© McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

15-2 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin LEARNING OBJECTIVES Learning Objectives What is supply chain management? How do supply chains add value? How does a supply chain work? How is a supply chain managed?

15-3 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Nicole Miller Retailer Nicole Miller Website

15-4 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Supply Chain Management

15-5 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Supply Chain, Marketing Channels, and Logistics are Related Marketing channelLogistics managementSimilar but different

15-6 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Supply Chains Add Value

15-7 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Supply Chains Streamline Distribution Reduce number of transactions Increase value for consumers More efficient and effective FedEx Commercial

15-8 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Supply Chain Management Affects Marketing Fulfilling delivery promisesMeeting customer expectationsReliant on an efficient supply chain

15-9 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. How does supply chain management add value? Check Yourself

15-10 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Information Flows

15-11 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Data Warehouse

15-12 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Electronic Data Interchange Advanced shipping notice Intranet ExtranetCPFR Vendor- Managed inventory

15-13 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Pull and Push Supply Chain Pull Orders based on sales data More accurate inventory Better when demand is uncertain Push Merchandise allocated based on forecast Does not need sophisticated IS system Good for steady demand items

15-14 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. What are the various supply chain links associated with each information flow step? 2. What is the difference between push and pull supply chains? Check Yourself

15-15 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Making Merchandise Flow

15-16 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin How does Dell’s Merchandise Flow

15-17 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Distribution Center vs. Direct Store Delivery What are the advantages of a distribution center?

15-18 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Distribution CenterDistribution Center Shipping to store Preparing to ship Getting Merchandise Floor Ready Storing and Cross-Docking Receiving and checking using UPC and RFID Management of inbound transportation ABC News Segment on a Walgreens Warehouse

15-19 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Inbound Transportation Dispatcher coordinates deliveries Manufacturer may pay transportation expenses or retailers may negotiate directly with trucking companies and pay expenses

15-20 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Receiving and Checking Receiving Arrival receipt Checking Undamaged Ordered = received Radio Frequency Distribution (RFID) Tags Container computer chips

15-21 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Storing and Cross-DockingCross-Docking TraditionalCross-dockingCombinations

15-22 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Getting Merchandise Floor-Ready Ticketing and marking Increasingly firms are forcing suppliers to ship floor ready merchandise

15-23 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Shipping Merchandise to Stores Shipping merchandise to stores is complex for multi-store chains Distribution centers use sophisticated routing and scheduling systems

15-24 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Inventory Management Through Just-In-Time Systems Just-In-Time Systems Just-in-time (JIT) Quick response (QR) Zappos Website

15-25 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Benefits of JIT Systems Reduced lead time Increased product availability and lower inventory investment

15-26 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. What happens at each step of the merchandise flow in a typical supply chain? 2. Why are just-in-time supply chain systems becoming so popular? Check Yourself

15-27 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Managing the Supply Chain Supply chain or channel conflict

15-28 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Managing Supply Chains Through Vertical Integration Independent or conventional supply chain

15-29 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Types of Vertical Marketing Systems Independent or conventional supply chain Administered vertical marketing system Contractual vertical marketing system Corporate vertical marketing system

15-30 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Managing Supply Chains Through Strategic Relationships Strategic Relationships Mutual Trust Open Communications Common Goals

15-31 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Relationship of supply chain members

15-32 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. What are the different types of vertical marketing systems? 2. How do firms develop strong strategic partnerships with their supply chain partners? Check Yourself

15-33 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Merchandise cartons that are cross-docked are prepackaged by the vendor for a specific store. Return to slide

15-34 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Manufacturers can ship merchandise either directly to a store or to a distribution center, where it is then shipped to the store. Return to slide

15-35 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Electronic data interchange (EDI) is the computer- to-computer exchange of business documents from a retailer to a vendor and back. Return to slide

15-36 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Just-in-time inventory systems are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems. Return to slide

15-37 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Return to slide

15-38 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary A strategic relationship or partnering relationship involves the supply chain members being committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial. Return to slide

15-39 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Supply chain management is a set of approaches and techniques firms employ to integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels that their customers require. Return to slide

15-40 © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Glossary Vendor-managed inventory (VMI) is an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores. Return to slide