CHAPTER 2 The Supply Chain Management ConceptLearning ObjectivesThe Supply Chain ConceptAbout Supply Chains…Different Supply Chain Configurations: Direct Supply ChainDifferent Supply Chain Configurations: Extended Supply ChainDifferent Supply Chain Configurations: Ultimate Supply ChainSupply Chain ManagementLogistics: What It Is?Successful Supply Chains have…The Supply-Chain Operations Reference (SCOR) ModelSlide 12The Global Supply Chain Forum (GSCF) ModelGlobalization of Supply ChainsKey Attributes of Supply Chain ManagementSlide 16Barriers to Supply Chain ManagementSupply Chain Management and IntegrationSlide 19Case 2-1 Johnson Toy CompanySlide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Case 2-2 Wyomo Grocery Buyers’ CooperativeSlide 29Slide 30Slide 31Slide 32Slide 33CHAPTER 2The Supply Chain Management ConceptLearning Objectives•To learn about supply chains and their management•To understand differences between transactional and relational exchanges•To realize the importance of leveraging technology•To appreciate barriers to supply chain management© 2008 Prentice Hall 2-2The Supply Chain Concept•Key Terms–Agile supply chain–Bullwhip effect–Contract logistics–Data mining–Fast supply chain–Fourth-party logistics (4PL)–GSCF model•Key Terms–Partnerships–Perfect order–SCOR model–Supply chain–Supply chain collaboration–Supply chain management–Third-party logistics (logistics oursourcing)© 2008 Prentice Hall 2-3About Supply Chains…•A supply chain “encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction), through to the end user, as well as the associated information flows.”2-4Source: Robert B. Handfield and Ernest L. Nichols, Jr., Introduction to Supply Chain ManagementDifferent Supply Chain Configurations:Direct Supply Chain2-5Supplier Organization CustomerDifferent Supply Chain Configurations:Extended Supply Chain2-6SupplierOrganizationCustomerSupplier’ssuppliersCustomer’scustomersDifferent Supply Chain Configurations:Ultimate Supply Chain2-7SupplierOrganizationCustomerUltimatesupplierUltimatecustomerFinancial ProviderMarket Research3rd Party Logistic SupplierSupply Chain ManagementSupply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. CSCMPLogistics: What It Is?•CSCMP (Council of Supply Chain Management Professionals) definition:“Logistics is that part of the Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.”© 2008 Prentice Hall 1-9Source: clm1.orgSuccessful Supply Chains have…•Enterprise-to-enterprise point of view•Systems approach across all organizations in the supply chain–Companies recognize interdependencies–Goals and objectives are compatible© 2008 Prentice Hall 2-10•Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework.•A Process Reference Model Contains:–Standard descriptions of management processes–A framework of relationships among the standard processes–Standard metrics to measure process performance–Management practices that produce best-in-class performance–Standard alignment to features and functionalityThe Supply-Chain Operations Reference (SCOR) Modelhttp://archive.supply-chain.org/galleries/default-file/SCOR%2080%20Overview%20Booklet2.pdfhttp://supply-chain.org/f/SCOR%2090%20Overview%20Booklet.pdfThe Supply-Chain Operations Reference (SCOR) Model© 2008 Prentice Hall 2-12http://archive.supply-chain.org/galleries/default-file/SCOR%2080%20Overview%20Booklet2.pdf•Customer Relationship Management (CRM)•Customer Service Management•Demand Management •Order Fulfillment•Manufacturing Flow Management•Supplier Relationship Management•Product Development and Commercialization•Return ManagementThe Global Supply Chain Forum (GSCF) Modelhttp://findarticles.com/p/articles/mi_qa3705/is_200501/ai_n13632938/?tag=content;col1Globalization of Supply Chains•Increasing globalization–Lower priced materials and labor–Global perspective of companies–Development of global competition•Extremely difficult to execute due to differences–Cultural, economic, and technological–Political, spatial, and logistical© 2008 Prentice Hall 2-14Key Attributes of Supply Chain Management•Customer power–Fast and agile supply chain•Long-term orientation–Relational exchanges–Transactional exchanges•Leveraging technology–Computer and Internet•Enhanced communication across organizations© 2008 Prentice Hall 2-15Key Attributes of Supply Chain Management•Inventory control–Bullwhip effect–JAZ•Interorganizational Collaboration–Supply chain councils© 2008 Prentice Hall 2-16Barriers to Supply Chain Management•Regulatory and political considerations•Lack of top management commitment•Reluctance to share, or use, relevant data•Incompatible information systems•Incompatible corporate cultures© 2008 Prentice Hall 2-17Supply Chain Management and Integration•Long-term, mutually beneficial agreements–Partnerships–Strategic alliances–Third-party arrangements–Contract logistics•Methods used to integrate–Vertical integration–Formal contracts–Informal agreements© 2008 Prentice Hall 2-18Supply Chain Management and Integration•Third-Party Logistics (3PL)–Logistics outsourcing–Contract logistics•Fourth-party logistics (4PL) primarily used in global companies–Lead logistics provider (LLP)•Supply chain software© 2008 Prentice Hall 2-19Case 2-1 Johnson Toy Company•Located Biloxi, Mississippi1-20Company Facts:•Basic Design Toys: Low profit margin•Unconventional Toys: Risky, High profits if popular–Jungle Jim the Jogger Product Facts:Market Facts:•Seasonal•Popular toy turns into unpopular•Production was cancelled •Returns without a clear
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