Chapter 10 : Extending the Organization – Supply Chain Management

Supply Chain Management :

1) The average company spends nearly half of every dollar that it earns on production

2) In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains

Basics of Supply Chain :

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

Organizations must embrace technologies that can effectively manage supply chains





PLAN

1)Aim:plan for managing all the resources that go toward meeting customer demand for products or services.

2)Activity: develope a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers.

SOURCE

Aims:
choose reliable suppliers that will deliver goods and services required for making products.
develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving the relationships.

MAKE

Activity: include scheduling the activities necessary for production, testing, packaging, and preparing for delivery.

DELIVER

commonly referred to as logistics.
Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers.
Activity: companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.

RETURN

Activity: create a network for receiving defective and excess products and support customers who have problems with delivered products.

Information Technology’s Role in the Supply Chain:

IT’s primary role is to create integrations or tight process and information linkages between functions within a firm





Visibility

1)Supply chain visibility – the ability to view all areas up and down the supply chain

2)Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain

Consumer Behavior

1)Companies can respond faster and more effectively to consumer demands through supply chain enhances

2)Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

Competition

1)Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain

2)Supply chain execution (SCE) software – automates the different steps and stages of the supply chain

SCP and SCE in the supply chain


Speed

Three factors fostering speed


Supply Chain Management Success Factors



Supply Chain Management Success Factors

SCM industry best practices include:

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

SCM Success Stories

Top reasons why more and more executives are turning to SCM to manage their extended enterprises


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:
1)Suppliers
2)Manufacturers
3)Distributors
4)Other factors that optimize supply chain performance