ch4 global supply chain management

supply chain

= network of activities to deliver finished products to customers

• supplier provides raw materials and components

• manufacturers transform these materials into finished products

• products are distributed to retailers via distribution centers and or wholesalers

• retailers sell the finished products to the end customer

suppliers

provide raw materials and components

manufacturers

transform these materials into finished products

distribution centers / wholesalers

distribue the products to the retailers

supply chain management SCM

coordination and management of all the activities of the supply chain → prime example of OM

supply chain components : internal functions

processing : transforming raw materials into finished products, packaging

purchasing : selecting suppliers, monitoring perofrmance, developing and maintaining relationships

production : planning and controling

quality assurance : overseeing quality

shipping : selecting carriers/ fleet

supply chain components : external distributors

logistic function

• traffic management : selecting and monitoring of carriers/ fleet

• distribution management : packaging, labelling, storing and handling at warehouses and at stores

major issues in supply chain management

• E-commerce

• globalization

• infrastructure issues

• government regulation

• green supply chain management

green supply chain management

impact of supply chain on living environment and climate change ?

→ meeting present needs without compromising abilities of future generations

sourcing

is the proces of selecting suppliers to provide goods and services

important cosiderations during sourcing

how to choose between suppliers

• availability

• cost

• quality

• speed and reliability

one or more suppliers per item ?

partnership with a supplier ?

→ decisions must be in accordance with business strategy

vertcial integration

extent to which a suppy chain is owned/operated by the manufacturer

• backwards integration : owning or controling sources of raw materials and components

• forward integration : owning or controlling the channels of distribution

insourcing :

the manufacturer provides products and services in house

outsourcing

the manufacturer pays suppliers or third parties for their products and services

→ a product or service should not be outsourced if its

• a company’s core competence

• critical to the company’s success or survival

make or buy decisions based on

volume : indifference point

quality and functionality

required skills

available capital for investment

Kraljic matrix

→ 4 different sourcing strategies

strategic item

• high profit impact and high supply risk

leverage items

• high profit impact and low supply chain risk

non-critical items

• low profit impact and supply risk

bottleneck items

• high supply risk and low profit impact

partnering

developing a long-term relationship with a supplier based on mutual trust, shared vision, shared information, and shared risks

• strategic in nature

• driven by-end customer expectations

earrly supplier involvemenet (ESI)

critical suppliers are part of a cross-functional product design team (shared expertise, shorter time to market)

critical success factors of partnering

impact : attaining higher levels of productivity and competitiveness

• elimination of duplicate and waste

• leveraging core competencies

• creating new opportunities

intimacy : trust to share all information on sales, operations ext

vision : agreement on the goals of the partnership and the role of each partner

benefits of partnering : manufacturer’s benefit

• reduces costs

• reduce duplication of effort

• improve quality

• reduce lead time

• implement cost reduction program

• involve suppliers earlier

• reduce time to market

• reduce inevntory

benefits of partnering ; supplier’s benefit

• increases in sales volume

• increase customer loyality

• reduce costs

• improve demand data

• imrpove profitability

• reduce inventory