Essentials of supply chain management

Table of Contents Cover Title Page Preface CHAPTER 1: Key Concepts of Supply Chain Management Nothing Entirely New … Just a Significant Evolution How the Supply Chain Works The Evolving Structure of Supply Chains Participants in the Supply Chain Aligning the Supply Chain with Business Strategy Chapter Summary CHAPTER 2: Supply Chain Operations: Planning and Sourcing A Useful Model of Supply Chain Operations Demand Forecasting and Planning (Plan) Product Pricing (Plan) Inventory Management (Plan) Credit and Collections (Source) Chapter Summary CHAPTER 3: Supply Chain Operations: Making and Delivering Product Design (Make) Production Scheduling (Make) Facility Management (Make) Order Management (Deliver) Delivery Scheduling (Deliver) Return Processing (Deliver) Supply Chain Operations Can Be Outsourced Chapter Summary CHAPTER 4: New Technology Changes How Work Is Done New Technology Is Changing Supply Chain Operations Key Components of Information Technology New Supply Chain Technology Impact on Supply Chain Operations Assessing Technology and System Needs E Business and Supply Chain Integration Chapter Summary CHAPTER 5: Metrics for Measuring Supply Chain Performance Useful Model of Markets and Their Supply Chains Market Performance Categories A Framework for Performance Measurement Customer Service Metrics Internal Efficiency Metrics Demand Flexibility Metrics Product Development Metrics Operations that Enable Supply Chain Performance Collecting and Displaying Performance Data Three Levels of Detail Spotlighting Problems and Finding Opportunities Markets Migrate from One Quadrant to Another Sharing Data Across the Supply Chain Chapter Summary CHAPTER 6: Supply Chain Coordination The Bullwhip Effect Coordination in the Supply Chain Supply Chain Product Data Standards Collaborative Planning, Forecasting, and Replenishment CPFR in Action How to Start Supply Chain Collaboration Sales and Operations Planning Chapter Summary CHAPTER 7: Supply Chain Innovation for the Real Time Economy Supply Chain Performance Depends on Timely Data Coordination and Collaboration in Supply Chains Use Collaboration to Reinvent Supply Chain Operations Process for Collaborative Supply Chain Operations Chapter Summary CHAPTER 8: Defining Supply Chain Opportunities The Supply Chain as a Competitive Advantage Identify the Business Opportunity and Define the Goal Create the Strategy Create a Conceptual System Design Strategic Guidelines for Designing Systems Define Project Objectives Create an Initial Project Plan and Budget Estimate the Project Budget and ROI Define the Specific Costs and Benefits Chapter Summary CHAPTER 9: Creating Supply Chains for Competitive Advantage Charlie Supply, Inc.—Initial Business Situation New Opportunities Emerge—Follow on Situation Strategic Alliances for Competitive Advantage Chapter Summary CHAPTER 10: Promise of the Real Time Supply Chain The Start of Something Big Winning at the Game of Real Time Supply Chains Chapter Summary About the Author Index End User License Agreement List of Illustrations Chapter EXHIBIT 1.1 Old Supply Chains versus New EXHIBIT 1.2 Supply Chain Structure Chapter EXHIBIT 3.1 Cloud Based Training and Collaboration Platform EXHIBIT 3.2 Maps and Satellite Pictures Provide Organizing Context for Real Time Data EXHIBIT 3.3 Five Step Mission and Operations Planning Process EXHIBIT 3.4 Cost vs Number of Pool Points Used EXHIBIT 3.5 Estimated Combined Freight Spend Savings Is 25 Percent EXHIBIT 3.6 Value Contribution as the Collaborative Network Expands Chapter EXHIBIT 4.1 EPCglobal Network EXHIBIT 4.2 Physical and Behavioral Policies EXHIBIT 4.3 Proposed Facility Layout EXHIBIT 4.4 Three Dimensional Warehouse Simulation EXHIBIT 4.5 Connected Data Drives Machine Learning and Improves Customer Service EXHIBIT 4.6 Supply Chain Events Hub EXHIBIT 4.7 Big Data Learning Feedback Loop Chapter EXHIBIT 5.1 Displaying Different Views of Data to Different Audiences EXHIBIT 5.2 Dashboard Designs Are Different at Each Level EXHIBIT 5.3 Market Conditions Shift over Time EXHIBIT 5.4 Benefits of Data Sharing across the Entire Supply Chain Chapter EXHIBIT 6.1 Product Demand Distortion EXHIBIT 6.2 Flow of Work and Inventory through a Factory EXHIBIT 6.3 Flow of Inventory through a Synchronized Supply Chain EXHIBIT 6.4 Global Data Synchronization Network (GDSN) EXHIBIT 6.5 Sales and Operations Planning (S&OP) Chapter EXHIBIT 7.1 Virtuous Cycle Starts with Electronic Connections EXHIBIT 7.2 Supply Chains Need to Respond to Continuous Changes in Demand EXHIBIT 7.3 Supply Chain Performance Scorecard Provides Real Time Transparency EXHIBIT 7.4 Products, Facilities, Vehicles, Routes EXHIBIT 7.5 Fantastic Corporation Global Supply Chain EXHIBIT 7.6 Supply Chain Simulation Results EXHIBIT 7.7 Collaborative S&OP with Supply Chain Simulations EXHIBIT 7.8 Cloud based Collaboration Platform EXHIBIT 7.9 Proposed New Facilities for Supply Chain EXHIBIT 7.10 Operations at Chicago Distribution Center EXHIBIT 7.11 Modular Technical Architecture Chapter EXHIBIT 8.1 Improve Selected Business Operations to Meet Performance Targets EXHIBIT 8.2 Network Services' Development EXHIBIT 8.3 Diagram of the Business Process Flows EXHIBIT 8.4 A Web Enabled Supply Chain EXHIBIT 8.5 Build NSC Integrated Information Infrastructure Chapter EXHIBIT 9.1 Results of Business Analysis for Strategic Plan EXHIBIT 9.2 Charlie Supply Decides to Build on Its Strengths to Differentiate Itself EXHIBIT 9.3 Charlie Supply Strengthens Performance by Improving Four Business Operations EXHIBIT 9.4 Exercise #1: Project Completion Schedule EXHIBIT 9.5 Charlie Supply Continues to Build on Its Strengths for Competitive Advantage EXHIBIT 9.6 Charlie Supply Further Strengthens Customer Service and Improves Product Development Capabilities EXHIBIT 9.7 Exercise #2: Project Completion Schedule EXHIBIT 9.8 A Company and Its Alliance Partners Chapter 10 EXHIBIT 10.1 Three Requirements for Self Adjusting Feedback Loops Essentials Series The Essentials Series was created for business advisory and corporate professionals The books in this series were designed so that these busy professionals can quickly acquire knowledge and skills in core business areas Each book provides need to have fundamentals for those professionals who must: Get up to speed quickly, because they have been promoted to a new position or have broadened their responsibility scope Manage a new functional area Brush up on new developments in their area of responsibility Add more value to their company or clients Books in this series include: Essentials of Accounts Payable by Mary S Schaeffer Essentials of Balanced Scorecard by Mohan Nair Essentials of Business Ethics by Denis Collins Essentials of Business Process Outsourcing by Thomas N Duening and Rick L Click Essentials of Capacity Management by Reginald Tomas Yu Lee Essentials of Cash Flow by H.A Schaeffer, Jr Essentials of Corporate and Capital Formation by David H Fater Essentials of Corporate Fraud by Tracy L Coenen Essentials of Corporate Governance by Sanjay Anand Essentials of Corporate Performance Measurement by George T Friedlob, Lydia L.F Schleifer, and Franklin J Plewa, Jr Essentials of Cost Management by Joe and Catherine Stenzel Essentials of Credit, Collections, and Accounts Receivable by Mary S Schaeffer Essentials of CRM: A Guide to Customer Relationship Management by Bryan Bergeron Essentials of Enterprise Compliance by Susan D Conway and Mara E Conway Essentials of Financial Analysis by George T Friedlob and Lydia L F Schleifer Essentials of Financial Risk Management by Karen A Horcher Essentials of Foreign Exchange Trading by James Chen Essentials of Intellectual Property, Second Edition by Alexander I Poltorak and Paul J Lerner Essentials of Knowledge Management by Bryan Bergeron Essentials of Licensing Intellectual Property by Paul J Lerner and Alexander I Poltorak Essentials of Managing Corporate Cash by Michele Allman Ward and James Sagner Essentials of Managing Treasury by Karen A Horcher Essentials of Online Payment Security and Fraud Prevention by David Montague Essentials of Patents by Andy Gibbs and Bob DeMatteis Essentials of Payroll Management and Accounting by Steven M Bragg Essentials of Risk Management in Finance by Anthony Tarantino with Deborah Cernauskas Essentials of Sarbanes Oxley by Sanjay Anand Essentials of Shared Services by Bryan Bergeron Essentials of Supply Chain Management by Michael Hugos Essentials of Technical Analysis for Financial Markets by James Chen Essentials of Trademarks and Unfair Competition by Dana Shilling Essentials of Venture Capital by Alexander Haislip Essentials of Working Capital Management by James Sagner Essentials of XBRL by Bryan Bergeron For more information on any of the above titles, please visit www.wiley.com ESSENTIALS of Supply Chain Management Fourth Edition Michael Hugos Copyright © 2018 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750 8400, fax (978) 646 8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748 6011, fax (201) 748 6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations 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information about Wiley products, visit our website at www.wiley.com Library of Congress Cataloging in Publication Data: Names: Hugos, Michael, author Title: Essentials of supply chain management / Michael Hugos Description: Fourth Edition | Hoboken : Wiley, 2018 | Series: Essentials series | Revised edition of the author’s Essentials of supply chain management, 2011 | Includes index | Identifiers: LCCN 2017056763 (print) | LCCN 2017058101 (ebook) | ISBN 9781119464464 (epub) | ISBN 9781119461104 (paperback) | ISBN 9781119464457 (ePDF) Subjects: LCSH: Business logistics | BISAC: BUSINESS & ECONOMICS / Decision Making & Problem Solving Classification: LCC HD38.5 (ebook) | LCC HD38.5 H845 2018 (print) | DDC 658.7—dc23 LC record available at https://lccn.loc.gov/2017056763 Cover Design: Wiley Cover Image: © FarukUlay/Getty Images project budget, estimation completion schedule cost/benefits initial project plan/budget, creation objectives, defining opportunities renewal, avoidance results section, creation twelve month project objectives value promotion, question proprietary information, sharing (collaboration roadblock) purchase orders creation sending/receiving usage purchasing (procurement category) Q qualitative forecasting method Quiviger, Thibault quoted customer response time R Race Against the Machine (Brynjolfsson/McAfee) radio frequency identification (RFID) rail (transport mode) Ram, Ganeshan real time access real time data (organizing context), maps/satellite pictures (usage) real time economy, supply chain innovation real time global economy real time product information (technology factor) real time sales data real time supply chain winning real time transparency, supply chain performance scorecard (usage) real time updating recyclable products, pickup/return processing (provision) relational database technology, usage replenishment, collaborative replenishment request for proposal (RFP) retailers (supply chain participants) return on investment (ROI) calculations estimation return on sales return processing (deliver) risk acceptance criteria, set/change robots, impact routes, entity type runout time calculation R values S safety inventory Sagar, Nikhil sales and operations planning (S&OP) collaborative S&OP, supply chain simulations (usage) flowchart procedures process sales force automation (SFA) sales forecasts, sharing sales orders, usage Sam's Club, supply chain savings matrix technique scheduling advanced planning/scheduling process, repetition transportation scheduling system SCM Globe SCOR See supply chain operations reference seasonal inventory self adjusting feedback loop profit potential requirements self correcting feedback loop, power Senge, Peter service agents, order status (visibility) providers (supply chain participants) quality, delivery service level maintenance provision requirement ship (transport mode) short age gaming simulation forecasting method modeling (technology factor) results running 3D warehouse simulation usage single product locations Slone, Reuben smart factories smart machines, impact Smith, Carlo D social change, impact social data, external data (combination) socioeconomic structure software costs source operation category supply chain operation category sourcing, supply chain operation Stack, Jack steady market growth market, movement steam engine, invention/spread Stock, James R stock keeping unit (SKU) storage strategic alliances, structuring strategic data level strategic design, purpose strategic plan, business analysis (results) strategic supply chain design strategic system guidelines strategy, creation structure (collaboration roadblock) Structured Query Language (SQL) suppliers allocation EDI usage supply determination uncertainty, coping variable supply chain actions ad hoc supply chains, training/coordination alignment steps application systems, creation big data, control capabilities, development capacity changes, technology factors collaboration initiation process collaborative supply chain planning, example competitive advantage contrasts coordination corporation global supply chain creation data, sharing benefits decision making, price decisions, importance differentiation downstream drivers e business, integration efficiency/responsiveness emergent behavior, usage event hub facilities proposal feedback loop, harnessing firm alignment function, explanation information, purposes innovation knowledge manager, integration management market supply chains models, usage networks, design opportunities, defining organization, implications participants partnership predictive analytics applications product data standards product movement, tracking profitability, maximization projects, exercise real time supply chain response responsiveness running, leverage point simulation game show results usage stages/network strategic supply chain design strategy creation exercise structure evolution synchronized supply chain, inventory flow tactical supply chain planning tao technology information technology, combination thinking usage value delivery web enabled supply chain Supply Chain (Chopra/Meindl) Supply Chain Management (Chopra/Meindl) supply chain management (SCM) concepts coordination definitions detail, levels evolution impact supply chain operations categories change, technology (impact) collaborative supply chain operations, process impact model monitoring/management outsourcing planning/sourcing reinvention, collaboration (usage) support systems supply chain operations reference (SCOR) model supply chain performance categories data dependence enabling, operations (impact) metrics scorecard, usage sustainable growth/productivity Sutherland, Joel synchronized supply chain, inventory flow system design alignment failure guidelines strategic guidelines application systems alignment benefits bottlenecks/constraints bottom up systems companies, components complexity, organizational capabilities (contrast) cost avoidance benefits costs creation, development sequence (usage) development project, success sequence direct benefits high level outline, conceptual design incremental benefits infrastructure, strengths (leverage) intangible benefits needs, assessment strategic system guidelines technology integration (collaboration roadblock) top down systems usage web based e commerce systems T tactical data level tactical planning, simulation (usage) tactical supply chain planning team building event technical innovations, impact technical support technology assessment business combination, usage processes, combination changes, impact expense impact people, combination supply chain technology telephone documents, usage Theory of Constraints third party logistics suppliers (3PLs) 3D printing/additive manufacturing (technology factor) 3D warehouse simulation throughput, increase Tier dashboard, display time boxing time series forecasting method Today and Tomorrow (Ford) total backorders, value total capacity, usage total cost of ownership (TCO), emphasis (increase) total products, sale (percentage) total sales, percentage transportation planning/content systems planning systems scheduling system supply chain driver transport modes truck load (TL) amount trucks (transport mode) trust collaboration roadblock CTM enabler turn and earn (T&E) Tzu, Sun U Uber, connection Uniform Code Council United Nations Development Program (UNDP) United Nations Standard Products and Services Code (UNSPSC) Universal Product Code (UPC) unpredictability levels upside flexibility upside production flexibility UPS, transportation services usage rates utilization rates V value added networks (VANs) value contribution, impact variables, forecasts vehicles, entity type vendor performance selection (procurement category) vendor managed inventory (VMI) vertically integrated companies divisions running virtuous cycle visualizations (cloud infrastructure building block) voice over the Internet (VOIP) Voluntary Interindustry Commerce Standards (VICS) W Walmart dominance supply chain, impact warehouse data warehouse inventory NSC data warehouse operations, simulation (usage) warehouse management system (WMS) warehousing, approaches warranty returns/repairs, number web based e commerce systems Web based services, array web enabled supply chain Whang, Seungjin workflow coordination work (completion), technology changes (impact) W.W Grainger, market service X XML See extensible markup language Y Yanasik, Tolga Z Zacharia, Zach G WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... Title: Essentials of supply chain management / Michael Hugos Description: Fourth Edition | Hoboken : Wiley, 2018 | Series: Essentials series | Revised edition of the author’s Essentials of supply chain. .. supply chain is, then we can define supply chain management as the things we to influence the behavior of the supply chain and get the results we want Some definitions of supply chain management. .. hurt the profitability of a company Executive Insight Walmart is a company shaped by its supply chain and the efficiency of its supply chain has changed the practice of supply chain management