Slide 1Discussion QuestionsWhat is the essence of business?Porter’s Value ChainCompetitive AdvantageChange in the Business EnvironmentParadigm ChangeForm, Time and Place UtilityGaining competitive advantage through SCMSlide 10Slide 11Logistics ManagementSlide 13Slide 14Slide 15UT Global Supply Chain Management FrameworkSlide 17Supply Chain Value PropositionThe Great DivideSlide 20Business Administration 331Supply Chain ManagementChapter 1Dr. John E. BellAssociate Professor of Supply Chain Management 343 Stokely Management [email protected] Questions2Why should we care about SCM at the Haslam College of Business?How many of you believe (hope??) that you will never have to worry about Supply Chain Management (SCM) again after this class?https://www.youtube.com/watch?v=OVYcxi1rDgEWhat is the essence of business?3SupplyDemandGenerate and Manage Customer DemandFulfill or Supply Customer Demand• Form• Time• Place•ExchangeInboundLogisticsOperations OutboundLogisticsMarketing &SalesServiceFirm InfrastructureHuman Resource ManagementTechnology DevelopmentProcurementSupportActivitiesPrimary ActivitiesMARGINPorter’s Value ChainCompetitive Advantage5Needs seeking benefitsat acceptable pricesAssets and utilizationAssets and utilizationCustomersCost differentialsValueValueYour CompanyCompetitorChange in the Business Environment•Scarcity•Limited Technology•Adversarial PosturePractices were developed to overcome 20th century business problems. And we succeeded!New rules of competitionGlobalization of industryDownward pressure on priceCustomers taking controlBut…Now we have a new set of problems for today!Paradigm Change7Strong brandsLarge advertising budgetsAggressive sellingWin through capabilities and competenciesManaging core processes better than competitorsSped along by commoditization of products and industriesOLDNEWCompetitive Advantage: Product Excellence X Process ExcellenceForm, Time and Place utilityForm, Time and Place Utility7376.60 Miles from Viti Levu to Knoxville89Increasing Value Advantage•Tailored service•Reliability•ResponsivenessIncreasingProductivity AdvantageCapacity utilizationAsset turnsIntegrationService LeaderCommodity Market Cost LeaderCost and Service LeaderGaining competitive advantage through SCMSuperiorCustomerValueSuperiorCustomerValueWhy do people buy from a company like Amazon.com?What expectations do customers have regarding the value that Amazon provides?How do they fulfill customer expectations?10Discussion Questionwww.youtube.com/watch?v=zknLfU7GJIwBusiness Administration 331Supply Chain ManagementChapter 1Dr. John E. BellAssociate Professor of Supply Chain Management 343 Stokely Management [email protected] ManagementLogistics management is that part of 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 customer requirements.CSCMP 200712Logistics Management:“…the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and related information) through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders”13Book Definition14What is a Supply Chain?Key MetricsMATERIALSENDCUSTOMERSupplier BaseMarket/Distribution NetworkIntegrated EnterpriseMfg/AssemblyFulfillment Supply Base ManagementInbound LogisticsOutbound LogisticsDistribution / Product SupportSupplier/Customer Relationship ManagementProduct/Service ManagementInformation ManagementPlanning Process ManagementCapital and Asset Managementhttps://www.youtube.com/watch?v=Mi1QBxVjZAwSupply Chain Management:“The Management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole”15Book DefinitionDEMAND NETWORK16UT Global Supply Chain Management FrameworkExternal Business EnvironmentMetricsFinancialsRelationships RESOURCES RESOURCES CONSUMERS CONSUMERSSUPPLYNETWORKSourcingOperationsINTEGRATEDENTERPRISELogisticsInnovation and Transformation OrientationRisk MgtTeamsTalentContinuous Improvement OrientationIntegration / Collaboration / Alignment Customer and Supplier OrientationLong-term Planning OrientationThe systematic coordination of traditional business functions within a particular organization and across organizations within the supply chain for the purposes of improving the long-term performance of the individual enterprises and the supply chain as a whole (Mentzer et al 2001). InformationTHE INTEGRATED SUPPLY CHAIN EVOLUTIONFUNCTIONALENTERPRISEDISTRIBUTIVENETWORKMATERIALSCore Competencies, Capital and Human ResourcesProcurement Operations DistributionENDCONSUMERSSource: 21st Century Logistics: Making Supply Chain Management a Reality, Bowersox, Closs, and Stank, 1999Product, Service and Financial Flowshttps://www.youtube.com/watch?v=ElYNhGbOTOQSupply Chain Value PropositionSCM ValueTotalCostManagementAssetUtilizationReduce Capital Requirements Minimize total inventory (SS, RM, WIP, FG) Shorten cash-to-cash cycle Improve fixed asset utilizationOptimize Total Cost Reduce sourcing, production, logistics, warehousing, and customer support costs Leverage economies of scale and technology to reduce transaction and unit cost Manage system performance and mitigate riskRevenue Growth and High Service Level Improve product and service availability Sell more volume or ‘share of wallet’ Strengthen relationships with more profitable customers Improve product/service innovation Align services with cost-to-serveCustomer ServiceEnd-to-End Cycle Time Compression Increase flexibility and agility Postponement Shorten time-to-marketResponsive & ReliableThe Great Divide19….need…product….NOW…need some Product A, B, & C quickly…We need: 3 product A, 2 product B, 6 product C in 1 week.PlantsManufacturer D.C.sDistribution NetworkProduct FocusedEfficiency metricsEconomies of scale and scopeFocused on customerSatisfaction metricsRelevanceTheGreat Divide20Learning About Customers(Determining Customer Value)Giving Customers What They Want (Delivering Customer Value)Telling Customers About What You Can Give Them(Communicating Customer
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