Slide 1What is a business?What does a business do?Slide 4Slide 5Place, Time, & Form UtilityGroup Discussion ActivitySupply Chain ManagementChange in the Business EnvironmentA New Dimension of CompetitionParadigm ChangeCompetitive AdvantageGaining competitive advantage through SCMA Classic View of Business StrategySCM Value Chain ComponentsThe Great DivideSupply Chain Value PropositionSlide 18The 4R’s serve as a guideChapter 1Shay Scott, Ph.D.Department of Marketing and SCMManaging Director, Global Supply Chain InstituteUniversity of [email protected] Chain ManagementWhat is a business?2SupplyDemandSupport Activities• General Management• Finance & Accounting• Information Technology• Design & Engineering• HR & Org DesignGenerate and Manage Customer DemandFulfill or Supply Customer Demand©2013 Shay Scott, Ph.D.What does a business do?Businesses create three types of “utility”3©2013 Shay Scott, Ph.D.FormTimePlace©2013 Shay Scott, Ph.D.4www.supplychainconnections.com©2013 Shay Scott, Ph.D.Place, Time, & Form Utility6©2013 Shay Scott, Ph.D.7377 miles from Fiji to Knoxville7377 miles from Fiji to KnoxvilleGroup Discussion Activity•Identify a company that is known for their supply chain management (either good or bad).•Specifically, what does this firm do to garner recognition for their supply chain?7©2013 Shay Scott, Ph.D.Supply Chain ManagementRaw Materials & Supplier NetworkRaw Materials & Supplier NetworkEnd Customer/ConsumerEnd Customer/ConsumerCompany OperationsDistribution NetworkProcurement(Purchasing)Logistics(Distribution)Operations (Production)Product, Service, and Financial FlowsAdapted from 21st Century Logistics: Making Supply Chain Management a Reality, Bowersox, Closs, and Stank, 1999Change in the Business Environment9•Scarcity•Limited Technology•Adversarial PosturePractices were developed to overcome 19th century business problems. And we largely did it!Era of supply chain competitionGlobalization of industryDownward pressure on priceCustomers taking controlBut…Now we have a new set of problems for today!©2013 Shay Scott, Ph.D.A New Dimension of CompetitionNew Paradigm Companies10All of these “New Paradigm” companies were built upon a Supply Chain Value Proposition Deliver maximum value to end customers while simultaneously increasing quality, productivity and operational excellence.Old Paradigm Companies©2013 Shay Scott, Ph.D.Paradigm Change11Strong 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 ExcellenceWe will keep revisiting this…©2013 Shay Scott, Ph.D.Competitive Advantage12Needs seeking benefitsat acceptable pricesAssets and utilizationAssets and utilizationCustomersCost differentialsValueValueYour CompanyCompetitor©2013 Shay Scott, Ph.D.13Increasing Value AdvantageTailored serviceReliabilityResponsivenessIncreasingProductivity AdvantageCapacity utilizationAsset turnsIntegrationService LeaderCommodity Market Cost LeaderCost and Service LeaderGaining competitive advantage through SCMSuperiorCustomerValueSuperiorCustomerValue14InboundLogisticsOperations OutboundLogisticsMarketing &SalesServiceFirm InfrastructureHuman Resource ManagementTechnology DevelopmentProcurementSupportActivitiesPrimary ActivitiesMARGINA Classic View of Business StrategyA Company’s Value ChainSCM Value Chain ComponentsLogistics 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 2007Supply Management (Procurement or Purchasing) is the identification, acquisition, access, positioning, management of resources and related capabilities the organization needs or potentially needs in the attainment of its strategic objectives. ISM 2010Operations is the manufacturing, production, or creation of form utility. Shay 201315©2013 Shay Scott, Ph.D.The Great Divide16….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 DivideSupply 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-market18Learning About Customers(Determining Customer Value)Giving Customers What They Want (Delivering Customer Value)Telling Customers About What You Can Give Them(Communicating Customer Value)Demand(Sales and Marketing)Integrated Business PlanningDemand ForecastDemand PlanningKeyBlue: BA 331Red: BA 332Developing a Supply Line to Fit Market StrategySupply (Logistics, Procurement, Operations)Understanding Relationships between Supply Chain MembersManaging Supply Chain ComponentsBA 331/332 FrameworkCapacity ForecastOperational PlanningReliabilityPrimarily delivered through supply chain visibilityReliabilityPrimarily delivered through supply chain visibilityThe 4R’s serve as a guide19©2013 Shay Scott, Ph.D.ResponsivenessDemand Driven instead of Forecast DrivenResponsivenessDemand Driven instead of Forecast DrivenResilienceCoping with UncertaintyResilienceCoping with UncertaintyRelationshipsNetwork CompetitionRelationshipsNetwork
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