Chapter 13 Supply Chain Management Supply Chains and Supply Chain Management 13 1 A Benefits of Supply Chain Management Supply Chain the connected chain of all of the business entities both internal and external to the company that perform or support the logistics function Supply Chain Management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process from the source to the point of consumption resulting in enhanced customer and economic value o Reflects a completely customer driven management philosophy Supply Chain Agility an operational strategy focused on inducing inventory velocity and operational flexibility simultaneously in the supply chain o Clear relationship between supply chain performance and profitability Supply Chain Integration and Its Benefits 13 2 A Key Principle multiple firms and their functional areas work together as a unified system Supply chain integration multiple firms or their functional areas in a supply chain coordinate business processes so that they are seamlessly linked to one another Demand Supply Integration philosophy focuses on integrating the supply management and the demand generating functions of an organization o Sales people talk to the producers of the company and vice versa B External Integration between different companies Relationship Integration interactions when working together Measurement integration o Two or more companies to develop social connections that serve to guide their o Performance assessments should be transparent and measurable across the borders of different firms and that they should be able to assess the whole supply chain o Creation and maintenance of information technology systems that connect managers Technology and Planning Integration across the firms Material and service supplier Integration o Requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline work processes and thereby provide good service Both sides need a common vision Customer Integration o Competency that enables firms to offer long lasting distinctive value added offerings to those customers who represent the greatest value to the firm or supply chain 13 3 The Key Processes of Supply Chain Management A Customer Relationship Management Business Processes composed of bundles of interconnected activities that stretch across firms in the supply chain they represent key areas that some or all of the involved firms are constantly working on in order to reduce costs and or generate revenue CRM Process allows companies to prioritize their marketing focus on different customer groups according to each group s long term value to the company o Designed to identify and build relationships CSM unified response system to a customer whenever complaints concerns questions or B Customer Service Management comments are voiced C Demand Management DMP seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and creating demand related plans of action prior to actual customer purchasing behavior o Minimize the costs of serving multiple types of customers who have variable wants and needs o Eases the pressure on the production process and allow companies to satisfy most of their customers through greater flexibility D Order Fulfillment OFP highly integrated process often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time o Reduces time between purchase and receiving the product E Manufacturing Flow Management MFM Ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi stage production process o Leveraging the capabilities held by multiple members of the supply chain to improve overall manufacturing output in terms of quality speed and flexibility F Supplier Relationship Management SRMP supports manufacturing flow by identifying and maintaining relationship with highly valued suppliers o Ensures that firms manufacturing resources are available G Product Development and Commercialization Includes the group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms o Different groups working together to create a new product H Returns Management Enables firms to manage volumes of returned product efficiently while minimizing returns related costs and maximizing the value of the returned assets to the firm s in the supply chain o Allows firm to recognize weakness in product design 13 4 How Business Logistics Functions Impact the Supply Chain A Sourcing and Procurement Logistics process of strategically managing the efficient flow and storage of raw materials in process inventory and finished goods from point of origin to point of consumption Supply Chain team entire group of individuals who orchestrate the movement of goods services and information from the source to the consumer Sourcing and Procurement activities are to reduce the costs of raw materials and supplies B Inventory Control Inventory control system develops and maintains an adequate assortment of materials or products to meet a manufacturer s or a customer s demands o Keep inventory levels as low as possible while maintain an adequate supply of goods to meet demand Materials requirement planning a control system that manages the replenishment of raw materials supplies and components form the supplier to the manufacturer Distribution resource planning system that manages the replenishment of goods from the Automatic replenishment program a real time inventory system that triggers shipments manufacturer to the final consumer only when a good is sold to the end user C Order Processing Order processing system processes the requirements of the customer and send the information into the supply chain via the logistics information system Electronic Data interchange EDI information technology that replaces the paper documents that usually accompany business transactions such as purchase orders and invoices with electronic transmission of the needed information to reduce inventory levels improve cash flow streamline operations and increase the speed and accuracy of information transmission D Production Build to Stock manufacturing production method whereby products are made in advance of
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