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ISU SCM 301 - CHAPTER 1: INTRODUCTION TO SUPPLY CHAIN MANAGEMENT
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SCM 301 1st Edition Lecture 2Outline of Last Lecture 1. Course Topics OverviewOutline of Current Lecture 1. What is Supply Chain2. Supply Chain Management3. Importance of Supply Chain Management4. Causes of Bullwhip Effect5. Origins of Supply Chain Management6. Current Trends in Supply Chain ManagementCurrent LectureI. What is Supply Chaina. Supply Chain consists of the flow of products and services fromi. Raw materials manufacturersii. Component and intermediate manufacturersiii. Final product manufacturersiv. Wholesalers and distributors andv. RetailersII. Supply Chain Managementa. The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customerIII. Importance of Supply Chain Managementa. Firms using Supply Chain Management:i. Start with key suppliersii. Move on to other suppliers, customers, and shippersiii. Integrate second tier suppliers and customers (second tier refers to the customer’s customers and the supplier’s suppliers)b. Cost savings and better coordination of resources i. Reduced Bullwhip Effectii. Orders to suppliers have larger variance than sales to a buyeriii. These distortions amplify as they move upstream, back to suppliersiv. Collaborative planning, forecasting, and replenishment activities reduce the Bullwhip Effect and lead to better customer service, lower inventory These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.costs, improved quality, reduced cycle time, better production methods, and other benefits.IV. Causes of the Bullwhip Effecta. Price fluctuationsb. Periodic order policies at the wholesaler and manufacturer levelsc. Rationing/shortage gaming, trade deals offered by manufacturers to wholesalersd. Production schedules based on forecasts of wholesaler demand versus consumerdemand V. Origins of Supply Chain Managementa. 1950s & 1960s: U.S. manufacturers focused on mass production techniques as their principal cost reduction and productivity improvement strategiesb. 1960s-1970s: Introduction of new computer technology lead to development of Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) to coordinate inventory management and improve internal communicationc. 1980s & 1990s: Intense global competition led U.S. manufacturers to adopt: i. Supply Chain Management ii. Just-In-Time (JIT) iii. Total Quality Management (TQM) iv. Business Process Reengineering (BPR) practicesd. 2000s and Beyond: Industrial buyers will rely more on third-party service providers (3PLs) to improve purchasing and supply management. Wholesalers/retailers will focus on transportation and logistics more & refer to these as quick response, service response logistics, and integrated logisticsVI. Current Trends in Supply Chain Managementa. 75% of U.S. consumers are influenced by a firm’s environmental friendliness reputationb. Recycling and conservation rising in popularityc. Continuous


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ISU SCM 301 - CHAPTER 1: INTRODUCTION TO SUPPLY CHAIN MANAGEMENT

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