Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 14 Supply Chain Management © Adam Duckworth/Alamy

Define the terms supply chain and supply chain management, and discuss the benefits of supply chain management Discuss the concept of supply chain integration and explain why each of the six types of integration is important Identify the eight key processes of excellent supply chain management and discuss how each of these processes affects the end customer Learning Outcomes 12 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains Discuss new technology and emerging trends in supply chain management Learning Outcomes 4 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

Define the terms supply chain and supply chain management, and discuss the benefits of supply chain management Supply Chains and Supply Chain Management 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 4

Supply Chains Supply Chain The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 5

Supply Chains Supply Chain Management Supply Chain Management 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 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 6

Supply Chain Managers The philosophy behind supply chain management is that by visualizing the entire supply chain, supply chain managers can maximize strengths and efficiencies at each level of the process to create a highly competitive, customer-driven supply system that is able to respond immediately to changes in supply and demand. 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 7

Supply Chain Management Physical flow process that engineers the movement of goods Physical flow process that engineers the movement of goods Communicator of customer demand from point of sale to supplier Communicator of customer demand from point of sale to supplier 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 8

Benefits of Supply Chain Management Supply chain oriented companies commonly report: Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased performance and profitability 1 © 2013 by Cengage Learning Inc. All Rights Reserved. 9

Discuss the concept of supply chain integration and explain why each of the six types of integration is important Supply Chain Integration 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 10

Supply Chain Integration 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 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 11

Supply Chain Integration Relationship Integration Relationship Integration The ability of two or more companies to develop social connections that serve to guide their interactions when working together. The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals Measurement Integration 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 12

Supply Chain Integration Technology and planning integration The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain Material and service supplier integration Requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline processes and provide quality customer experiences. 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 13

Internal Operations Integration Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements A competency that enables firms to offer long-lasting, distinctive, value- added offerings to those customers who represent the greatest value to the firm or supply chain Customer Integration Supply Chain Integration 2 © 2013 by Cengage Learning Inc. All Rights Reserved. 14

Identify the eight key processes of excellent supply chain management and discuss how each of these processes impacts the end customer Key Processes of Supply Chain Management 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 15

Key Business Processes 1.Customer relationship management 2.Customer service management 3.Demand management 4.Order fulfillment 5.Manufacturing flow management 6.Supplier relationship management 7.Product development and commercialization 8.Returns management 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 16

Customer Relationship Management Customer Relationship Management (CRM) Process Customer Relationship Management (CRM) Process Allows companies to prioritize their marketing focus on different customer groups according to each group’s long-term value to the company or supply chain 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 17

Customer Service Management Customer Service Management Process Customer Service Management Process Presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 18

Demand Management Demand Management Process Demand Management Process Seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 19

Order Fulfillment Order Fulfillment Process Order Fulfillment Process a highly integrated process, often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 20

Manufacturing Flow Management Manufacturing Flow Management Process Manufacturing Flow Management Process Concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 21

Supplier Relationship Management Supplier Relationship Management Process Supplier Relationship Management Process Supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 22

Product Development and Commercialization Product Development and Commercialization Process Product Development and Commercialization Process Includes the group activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 23

Returns Management Returns Management Process Returns Management Process Enables firms to manage volumes of returned product efficiently, while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain 3 © 2013 by Cengage Learning Inc. All Rights Reserved. 24

Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains Managing the Logistical Components of the Supply Chain 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 25

the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. Logistics is… Logistics 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 26

Logistical Components of the Supply Chain Supply Chain Team Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 27

Sourcing and Procurement  Plan purchasing strategies  Develop specifications  Select suppliers  Negotiate price and service levels  Reduce costs The Role of Purchasing: © iStockphoto.com/Maria Toutoudaki 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 28

Production Scheduling Push / Pull Strategy Traditional Focus Push Start of Production Manufacturing Inventory- Based Mass Production Customer Focus Pull Customer-Order Based Mass Customization 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 29

Just-in-Time Manufacturing A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials at the precise time they are needed on the production line. JIT 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 30

Benefits of JIT  For manufacturers: reduces raw material inventories; immediate shipping of products  For suppliers: daily or hourly deliveries rather than weekly  For customers: lower costs; shorter lead times; products tailored to customer needs 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 31

Order processing is becoming more automated through the use of computer technology known as ELECTRONIC DATA INTERCHANGE (EDI). a system whereby orders are entered into the supply chain and filled. 4 An Order Processing System is… © 2013 by Cengage Learning Inc. All Rights Reserved. 32

Inventory Control 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 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 33

Inventory Control Tools for managing inventory include:  materials requirement planning (MRP) or materials management – supplier to manufacturer  distribution resource planning (DRP) – manufacturer to end user  automatic replenishment programs – minimal forecasting 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 34

Warehousing and Materials Handling Most manufacturers today have moved to AUTOMATED materials-handling systems to minimize the amount of handling. 4 Materials- Handling System a method of moving inventory into, within, and out of the warehouse. © 2013 by Cengage Learning Inc. All Rights Reserved. 35

Transportation Airways Water Pipelines Motor Carriers Railroads 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 36

Transportation Mode Choice  Cost  Transit time  Reliability  Capability  Accessibility  Traceability 4 © 2013 by Cengage Learning Inc. All Rights Reserved. 37

Exhibit 14.1 Criteria for Ranking Modes of Transportation © 2013 by Cengage Learning Inc. All Rights Reserved. 38

Discuss new technology and emerging trends in supply chain management Trends in Supply Chain Management 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 39

Trends in Supply Chain Management 5 Electronic distribution Outsourcing of logistics functions Advanced computer technology Green Supply Chain management © 2013 by Cengage Learning Inc. All Rights Reserved. 40

Advanced Computer Technology Automatic identification systems Bar coding Radio frequency technology Communications technology Supply chain software systems 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 41

Outsourcing Logistics Functions Outsourcing Benefits  Reduce inventories  Locate stock at fewer plants and distribution centers  Provide same or better levels of service 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 42

Electronic Distribution a distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber- optic cable or through satellite transmission of electronic signals. 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 43

Green Supply Chain Management Requires integrating green thinking into all phases of the supply chain –Green materials sourcing –Environmental impact of packaging, shipment, use –Incorporate end-of-life management Recycling Clean disposal 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 44

Global Logistics and Supply Chain Management Logistical challenges of global markets: Understanding and coping with the legalities of trade in other countries Uncertainty regarding shipping 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 45

Chapter 14 Video Recycline Recycline faces challenges in making an impact with its products in new mass market spaces. By working with its suppliers through technological advances, Recycline is able to speed up and stock its products for large new customers like Walmart. ent/ _lamb/videos/ch14.html © 2013 by Cengage Learning Inc. All Rights Reserved. 46