1. What is Supply Chain Management? Know, Develop, and Exploit Your Strengths Peter Drucker The Goal: to meet customers needs better than the competition!!! Success depends on managing processes capable of making & delivering the innovative, high-quality, low-cost products & services that customers demand. Most companies cannot do this on their own. The bar is too high!!! Therefore, they emphasize their strengths & leverage complementary capabilities of other supply chain members. SCM is the theory of comparative advantage applied at the company level.

2. What is Supply Chain Management? “Suppliers’ suppliers to customers’ customers” Focal Firm 1 st -Tier 2 nd -Tier 1 st -Tier 2 nd -Tier 3 rd -Tier Physical GoodsPhysical Goods IformationIformation

3. What is Supply Chain Management? UpstreamDownstreamFocal Firm 1 st Tier2 nd Tier3 rd Tier4 th Tier 3 rd Tier2 nd Tier1 st Tier General Contractor Cement Contractor Sand/Rock Quarry Framing Contractor Temporary Labor Mattress Supplier Lumber Provider Mill Food Services Business Traveler Leisure Traveler Hotel Brand Hotel Brand Hotel Brand Grocery Distributor Retail Grocer Consumer Flour Processor Farmer Corrugated Manufacturer Lumber Provider Forest Polyethylene Bag Manufacturer Chemical Processor Oil Company Hotel Management Company Cereal Manufacturer

4. What is Supply Chain Management? Upstream Suppliers Downstream Customers A Company’s Internal Value Chain Executive Management R&D Marketing Information Technology Finance Supply Management Human Resources Operations Accounting Logistics A supply chain consists of a series of linked value chains. Focal Firm Customer Customer’s Customer Supplier Supplier’s Supplier

5. Supply Chain Leaders...... are relentlessly customer centric.... recognize inter-firm collaboration as critical.... focus on processes rather than functions.... view open communication as a must.... factor people into every decision.... invest in information technology as an enabler.... are obsessed with performance measurement.

6. What is Supply Chain Management? Supply Chain Management is the design and management of seammless, value- added processes across organizational boundaries to meet the real needs of the end customer. The development and integration of people and technological resources are critical to successful supply chain integration. Institute for Supply Management

7. What is Supply Chain Management? Achieving World-class Supply Chain Alignment: Benefits, Barriers, & Bridges Supply Chain Management is...... an Attitude... a Culture... a Mindset... a Philosophy that promotes the building of a world-class SC TEAM through the selection of the RIGHT players & the establishment of the Right relationships. Great TEAMS consist of outstanding players & achieve true chemistry. Chemistry: a common vision, an understanding of individual roles, an ability to work together, & a willingness to adjust & adapt in order to create superior value.

8. What is Supply Chain Management? The Supply Chain Council Plan DeliverMakeReturnSource

9. What is Supply Chain Management? Deliver SourceDeliverMake Return Suppliers’ Supplier Your Company Customer Customers’ Customer SourceDeliverMake Return SourceDeliverMake Return Source Plan DeliverMake Return Source

10. Maturity of Supply-Chain Practice Time, Experience, & Integration Capability Stage 1: Functional Focus Discrete processes & data flows documented & understood. Resources managed at the department level & performance measured at functional level. Stage 2: Internal Integration Company-wide process model continuously measured at the company, process, & diagnostic levels. Resources managed at both functional & cross- functional levels. Stage 3: External Integration Strategic partners throughout the global supply chain collaborate to: Identify joint business objectives & action plans. Enforce common processes & data sharing. Define, monitor, & react to performance metrics. Stage 4: Cross-Enterprise Collaboration It and e-Business solutions enable a collaborative supply- chain strategy that: Aligns participating companies’ business objectives & associated processes. Results in real-time planning, decision making, & execution of supply chain responses to customer requirements.

11. Maturity of Supply-Chain Practice Stages of Operational Capability Stage 1Stage 2Stage 3Stage 4 FunctionalInternalExternalCross-Enterprise FocusIntegrationIntegrationCollaboration Plan Strategy Demand Planning Supply Planning Demand/Supply Balancing Source Strategy Commodity & Process Management Supplier Development/Management Organization & Infrastructure Make Manufacturing Strategy Production Scheduling Material Issue, Move & Tracking Manufacturing Process Control Deliver Enable Order Entry & Scheduling Warehousing, Transportation & Delivery Invoicing & Cash Collection Overall Supply Chain Strategy Supply Chain Performance Mgmt Supply Chain Processes Supply Chain Organization Dominant PracticeEmerging Practice

12. Superior SC competence doesn't require complete end-to- end integration, but it does require a changed mindset. Supply Chain Management In Practice The 4 X 100 X 400 Relay Managing the 2nd-tier is a 1st-tier responsibility. The focus is on the handoff. There is no coach to teach or encourage. The difference between victory & defeat is technique.

13. Why Supply Chain Management Now? Who is really in charge? Can we trust other supply chain members not to take advantage of us? How is our role going to change in the new, integrated supply chain environment? Isn’t SCM going to reduce our operating flexibility? How am I going to develop the skills needed for success in the new “team” environment? What happens if we choose the wrong supply chain partners? How are we going to measure who adds what value? How are we going to share risks and rewards among the supply chain members? What does SCM really mean for our bottom line performance? Why should I be concerned about how somebody else does business? Where are we supposed to get the money to pay the added cost of doing things differently? Who are the best partners to align our competitive efforts with? What do we need to do to form linkages with these key “partners”? How many different supply chains can we work with effectively? How do we manage our relationships with supply chain partners who are also competitors? SCM creates organizational vulnerability & inertia. Emotionally charged questions arise:

14. Strategy in Today’s Supply Chain World The Greek verb stratego means, Contingency Theory: EnvironmentStrategy Performance Industrial Organization Theory: 5 Forces Model Buyer PowerSupplier Power Rivalry SubstitutesPotential Entrants The Firm Resource-Based Theory:... “to plan the destruction of one's enemies through the effective use of resources.”

15. Strategic Management Concept ? How do we get there? ? ? Where do we want to be? Where are we? Strategy Directs, Focuses, Guides managers as they evaluate the firm’s competitive position in a dynamic marketplace and utilize resources to achieve the critical objectives of customer value and profitability. Feedback Environment ResourcesObjectives

16. Strategic Management Worksheet What are the 3 to 5 forces driving change in your industry? How do they affect decision-making now; i.e., TODAY! TOMORROW? Have you planned for them? (Does everybody know about them?) What are you specific responses to each driving force? Who is accountable? What metrics are in place? What resources do you need? Are they in place? Have you prioritized? What are your firm's 3 most important customer-oriented objectives? What are your firm's core resources? What are you doing to develop them? How well does your feedback system collect, manipulate, & disseminate information regarding... the environmental imperatives? performance vis-a-vis each customer oriented objective? From the customer viewpoint? the development and capability of each critical resource? Have you prioritized?