1. 1 Lamb, Hair, McDaniel CHAPTER 14 Supply Chain Management 2010-2011

2. 2 LO 1 Define the terms supply chain, supply chain management, and supply chain orientation, and discuss the benefits of supply chain management LO 2 Discuss the concept of supply chain integration and explain why each of the six types of integration is important LO 3 Identify the eight key processes for excellent supply chain management and discuss how each of these processes impacts the end customer Learning Outcomes

3. 3 LO 4 Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains LO 5 Discuss new technology and emerging trends in supply chain management. Learning Outcomes

4. 4 Supply Chains and Supply Chain Management 4 Define the terms supply chain, supply chain management, and supply chain orientation, and discuss the benefits of supply chain management LO 1

5. 5 Supply Chains 5 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 LO 1

6. 6 Supply Chains 6 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 LO 1

7. 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 LO 1

8. 8 Supply Chains 8 LO 1

9. 9 Supply Chain Managers 9 Supply chain managers are responsible for :  Making strategic decisions  Management of information through supply chain  Coordinating relationships between company and external partners LO 1

10. 10 Benefits of Supply Chain Management 10 Supply chain oriented companies commonly report: Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased profitability LO 1

11. 11 Supply Chain Integration 11 Discuss the concept of supply chain integration and explain why each of the six types of integration is important LO 2

12. 12 Supply Chain Integration 12 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 LO 2

13. 13 Supply Chain Integration 13 Relationship Integration Relationship Integration The ability of two or more companies to develop social connections that serve to guide their interactions when working together. Role Specificity Role Specificity When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which firms are the followers, and which responsibilities are assigned to each firm. LO 2

14. 14 Measurement Integration 14 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 Technology and planning integration The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain LO 2

15. 15 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 LO 2 Internal Operations Integration

16. 16 Key Processes of Supply Chain Management 16 Identify eight key processes of excellent supply chain management, and discuss how each of these processes impacts the end customer LO 3

17. 17 Key Processes 17 LO 3

18. 18 Customer Relationship Management 18 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. LO 3

19. 19 Customer Service Management 19 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. LO 3

20. 20 Demand Management 20 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. LO 3

21. 21 Order Fulfillment 21 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. LO 3

22. 22 Manufacturing Flow Management 22 Manufacturing Flow Management Process Manufacturing Flow Management Process A process that ensures that firms in the supply chain have the resources they need LO 3

23. 23 Supplier Relationship Management 23 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 LO 3

24. 24 Product Development and Commercialization 24 Product Development and Commercialization Process Product Development and Commercialization Process The group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms. LO 3

25. 25 Returns Management 25 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. LO 3

26. 26 Key Processes of Supply Chain Management 26 LO 3

27. 27 Managing Logistical Components 27 Describe the logistical components of the supply chain LO 4

28. 28 Logistical Components of the Supply Chain Supply Chain Team Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System LO 4

29. 29 Sourcing and Procurement  Plan purchasing strategies  Develop specifications  Select suppliers  Negotiate price and service levels  Reduce costs The Role of Purchasing: LO 4

30. 30 Production Scheduling Push / Pull Strategy Traditional Focus Push Start of Production Manufacturing Inventory- Based Mass Production Customer Focus Pull Customer-Order Based Mass Customization LO 4

31. 31 Just-in-Time Manufacturing A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line. JIT LO 4

32. 32 Benefits of JIT  Reduces raw material inventories  Shortens lead times  Creates better supplier relationships  Reduces production and storeroom costs  Reduces paperwork LO 4

33. 33 Materials Handling Functions Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods LO 4

34. 34 Transportation Airways Water Pipelines Motor Carriers Railroads LO 4

35. 35 JIT Requirements Receive high-quality parts Meet supplier delivery commitments Have a crisis management plan LO 4

36. 36 Order Processing Information technology that replaces paper documents that accompany business transactions with electronic transmission of the information. Electronic Data Interchange http://www.walmartstores.com Online LO 4

37. 37 Order Processing A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand. Inventory Control System Inventory Control System LO 4

38. 38 Order Processing 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. 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. An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer. LO 4

39. 39 Materials Handling Functions Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods LO 4

40. 40 Transportation Airways Water Pipelines Motor Carriers Railroads LO 4

41. 41 Transportation Mode Choice 41  Cost  Transit time  Reliability  Capability  Accessibility  Traceability LO 4

42. 42 Criteria for Ranking Modes of Transportation 42 Relative Cost Transit Time Reliability Capability Accessibility Traceability HighestLowest Air WaterPipeRailTruck WaterRailPipeTruckAir PipeTruckRailAirWater Truck RailTruckAirPipe RailAirWaterPipe AirTruckRailWaterPipe LO 4

43. 43 Trends in Supply Chain Management 43 Discuss new technology and emerging trends in supply chain management LO 5

44. 44 Trends in Supply Chain Management 44 Electronic distribution Outsourcing of logistics functions Advanced computer technology Globalization of supply chain management Outsourcing of logistics functions LO 5

45. 45 Trends in Supply Chain Management Electronic distribution Outsourcing of logistics functions Advanced computer technology LO 5

46. 46 Advanced Computer Technology  Automatic identification systems - Bar coding - Radio frequency technology  Communications technology  Supply chain software systems LO 5

47. 47 Outsourcing Logistics Functions Outsourcing Benefits  Reduce inventories  Locate stock at fewer plants and distribution centers  Provide same or better levels of service LO 5

48. 48 Green Supply Chain Management Requires integrating green thinking into all aspects of the supply chain –Green materials sourcing –Environmental impact of packaging, shipment, use –Incorporate end of life management Recycling Clean disposal LO 5

49. 49 AMR Research Healthcare Top 25 Ranked based on building supply chain excellence and innovation to drive business results in demand-driven supply chains 1. Johnson & Johnson 2. Sisters of Mercy 3. Cardinal Health 4. Owens & Minor 5. McKesson 6. CVS Caremark 7. Abbott 8. Novartis 9. BD (Becton, Dickinson) 10. Wyeth 11. GlaxoSmithKline 12. AstraZeneca 13. AmerisourceBergen 14. Walgreens 15. Covidien 16. Cleveland Clinic 17. Merck 18. Genentech 19. Alcon Laboratories 20. Medtronic 21. Boston Scientific 22. BJC HealthCare 23. Roche 24. Amgen 25. Mayo Clinic Source: http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-49119http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-49119 LO 5