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CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT Chapter 16 Supply Chain Management.

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Presentation on theme: "CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT Chapter 16 Supply Chain Management."— Presentation transcript:

1 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT Chapter 16 Supply Chain Management

2 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Supplier Operations Supply Chain Management Management of the network of suppliers, warehouses, operations, and retail outlets Warehouse Retail Outlet Warehouse

3 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Purchasing ReceivingStorageOperationsStorage ProductionDistribution Figure 16-1 Materials Management Management of the purchasing, storage, and movement of materials during production, and the distribution of finished goods

4 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Purchasing Legal Accounting Operations Data processing Design Receiving Suppliers Figure 16-2 Purchasing Interfaces

5 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Purchasing Legal Accounting Operations Data processing Design Receiving Suppliers Purchasing Cycle Requisition received Supplier selected Order is placed Monitor orders Receive orders

6 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Value Analysis vs Outsourcing Value analysis –Examination of the function of purchased parts and materials in an effort to reduce cost and/or improve performance Outsourcing –Buying goods or services from outside sources rather than making or providing them in-house

7 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Outsourcing Cost to make vs cost to buy Stability of demand Quality from suppliers Maintaining close control Idle capacity available

8 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Goals of Just-in-Time Purchasing qelimination of unnecessary activities qelimination of in-plant inventory –exposes problems qelimination of in-transit inventory –location of supplier –consignment qquality and reliability improvement

9 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Characteristics of JIT Purchasing (1 of 2) Few suppliers Nearby suppliers Repeat business with same suppliers Active use of analysis to enable desirable suppliers to become/stay price competitive Clusters of remote suppliers Competitive bidding mostly limited to new part numbers Steady output rate(a desirable prerequisite) Frequent deliveries in small lot quantities Long-term contract agreements Minimal release paperwork Delivery quantities vary from release to release but fixed for whole contract term Little or no permissible overage or underage of receipts Suppliers Quantities

10 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Characteristics of JIT Purchasing (2 of 2) Minimal product specification imposed on supplier Help suppliers to meet quality requirements Close relationshipsbetween buyers’ and suppliers’ quality assurance people Suppliers encouraged to use process control charts instead of lot sampling inspections Scheduling of inbound freight Gain control by use of company-owned or contract shipping, contract warehousing, and trailers for freight consideration/store where possible – instead of using common carriers Quality Shipping

11 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Determining Prices Published price lists –fixed or predetermined prices Competitive bidding –e.g. government purchases of standard goods or services Negotiating –win-win transaction

12 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Centralized vs Decentralized Purchasing Centralized purchasing – Purchasing is handled by one special department Decentralized purchasing –Individual departments or separate locations handle their own purchasing requirements

13 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Suppliers Choosing suppliers Evaluating sources of supply Supplier audits Supplier certification Supplier partnerships

14 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Considerations When Choosing a Supplier Lead times and on-time delivery Quality and quality assurance Flexibility Location Price Product or service charges Reputation and financial stability Other accounts

15 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Vendor Score Sheet Evaluating Sources of Supply Vendor analysis: Evaluating the sources of supply in terms of price, quality, reputation, and service

16 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Supplier Audits Means of keeping current on suppliers’ performance Factors covered in an audit –management style –quality assurance –materials management –design process used –process improvement policies –procedures for corrective action and follow- up

17 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Supplier Certification Detailed examination of the policies and capabilities of a supplier Verifies that a supplier meets or exceeds the requirements of a buyer Use of certified suppliers can eliminate much or all of the inspection and testing of delivered goods ISO 9000

18 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Supplier as a Partner

19 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Supplier Partnerships Ideas from suppliers could lead to improved competitiveness –Reduce cost of making the purchase –Reduce transportation costs –Reduce production costs –Improve product quality –Improve product design –Reduce time to market –Improve customer satisfaction –Reduce inventory costs –Introduce new products or services

20 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management s-10 Logistics Movement within the facility Incoming and outgoing shipments Evaluating shipping alternatives Bar coding EDI Distribution Requirements Planning (DRP) JIT Deliveries

21 CHAPTER SIXTEEN SUPPLY CHAIN MANAGEMENT MTSU Management Figure 16-3 Storage Work center Work center Work center Storage Shipping Materials Movement Receiving Storage Supplier Warehouse Customer


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