1. Supply Chain Management
Chapter 15
Supply Chain Management
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 15: Learning Objectives
You should be able to:
Discuss the key issues of supply chain management (SCM)
Name the recent trends in SCM
Summarize the motivations and risks of outsourcing as a strategy
State some of the complexities that are involved with global supply chains
List some of the strategic, tactical and operational responsibilities of SCM
Give examples of some advantages of e-business
Explain the importance of supplier partnerships
Discuss the issues involved in managing returns
List the requirements of an effective supply chain
Name some of the challenges in creating an effective supply chain
Student Slides
15-2

3. Supply Chain 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
Student Slides
15-3

4. Facilities
The sequence of the supply chain begins with basic suppliers and extends all the way to the final customer
Warehouses
Factories
Processing centers
Distribution centers
Retail outlets
Offices
Student Slides
15-4

5. Functions and Activities
Supply chain functions and activities
Forecasting
Purchasing
Inventory management
Information management
Quality assurance
Scheduling
Production and delivery
Customer service
Student Slides
15-5

6. Supply Chain Management
Supply Chain Management (SCM)
The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management
Student Slides
15-6

7. Key SCM Issues
The goal of SCM is to match supply to demand as effectively and efficiently as possible
Key issues:
Determining appropriate levels of outsourcing
Managing procurement
Managing suppliers
Managing customer relationships
Being able to quickly identify problems and respond to them
Managing risk
Student Slides
15-7

8. Trends in SCM Trends affecting supply chain design and management:
Measuring supply chain ROI
“Greening” the supply chain
Re-evaluating outsourcing
Integrating IT
Managing risks
Adopting lean principles
Student Slides
15-8

9. Procurement
The purchasing department is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service.
The goal of procurement
Develop and implement purchasing plans for products and services that support operations strategies
Student Slides
15-9

10. E-Business E-business
The use of electronic technology to facilitate business transactions
Applications include
Internet buying and selling
Order and shipment tracking
Electronic data interchange
Product and service promotion
Provide information about products and services
Student Slides
15-10

11. Supplier Management Choosing suppliers Supplier audits
Supplier certification
Supplier relationship management
Supplier partnerships
CPFR (collaborative planning, forecasting, and replenishment)
Strategic partnering
Student Slides
15-11

12. The Bullwhip Effect
Variations in demand cause inventory fluctuations to fluctuate and get out of control
Inventory fluctuation can be magnified by
Periodic ordering
Reactions to shortages
Forecast inaccuracies
Order batching
Sales incentives and promotions
Liberal product return policies
Results in
Higher costs
Lower customer satisfaction
Student Slides
15-12

13. Logistics
Logistics
Refers to the movement of materials, services, cash, and information in a supply chain
Movements within a facility
Incoming shipments
Outgoing shipments
Student Slides
15-13

14. Creating an Effective Supply Chain
It begins with strategic sourcing
Analyzing the procurement process to lower costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance
There must be
Trust
Effective communication
Information velocity
Supply chain visibility
Event management capability
Performance metrics
Student Slides
15-14

15. Operations Strategy
Effective supply chains are necessary for organizational success
Requires integration of all aspects of the chain
Supplier relationships are a critical component of supply chain strategy
Lean operations and six sigma are being employed to improve supply chain success
Student Slides
15-15