (JIT)

• Total quality Management (TQM)

• Business process reengineering (BPR)

• Costumer relationship management (CRM)

2000’s and beyond

Evolution along two parallel paths

Supply chain management emphasis from industrial buyer

Logistics and costumer service emphasis from wholesalers and retailers

Focus

Improving supply chain with initiatives like third party services providers (3PLs), integrating logistics, client/server SCM software- enterprise resource planning

Today

Emphasis is being placed on the environmental and social impacts of supply chains

Sustainability

Ability to meet the needs of current supply chain members without hindering the ability to meet the needs of future generations

Triple Bottom Line

Taking care of people, planet, and profits

Supply

Supply base reduction, supplier alliances, SRM, global sourcing, ethical and sustainable sourcing

Operations

Demand management, CPFR, inventory management, MRP, ERP, lean systems, Six Sigma quality systems

Logistics

Logistics management, customer relationship management, network design, RFID, global supply chains, sustainability, service response logistics

Integration

Barriers to integration, risk and security management, performance measurement, green supply chains

Supply elements

supplier management

Supplier evaluation

Supplier certification

Strategic partnership

Ethics and sustainability

Supplier management

Improve performance though supplier evaluation and supplier certification

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

Operations Elements

Demand management

MRP AND ERP

Inventory visibility

Radio frequency identification (RFID)

Lean systems

Six sigma

Demand management

Match demand to available capacity

MRP and ERP systems

Linking buyers and suppliers

Radio frequency Identification (RFID)

Systems scan cartons describing contents of the packages

Lean systems

Improve the flow of materials to reduce inventory levels

Six sigma

Improve quality compliance among suppliers

Logistic Elements

Transportation management

Third party logistics provider

Distribution networks

Transportation management

Trade-off decisions between cost and delivery timing considering modes of transportation and customer service

3rd party logistics providers (3PLs)

for hire outside agencies, providing transportation and other logistic services

Distribution Networks

Based on trade-off decisions between cost and sophistication of distribution systems

Integration Elements

Supply chain process integration

Supply chain performance measurement

High level supply chain performance occurs when strategies at each firm fit well with overall supply chain strategies

Supply chain process integration

When supply chain participants work for common goals. Requires intra-firm functional integration, with efforts to change attitudes and adversarial relationships.

Supply chain performance measurement

Crucial for firms to know if procedures are working as expected

Supply chain Analystics

Examining raw supply-chain data and researching conclusions or making predictions with the information

possible benefits of supply chain sustainability performance

• Enhancing processes

• reduce cost

• increased productivity

• uncover product innovation

• achieve market differentiation

• improve societal outcomes

Increasing supply chain visibility

Knowing exactly where products are, at any point in the supply chain

Inventory visibility is made easier by technology

Sophisticated software applications for tracking orders, inventory, deliveries, return goods, and employee attendance

Council of Supply Chain Management Professionals

The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities … includes coordination with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.