2. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Supply Chain Management To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved.

3. Supply Chain All activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer All activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer A sequence of business activities from suppliers through customers that provide the products, services, and information to achieve customer satisfaction A sequence of business activities from suppliers through customers that provide the products, services, and information to achieve customer satisfaction

4. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Supply Chain

5. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Supply Chain Products and Services Customers Total satisfaction with quality, price, delivery, and service Distributors Package and delivery Inventory Producers Finished goods, end products and services Inventory Suppliers Materials, parts, sub- assemblies, and services Figure 7.1

6. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Supply Chain Information Products and Services Customers Total satisfaction with quality, price, delivery, and service Distributors Package and delivery Inventory Producers Finished goods, end products and services Inventory Suppliers Materials, parts, sub- assemblies, and services Figure 7.1

7. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Supply Chain Information Cash Products and Services Customers Total satisfaction with quality, price, delivery, and service Distributors Package and delivery Inventory Producers Finished goods, end products and services Inventory Suppliers Materials, parts, sub- assemblies, and services Figure 7.1

8. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Supply Chain Management Synchronization of activities required to achieve maximum competitive benefits Synchronization of activities required to achieve maximum competitive benefits Coordination, cooperation, and communication Coordination, cooperation, and communication Rapid flow of information Rapid flow of information Vertical integration Vertical integration

9. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Supply Chain Uncertainty Forecasting, lead times, batch ordering, price fluctuations, and inflated orders contribute to variability Forecasting, lead times, batch ordering, price fluctuations, and inflated orders contribute to variability Inventory is a form of insurance Inventory is a form of insurance Distorted information is one of the main causes of uncertainty Distorted information is one of the main causes of uncertainty

10. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Information in the Supply Chain Centralized coordination of information flows Centralized coordination of information flows Integration of transportation, distribution, ordering, and production Integration of transportation, distribution, ordering, and production Direct access to domestic and global transportation and distribution channels Direct access to domestic and global transportation and distribution channels Locating and tracking the movement of every item in the supply chain Locating and tracking the movement of every item in the supply chain

11. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Information in the Supply Chain Consolidation of purchasing from all suppliers Consolidation of purchasing from all suppliers Intercompany and intracompany information access Intercompany and intracompany information access Data interchange Data interchange Data acquisition at the point of origin and point of sale Data acquisition at the point of origin and point of sale Instantaneous updating of inventory levels Instantaneous updating of inventory levels

12. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Electronic Business Replacement of physical processes with electronic ones Replacement of physical processes with electronic ones Cost and price reductions Cost and price reductions Reduction or elimination of intermediaries Reduction or elimination of intermediaries Shortening transaction times for ordering and delivery Shortening transaction times for ordering and delivery Wider presence and increased visibility Wider presence and increased visibility

13. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Electronic Business Greater choices and more information for customers Greater choices and more information for customers Improved service Improved service Collection and analysis of customer data and preferences Collection and analysis of customer data and preferences Virtual companies with lower prices Virtual companies with lower prices Leveling the playing field for smaller companies Leveling the playing field for smaller companies Gain global access to markets & customers Gain global access to markets & customers

14. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Table 7.1 Supply Chain Evolution at Nabisco

15. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Electronic Data Interchange Computer-to-computer exchange of business documents in a standard format Computer-to-computer exchange of business documents in a standard format Quick access, better customer service, less paperwork, better communication, increased productivity, improved tracing and expediting, improves billing and cost efficiency Quick access, better customer service, less paperwork, better communication, increased productivity, improved tracing and expediting, improves billing and cost efficiency

16. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Bar Codes Computer readable codes attached to items flowing through the supply chain Computer readable codes attached to items flowing through the supply chain Generates point-of-sale data which is useful for determining sales trends, ordering, production scheduling, and deliver plans Generates point-of-sale data which is useful for determining sales trends, ordering, production scheduling, and deliver plans 1234 5678

17. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The Internet Instant global access to organizations, individuals, and information sources Instant global access to organizations, individuals, and information sources Fundamentally changes the way organizations do business Fundamentally changes the way organizations do business Removed geographic barriers Removed geographic barriers Adds speed and accessibility to the supply chain Adds speed and accessibility to the supply chain

18. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.2Build-to-Order Cars over the Internet

19. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The E-Automotive Supply Chain

20. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. The E-Automotive Supply Chain SUPPLY CHAIN PROCESSAUTOMOTIVE PASTE-AUTOMOTIVE Customer sales Push—sell from inventory Pull—Build-to-order Production Goal of even and stable production Focus on customer demand, respond with supply chain flexibility Distribution Mass approach Fast, reliable, and customized to get cars to specific customer location Customer relationships Dealer-owned Shared by dealers and manufacturers Managing uncertainty Large car inventory at dealers Small inventories with shared information and strategically placed parts inventories Procurement Batch-oriented; dealers order based on allocations Orders made in real time based on available-to-promise information Product design Complex products don’t match customer needs Simplified products based on better information about what customers want Table 7.2

21. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Intranets and Extranets Intranets are internet-like networks that operate within a single organization Intranets are internet-like networks that operate within a single organization Extranets are intranets that can be connected to the global internet Extranets are intranets that can be connected to the global internet Difference is in who has access to the system Difference is in who has access to the system

22. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. IT Issues Increased benefits and sophistication come with increased costs Increased benefits and sophistication come with increased costs Efficient web sites do not necessarily mean the rest of the supply chain will be as efficient Efficient web sites do not necessarily mean the rest of the supply chain will be as efficient Security problems are very real Security problems are very real Partnership and trust are important elements that may be new to business relationships Partnership and trust are important elements that may be new to business relationships

23. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Suppliers Purchased materials account for about half of manufacturing costs Purchased materials account for about half of manufacturing costs Materials, parts, and service must be delivered on time, of high quality, and low cost Materials, parts, and service must be delivered on time, of high quality, and low cost Suppliers should be integrated into their customers’ supply chains Suppliers should be integrated into their customers’ supply chains Partnerships should be established Partnerships should be established On-demand delivery (JIT) is a frequent requirement On-demand delivery (JIT) is a frequent requirement

24. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Sourcing Relationship between customers and suppliers focuses on collaboration and cooperation Relationship between customers and suppliers focuses on collaboration and cooperation Outsourcing has become a long-term strategic decision Outsourcing has become a long-term strategic decision Organizations focus on core competencies Organizations focus on core competencies Single-sourcing is increasingly a part of supplier relations Single-sourcing is increasingly a part of supplier relations

25. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. E-Procurement Business-to-business commerce conducted on the Internet Business-to-business commerce conducted on the Internet Benefits include lower transaction costs, lower prices, reduce clerical labor costs, and faster ordering and delivery times Benefits include lower transaction costs, lower prices, reduce clerical labor costs, and faster ordering and delivery times Currently used more for indirect goods Currently used more for indirect goods E-Marketplaces service industry-specific companies and suppliers E-Marketplaces service industry-specific companies and suppliers

26. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.3 The Wal-Mart Supply Chain

27. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.4 Centralized Supply at Honda America

28. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Distribution The actual movement of products and materials between locations The actual movement of products and materials between locations Handling of materials and products at receiving docks, storing products, packaging, and shipping Handling of materials and products at receiving docks, storing products, packaging, and shipping Often called logistics Often called logistics Driving force today is speed Driving force today is speed Particularly important for Internet dot-coms Particularly important for Internet dot-coms

29. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.5Order Fulfillment at Amazon.com

30. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Distribution Centers and Warehousing DCs are some of the largest business facilities in the United States DCs are some of the largest business facilities in the United States Trend is for more frequent orders in smaller quantities Trend is for more frequent orders in smaller quantities Flow-through facilities and automated material handling Flow-through facilities and automated material handling Final assembly and product configuration may be done at the DC Final assembly and product configuration may be done at the DC

31. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Warehouse Management Systems Highly automated systems Highly automated systems Controls item putaway, picking, packing, and shipping Controls item putaway, picking, packing, and shipping Transportation management, order management, yard management, labor management, warehouse optimization Transportation management, order management, yard management, labor management, warehouse optimization

32. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.6A WMS

33. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Vendor-Managed Inventory Manufacturers generate orders, not distributors Manufacturers generate orders, not distributors Stocking information is accessed using EDI Stocking information is accessed using EDI A first step towards supply chain collaboration A first step towards supply chain collaboration Increased speed, reduced errors, and improved service Increased speed, reduced errors, and improved service

34. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Collaborative Distribution and Outsourcing Collaborative planning, forecasting, and replenishment (CPFR) Collaborative planning, forecasting, and replenishment (CPFR) Internet-based exchange of data and information Internet-based exchange of data and information Significant decrease in inventory levels and more efficient logistics Significant decrease in inventory levels and more efficient logistics Companies focus on core competencies Companies focus on core competencies

35. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Transportation Important element, often overlooked Important element, often overlooked Common methods are railroads, trucking, water, air, intermodal, package carriers, and pipelines Common methods are railroads, trucking, water, air, intermodal, package carriers, and pipelines

36. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Railroads 150,000 miles in US 150,000 miles in US Low cost, high-volume Low cost, high-volume Improving flexibility Improving flexibility intermodal service intermodal service double stacking double stacking

37. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Most used mode in US Most used mode in US Flexible, small loads Flexible, small loads Consolidation, Internet load match sites Consolidation, Internet load match sites Part of TQM supplier-customer relationship Part of TQM supplier-customer relationship Single sourcing reduces number of trucking firms serving a company Single sourcing reduces number of trucking firms serving a company Trucking

38. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Air Rapidly growing segment of transportation industry Rapidly growing segment of transportation industry Lightweight, small items Lightweight, small items Quick, reliable, expensive Quick, reliable, expensive Major airlines and US Postal Service, UPS, FedEx, DHL Major airlines and US Postal Service, UPS, FedEx, DHL

39. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Package Carriers FedEx, UPS, US Postal Service, DHL FedEx, UPS, US Postal Service, DHL Significant growth driven by e-businesses Significant growth driven by e-businesses Use several modes of transportation Use several modes of transportation Expensive Expensive Fast and reliable Fast and reliable Innovative use of technologies Innovative use of technologies

40. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Intermodal Combination of several modes of transportation Combination of several modes of transportation Most common are truck/rail/truck and truck/water/rail/truck Most common are truck/rail/truck and truck/water/rail/truck Enabled by the use of containers Enabled by the use of containers

41. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Water One of oldest means of transport One of oldest means of transport Low-cost, high-volume, slow Low-cost, high-volume, slow Bulky, heavy and/or large items Bulky, heavy and/or large items Standardized shipping containers improve service Standardized shipping containers improve service The most common form of international shipping The most common form of international shipping

42. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Pipelines Primarily for oil & refined oil products Primarily for oil & refined oil products Slurry lines carry coal or kaolin Slurry lines carry coal or kaolin High capital investment High capital investment Low operating costs Low operating costs Can cross difficult terrain Can cross difficult terrain

43. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Internet Transportation Exchanges Bring together shippers and carriers Bring together shippers and carriers Initial contact, negotiations, auctions Initial contact, negotiations, auctions Typically only one form of transportation, intermodal exchanges have been difficult to develop Typically only one form of transportation, intermodal exchanges have been difficult to develop

44. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Figure 7.8Linking the Supply Chain with SAP

45. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Global Supply Chain Free trade & global opportunities Free trade & global opportunities Nations form trading groups Nations form trading groups No tariffs or duties No tariffs or duties Freely transport goods across borders Freely transport goods across borders

46. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Global Supply Chain Problems National and regional differences National and regional differences Customs, business practices, and regulations Customs, business practices, and regulations Foreign markets are not homogeneous Foreign markets are not homogeneous Quality can be a major issue Quality can be a major issue

47. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Duties and Tariffs Proliferation of trade agreements Proliferation of trade agreements Group members charge uniform tariffs Group members charge uniform tariffs Member nations have a competitive advantage within the group Member nations have a competitive advantage within the group

48. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Landed Cost and Internet- Based ITL Systems Knowing landed cost is critical in international trade Knowing landed cost is critical in international trade Common components are transportation charges, tariffs, duties, and taxes Common components are transportation charges, tariffs, duties, and taxes ITL systems convert language and currency between trading partners ITL systems convert language and currency between trading partners

49. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Infrastructure Obstacles to Global Trade Some emerging markets lack suitable distribution systems, i.e. roads, rail systems Some emerging markets lack suitable distribution systems, i.e. roads, rail systems Existing roads and ports may be inadequate Existing roads and ports may be inadequate Market instability, political instability Market instability, political instability Vertical integration is a common solution Vertical integration is a common solution