1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 14 Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10 Supply Chain Management

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chains 2 Supply Chain LO I The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chains 3 Supply Chain Management Supply Chain Management LO I A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chains 4 LO I

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chain Managers 5 LO I Supply chain managers are responsible for  Making strategic decisions  Management of information through supply chain  Coordinating relationships between company and external partners

Copyright ©2009 by Cengage Learning Inc. All rights reserved Benefits of Supply Chain Management 6 LO I Supply chain oriented companies commonly report: Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased profitability

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chain Integration 7 LO 2 Material and service supplier Integration Internal Operations Integration Customer Integration Relationship Integration Measurement Integration Technology and planning Integration Firm-to-Firm Social Interactions Operational Planning and Control Customer Integration

Copyright ©2009 by Cengage Learning Inc. All rights reserved Key Processes 8 LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Customer Relationship Management 9 LO 3 Customer Relationship Management Process Customer Relationship Management Process The prioritization of a firm’s marketing focus on different customer groups according to each group’s long-term value to the company or supply chain; designed to identify and build relationships with good customers.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Customer Service Management 10 LO 3 Customer Service Management Process Customer Service Management Process A multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; designed to ensure that customer relationships remain strong.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Demand Management 11 LO 3 Demand Management Process Demand Management Process The alignment of supply and demand throughout the supply chain to anticipate customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Order Fulfillment 12 LO 3 Order Fulfillment Process Order Fulfillment Process A supply chain management process that involves generating, filling, delivering, and providing on-the-spot service for customer orders.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Manufacturing Flow Management 13 LO 3 Manufacturing Flow Management Process Manufacturing Flow Management Process A process that ensures that firms in the supply chain have the resources they need

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supplier Relationship Management 14 LO 3 Supplier Relationship Management Process Supplier Relationship Management Process A supply chain management process that supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers

Copyright ©2009 by Cengage Learning Inc. All rights reserved Returns Management 15 LO 3 Returns Management Process Returns Management Process A process that enables firms to manage volumes of returned product efficiently, while minimizing costs and maximizing the value of the returned assets to the firms in the supply chain.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chain Management 16 LO 4 Lean Supply Chain Management Lean Supply Chain Management Agile Supply Chain Management Agile Supply Chain Management The strategy that focuses primarily on the removal of waste from the supply chain to achieve the lowest total cost to the members of the supply chain system The supply chain strategy that focuses primarily on the ability of the firm to fulfill customer demand, even if this means somewhat higher costs The supply chain strategy that focuses primarily on the ability of the firm to fulfill customer demand, even if this means somewhat higher costs

Copyright ©2009 by Cengage Learning Inc. All rights reserved Mapping The Supply Chain 17 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Logistical Components of the Supply Chain 18 LO 5 Supply Chain Team Sourcing & Procurement Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System

Copyright ©2009 by Cengage Learning Inc. All rights reserved Sourcing and Procurement Plan purchasing strategies Develop specifications Select suppliers Negotiate price and service levels Reduce costs 19 LO 5 The Role of Purchasing:

Copyright ©2009 by Cengage Learning Inc. All rights reserved Order Processing 20 Electronic Data Interchange LO 5 Information technology that replaces paper documents that accompany business transactions with electronic transmission of the information. Online

Copyright ©2009 by Cengage Learning Inc. All rights reserved Inventory Management and Control 21 LO 5 Inventory Control System Inventory Control System A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Inventory Management and Control 22 LO 5 Materials Requirement Planning (MRP) Materials Requirement Planning (MRP) An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer. Distribution Resource Planning (DRP) Distribution Resource Planning (DRP) An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Inventory Replenishment Example 23 LO 5 MRP Sleep Right Mattress Retail Store Sleep Right Mattress Retail Store Sleep Right Distribution Center ABC Mattress Wholesaling Company Great Mattress Company Great Mattress Company

Copyright ©2009 by Cengage Learning Inc. All rights reserved Materials Handling Functions 24 LO 5 Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods

Copyright ©2009 by Cengage Learning Inc. All rights reserved Transportation 25 LO 5 Airways Water Pipelines Motor Carriers Railroads

Copyright ©2009 by Cengage Learning Inc. All rights reserved Transportation Mode Choice 26 LO 5  Cost  Transit time  Reliability  Capability  Accessibility  Traceability

Copyright ©2009 by Cengage Learning Inc. All rights reserved Supply Chain Performance Measurement 27 LO 6 A good metric is characterized by five qualities: Creates understanding of strategic objectives and tactical plans Promotes behaviors that are consistent with achieving these objectives Allows for recording of actual results/outcomes Allows companies to compare themselves to competitors and customer expectations Motivates continuous improvement

Copyright ©2009 by Cengage Learning Inc. All rights reserved Trends in Supply Chain Management 28 LO 7 Electronic distribution Outsourcing of logistics functions Advanced computer technology Globalization of supply chain management Outsourcing of logistics functions

Copyright ©2009 by Cengage Learning Inc. All rights reserved Advanced Computer Technology Automatic identification systems –Bar coding –Radio frequency technology Communications technology Supply chain software systems 29 LO 7

Copyright ©2009 by Cengage Learning Inc. All rights reserved Outsourcing Logistics Functions Reduce inventories Locate stock at fewer plants and distribution centers Provide same or better levels of service 30 Outsourcing Benefits LO 7