The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer
Supply Chain Management
The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities
Supply Chain Management
Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer
Firm gained synergy as a vertically integrated firm encompassing the ownership and coordination of several supply chain activities. Organizational cultures emphasized short-term, company focused performance.
•Firm in a supply chain focuses activities in its area of specialization and enters into voluntary and trust-based relationships with supplier and customer firms.–All participants in the supply chain benefit. –Boundaries are dynamic and extend from “the firm’s suppliers’ suppliers to its customers’ customers (i.e., second tier suppliers and customers).” –Supply chains now deal with reverse logistics to handle returned products, warranty repairs, and recycling.
Strategy is the basis from which a consistent allocation of resources is made to achieve some objective.
Strategic Thinking: Traditional View
1.What is our business? –Who are our customers? –What is the real value that we offer them? 2.How can we do it better than anyone else? –Unique organizational capabilities –Almost always process based
Supply Chain Strategy
•Seeks to leverage the resources and skills of diverse companies in the supply chain to deliver exceptional value to the end customer.
–How the capabilities of other chain members can be used to create value for the end customer
–How their own strategy and actions impact the ability of the supply chainto create value for the end customer
Supply Chain Strategy
Rather than “What is our business?” the SC strategist inquires: •What is the overall supply chain’s value proposition? •How does our company uniquely help the chain deliver on its value proposition?
SC strategist asks
•What valued capabilities do other members of the chain possess? •How can we bring these complementary competencies together in a way customers value? •What type of relationships should we maintain with other members of the supply chain? •Are any customer-valued competencies missing? If so, who is best positioned to develop them? •How much of the value-added process should we control?
Supply chains in a global environment must be able to
•React to sudden changes in parts availability, distribution, or shipping channels, import duties, and currency rates •Use the latest computer and transmission technologies to schedule and manage the shipment of parts in and finished products out •Staff with local specialists who handle duties, freight, customs and political issues
The Bullwhip Effect
•Variation in demand is exaggerated as information moves upstream away from the point of use. ••Variation in demand is exaggerated due to infrequent demand and/or inventory level information exchange and order batching.
Bullwhip can be effectively mitigated
–Sharing point of sale data –Collaborative forecasting–Collaborative future product promotion planning
–Provide support for the essential elements of various services the firm delivers
–Control inventory by managing the flows of materials–Suppliers identified by position in supply chain – “tiers” Suppliers and Customers
Internal Process Integration
: increase collaboration among the company’s functional groups.
Backward Process Integration
collaboration with 1st-tier and 2nd-tier (leading companies) suppliers.
Forward Process Integration
collaboration with 1st-tier customers.
•collaboration from the “suppliers’ supplier to the customers’ customer.”
Important activities include determining
1.Transportation vendors 2.Credit and cash transfers 3.Suppliers 4.Distributors 5.Accounts payable and receivable 6.Warehousing and Inventory 7.Order fulfillment 8.Sharing customer, forecasting, and production information
Supply Chain Strategy Framework
Step 1 - The firm’s suppliers are classified as belonging either to the innovative or functional category. Step 2 - The goals & strategies of the inbound portion of the supply chain are developed. Step 3 - Supply chain capabilities are evaluated & compared to required performance. Step 4 - Set goals for improving capabilities. Step 5 - Implement work plan. Step 6 - Monitor progress & adjust the work plans.
Reasons for Making
1.Maintain core competence 2.Lower production cost 3.Unsuitable suppliers 4.Assure adequate supply (quantity or delivery) 5.Utilize surplus labor or facilities 6.Obtain desired quality 7.Remove supplier collusion8.Obtain unique item that would entail a prohibitive commitment for a supplier 9.Protect personnel from a layoff 10.Protect proprietary or quality 11.Increase or maintain size of company
Reasons for Buying
1.Frees management to deal with its core competence 2.Lower acquisition cost 3.Preserve supplier commitment 4.Obtain technical or management ability 5.Inadequate capacity 6.Reduce inventory costs 7.Ensure alternative sources 8.Inadequate managerial or technical resources 9.Reciprocity 10.Item is protected by a patent or trade secret
Want to see the other 23 Flashcards in Chapter 9 Flashcards ?JOIN TODAY FOR FREE!