Supply Chain Management Chapter 14

Logistics v. Supply Chain Management Logistics- Those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest cost. SC- A sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users.

Why Now? Deregulation Managerial Attention Technology Competitive Pressures Increase in Big Business

SCM & Strategy Identify the Consumer Understand the Supply Chain Harmonize the Supply Chain with the Marketing Strategy Efficient Customer requirements Efficient- Inexpensive but slow transportation; economies of scale by producing fewer models; limit assembly and storage facilities Wal-mart- Low inv.; cross-docking; IT; own trucks Cust. Req.- Similar platforms, but slightly different; expensive transportation; several manufacturing facilities

Information Importance Types Electronic Data Interchanges (EDI) Extranet Enterprise Resource Planning (ERP) EDI- Combine proprietary and telecommunication technologies to exchange invoices, payments, and info among suppliers, manufacturers, and retailers. Extranet- B2B communication, web/based network

Customer Service Dimensions Time Dependability Communication Order Cycle Time Quick response Dependability Communication Convenience Customer Service Standards LT= Time from order until received. Emphasis on easy reorder, reduce lead time= reduce inventory Depend= consistent lead time, safe delivery, complete delivery Conv,- Minimum effort on part of buyer Customer Service Standards- Written as objectives

Order Cycle Time What is it? Why is it important? AKA Lead time Why is it important? How can it be reduced?

Total Logistics Cost Concept Transportation, materials handling and warehousing, inventory, stock outs, order processing, goods handling costs. Key issues What if add warehouses? Decrease stockouts and transportation costs, increase handling and warehouses. Ship in large quantities- Fewer stock outs, increase inventory costs

Logistical Functions Logistical functions Transportation Warehousing and Materials Handling Order Processing Inventory Management Third-party Logistics Providers 3rd party- firms that take care of these issues that manufacturers, suppliers, and buyers would usually do themselves

Transportation Railroads Motor Carriers Intermodal transportation Motor Carriers Air carriers and Express Companies Freight Forwarders IT- Combining different modes to get best features of each FF- Accumulate small shipments into larger lots, then have them moved at a reduced rate

Warehousing and Materials Handling/ Order Processing Types of Warehouses Storage Distribution Materials Handling Order Processing Stirage- Come to rest for period of time; dist- timely movement Mat Handling- Moving goods over short distances into, within, and out of warehouses and manufacturing plants. 2 probs: High labor costs & increasing chance for damage

Inventory Management Reasoning Costs Strategies Capital Inventory Storage Risk Strategies High inventory v. JIT Vendor-managed Inventory Buffer between supply and demand; better service for consumers who want on-demand; production efficiencies; provide hedge against price increases from suppliers; promote purchasing and transportation accts; protect from contingencies like strikes and shortages Capital- $$ could be spent elsewhere Inv.- insurance and taxes Stor.- WH Risk- Damage, obsolescence VMI- Vendor decides inventory to go to buyer

Reverse Logistics What is it? Process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or se for repair, remanufacturing, redistribution, or disposal.