Chapter 1 – Supply Chain Management : an overviewINTRODUCTIONSupply chain management and logistics are key ingredients for success in todays highly competitive global environment.What Forces are Driving the Rate of Change – 5 Major External Forces appear to be driving the rate of change and shaping our economic and political landscape1) Globalization -dominant driving force in world economicsthe concept of the global marketplace or the global economy has taken on new meaning for all enterprises (profit/non-profit; small, medium, and large; Products/Services) and for individual consumers during the last decades.Globalization has led to a more competitively intense economic and geopolitical environment.Questions by companies seeking to rationalize their global networksWhere in the world should we source our materials or services?Where in the world should we manufacture or produce our products or services?Where in the world should we market and sell our products or services?Where in the world should we warehouse and distribute our products?What global transportation alternatives should we consider.BRIC Factor – analysis of globalization and supply chainsBrazil, Russia, India, & China – these four countries have a total population of well over 3.0 Billion, with China accounting for 1.3 Billion of that; These 4 countries especially China and India, have been a leading force in the changing world marketplace in this era of globalization.They not only produce products and services for export, but they have also become major consumers of energy, basic materials, and finished products.General Motors sells more cars in China than in the United States; The Buick is the largest selling car.The Supply chains of most, if not all, companies have been affected by the emergence of the BRIC Countries2) Technology –major force in changing the dynamics of the marketplacesearch engines such as google have made it possible to gather timely information quickly.We are the “click here” generationWe can pull information as needed.Social networks play an ever-increasing role in influencing supply chains because of their impact on customer demand and the speed of information transfersOutsourcing to the less-developed countries has been enhanced by technology;3) Organizational Consolidation –after World War ll, product manufacturers became the driving force in Supply Chains.They developed, designed, produced, promoted, and distributed their products.Manufacturers were the largest organization(s) in the supply chain, in terms of sales volume, employees, buying power, locations, and other factorsDuring the 1980s and especially the 1990s – a significant change occurred in the relative economic power in a growing number of supply chains as MASS RETAILERS became increasingly largerRetail giants such as – Walmart, Target, Kmart, Home Depot, Sears, McDonalds, Kroger; became powerful market leaders and engines for change.4) The Empowered Customer –todays consumers are more enlightened and more educatedinformation is at the consumers disposal; which gives them the ability to compare prices, quality, and serviceconsumers tend to have a low tolerance for poor-quality in products and servicesthe internet allows the consumer to expands his/her buying options5) Government Policy and Regulation – Federal, State, and Localestablish and administer policies, regulations, and taxes that impact individual businesses and their supply chains.The Deregulation (removing or reducing state regulations) of several important sectors of our economy that occurred in the 1980 & 1990s is a good exampleDeregulated Sectors:TransportationIn the late 70s and into the 1980s, the U.S. Transportation Industry was deregulated at the federal level in terms of economic controls such as rates and areas of service; the net effect was that it became possible for transportation services to be purchased and sold in a much more competitive environment.Communications -Was made more competitiveMajor cause of change was Supreme court decision that split up the AT&T/Bell telephone system into regional companiesFinancial institutions -Also deregulated at the federal level; the distinctions b/t commercial banks, savings and loan associations, and credit unions, have blurred as these institutions have been allowed to broaden their array of servicesThe Supply Chain Concept –Development of the Concept of SCMSCM Represents the third phase of an evolution that started in the 1960s with the development of the Physical Distribution Concept that focused on the outside side of a firms logistics system.SCM – the art and science of integrating the flows of products, information, and financials through the entire supply pipeline from the supplier’s supplier to the customer’s customer….Figure 1.7 – basics of the supply chainVendors -> Contracted Manufacturers -> Manufacturers –> Wholesalers/Distributors -> Retailers/Customers.Product Flow – physical movement of goods and materialsImportant element in the supply chain; customers expect their orders to be delivered in a timely, reliable, and damage-free manner, and transportation is critical to this outcome.Product flow is a two way flow, because of the growing importance of reverse logistics systems for returning products, that are unacceptable to the buyer b/c they are damaged, obsolete, or worn out.Information Flow – enabling physical flow of products; decision making; supply chain collaborationsInformation is viewed as flowing in the opposite direction of products, that is from the market or customer back to the wholesalers, manufacturers, and vendors.Cash Flow – management of working capitalImportant metric of the financial markets to gauge the viability or vulnerability of companiesDemand Flow – detect and understand demand signals; synchronize demand vs supplyMajor Supply Chain Issues -Supply Chain NetworksNetwork Facilities (plants, distribution centers, terminals) – face a challenge that there are rapid changes that can take place at any given moment.The 2011 japan tsunami is an excellent example or disruption in the supply chainComplexity –……Inventory Development –Coordination and/or integration can help reduce inventory levels on horizontal (single-firm) and vertical (multiple-firm) levels in the supply chainStrategies such as compression and postponement can also have a positive impactInventory levels must be managed carefully to reduce working