1. CHAPTER 10 Supply Chain Management

2. a coordinated system of entities, activities, information and resources involved in moving a product or service from supplier to customer

3. a network of organizations and facilities that transforms raw materials into products delivered to customers The supply chain also includes transportation companies, warehouses, and inventories and some means for transmitting messages and information among the organizations involved

4. Dell’s own channel for manufacturing and selling eliminated distributors and retailers

5. Michael Dell decides to Sell PCs Directly to Consumers and Built-to-Order Dell’s own channel for manufacturing and selling PCs eliminated the reseller markups and large inventory expenses

6. 6 Learning Outcomes List and describe the components of a typical supply chain Define the relationship between decision making and supply chain management Identify three of the factors driving supply chain management’s explosive growth Summarize the best practices for implementing a successful supply chain management system

7. 7 Overview The average company spends nearly half of every dollar that it earns on production In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains Today, companies are focusing on all of the following to influence their supply chains: Suppliers, assemblers, shipping/logistic firms, sales/marketing channels, third-party customers support firms, other business partners

8. 8 Overview The supply chain has three main links: 1. Materials flow from suppliers and their “upstream” suppliers at all levels 2. Transformation of materials into semifinished and finished products through the organization’s own production process 3. Distribution of products to customers and their “downstream” customers at all levels

10. Traditional SCM thinking involved “I buy from my suppliers, I sell to my customers.” Today, organizations are realizing the tremendous value they can gain from having visibility throughout their supply chain Best Buy checks inventory levels at each of its 750 stores across North America as often as every half-hour

11. The bullwhip effect is a phenomenon in which the variability In the size and timing of orders increase at each stage up the supply chain, from customer to supplier

12. 12 The Bullwhip Effect (continued) One way to eliminate the bullwhip effect is to give all participants in the supply chain access to consumer- demand information from the retailer. Each organization can thus plan its inventory or manufacturing based on true demand and not on the observed demand from the next organization up in the supply chain. An interorganizational information system is necessary to share such data.

13. SCM’s Growth

14. Five Factors Driving SCM’s Explosive Growth

15. 15 Using SCM to Enhancing Decision Making Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains DSSs allow managers to examine performance and relationships over the supply chain and among: Suppliers Manufacturers Distributors Other factors that optimize supply chain performance

17. 17 The SCM industry best practices 1. Make the sale to suppliers 2. Wean employees off traditional business practices 3. Ensure the SCM system supports the organizational goals 4. Deploy in incremental phases and measure and communicate success 5. Be future oriented

18. 18 BudNet Anheuser-Busch’s top-secret nationwide data network, BudNet, knows every time a six- pack moves off of a store shelf. Information is entered into BudNet nightly from several thousand Anheuser-Busch distributors and sales representatives Anheuser-Busch has made a deadly accurate science out of determining what beer lovers are buying, as well as when, where, and why

19. 19 Case Questions 1. Describe how an SCM system can help a distributor such as Anheuser-Busch make its supply chain more effective and efficient 2. SCM is experiencing explosive growth. Explain why this statement is true using BudNet as an example 3. Evaluate BudNet’s effect on each of the five factors that are driving SCM success