Chapter 4 Supply Chain Management. Supply Chain A supply chain is the network of all the activities involved in delivering a finished product/service.
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Presentation on theme: "Chapter 4 Supply Chain Management. Supply Chain A supply chain is the network of all the activities involved in delivering a finished product/service."— Presentation transcript:
Supply-Chain for a Service Firm Figure 8.3 Electric power utility Home customers Commercial customers Other electric utilities Electric transformers Facility maintenance services Janitorial services Programming services Electric energy backup power Office supplies Fuel supplies
Bullwhip Effect in a Supply Chain Bullwhip effect is the inaccurate or distorted demand information magnified upstream in the supply chain.
Bullwhip Effect (a) Customer Firm A Firm B Firm C Firm A Time (b) Figure 8.5 Materials requirements
Causes What causes bullwhip effect in the chain: – demand forecasting updating, – order batching, – price fluctuations, – rationing and gaming
Consequence Consequences of bullwhip effect: – Excessive inventory / production at each spot of a supply chain due to erroneous percept of demand information. – Getting more serious when going upstream of the supply chain.
Counteracting Bullwhip Effect Cooperation and information sharing among companies in supply chain: – Make order calculation information available at all levels of the supply chain. – Share real demand information. – Replace order batching with improvisatory order – Stabilize pricing with increased cooperation – Eliminate gaming with cooperation and mutual trust
B2B In B2B e-commerce, companies sell and buy products to and from other business through Internet. B2B facilitates purchasing research (electronic storefront and net marketplace) and automates purchasing transaction process.
B2C B2C refers to the on-line business in which a company reaches individual consumers directly through Internet. B2C models: – Advertising revenue model – Subscription revenue model – Transaction fee model – Sales revenue model – Affiliate revenue model
Intranet, Extranet, Internet An intranet is a computer network exclusively for internal use of a company. An extranet is a computer network exclusively for a company and its suppliers / customers. Internet is an open computer network.
Role of Purchasing Purchasing departments play an important role in SCM and are responsible for: – Selecting suppliers – Negotiating and administering long-term contracts – Monitoring supplier performance – Placing orders to suppliers – Developing a responsible supplier base – Maintaining good supplier relations
Role of Warehouse A warehouse is for storage and/or distribution. – Transportation consolidation – Product mixing – Service improving Crossdocking refers to the sole distribution function of a warehouse with eliminated storage and order-picking.
Characteristics of Crossdocking Warehouse plays the role of transfer station where less-than-truckload (LTL) quantities are consolidated into truckload (TL), or items from different suppliers are consolidated and shipped to one customer. No storage and order picking. Crossdocking is carried out within 24 hours. Warehouse knows who are the owners of the inbound items before they arrive.
Types of Crossdocking Based on purpose of crossdocking and customers of the warehouse, four types: – Manufacturing crossdocking – Distribution crossdocking – Transportation crossdocking – Retail crossdocking
Stock-Keeping Unit (SKU) SKU, like UPC (universal product code), is a identification system for stored items in a warehouse. For example, SKU 12345bX refers to a box of 100 units of black staplers from supplier X, SKU 12345rY refers to a box of 75 red staplers from supplier Y.
Vertical Integration Vertical integration – a measure of how much of the supply chain is owned or operated by the manufacturer Backward integration – owning or controlling of sources of raw material and component parts Forward integration – owning or control the channels of distribution