McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. BUSINESS DRIVEN TECHNOLOGY Chapter Ten: Extending the Organization – Supply Chain Management

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved LEARNING OUTCOMES 10.1 List and describe the components of a typical supply chain 10.2 Define the relationship between decision making and supply chain management 10.3 Identify three of the factors driving supply chain management’s explosive growth 10.4 Summarize the best practices for implementing a successful supply chain management system

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER TEN OVERVIEW The average company spends nearly half of every dollar that it earns on production In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains Today, companies are focusing on all of the following to influence their supply chains: – Suppliers, assemblers, shipping/logistic firms, sales/marketing channels, third-party customers support firms, other business partners

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER TEN OVERVIEW The supply chain has three main links: 1.Materials flow from suppliers and their “upstream” suppliers at all levels 2.Transformation of materials into semifinished and finished products through the organization’s own production process 3.Distribution of products to customers and their “downstream” customers at all levels

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER TEN OVERVIEW Organizations must embrace technologies that can effectively manage and oversee their supply chains

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved SUPPLY CHAIN MANAGEMENT’S EXPLOSIVE GROWTH Top reasons why more and more executives are turning to SCM to manage their extended enterprises

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved SUPPLY CHAIN MANAGEMENT’S EXPLOSIVE GROWTH Five Factors Driving SCM’s Explosive Growth

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved USING SUPPLY CHAIN MANAGEMENT TO ENHANCE DECISION MAKING Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains DSSs allow managers to examine performance and relationships over the supply chain and among: – Suppliers – Manufacturers – Distributors – Other factors that optimize supply chain performance

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS 10-9

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS The following are the SCM industry best practices: 1.Make the sale to suppliers 2.Wean employees off traditional business practices 3.Ensure the SCM system supports the organizational goals 4.Deploy in incremental phases and measure and communicate success 5.Be future oriented

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved OPENING CASE STUDY QUESTIONS Revving Up Sales at Harley-Davidson 1.Describe how Harley-Davidson’s SCM system, Manugistics, might improve its business operations 2.Provide an illustration of Harley-Davidson’s SCM system including all upstream and downstream participants

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER TEN CASE BudNet Anheuser-Busch’s top-secret nationwide data network, BudNet, knows every time a six-pack moves off of a store shelf. Information is entered into BudNet nightly from several thousand Anheuser-Busch distributors and sales representatives Anheuser-Busch has made a deadly accurate science out of determining what beer lovers are buying, as well as when, where, and why

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved CHAPTER TEN CASE QUESTIONS 1.Describe how an SCM system can help a distributor such as Anheuser-Busch make its supply chain more effective and efficient 2.SCM is experiencing explosive growth. Explain why this statement is true using BudNet as an example 3.Evaluate BudNet’s effect on each of the five factors that are driving SCM success