Distribution Planning and Control_ Managing in the Era of Supply Chain Management ( PDFDrive )

David Frederick Ross Distribution Planning and Control Managing in the Era of Supply Chain Management Third Edition Distribution Planning and Control Distribution Planning and Control Managing in the Era of Supply Chain Management Third Edition David Frederick Ross David Frederick Ross APICS Chicago, IL, USA ISBN 978-1-4899-7577-5 ISBN 978-1-4899-7578-2 DOI 10.1007/978-1-4899-7578-2 (eBook) Library of Congress Control Number: 2015934905 Springer New York Heidelberg Dordrecht London # Springer Science+Business Media New York 2015 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper Springer Science+Business Media LLC New York is part of Springer Science+Business Media (www.springer.com) CONTENTS PREFACE / XIX PART THE SCM AND THE DISTRIBUTION MANAGEMENT ENVIRONMENT / 1 Introduction to Supply Chain Management / 1.1 Defining Logistics and Supply Chain Management / 1.1.1 Defining Logistics / 1.1.2 Detailed Logistics Activities / 1.1.3 Detailed Logistics Performance Measurements / 1.1.4 Defining Supply Chain Management / 1.2 The Evolution of Supply Chain Management / 15 1.2.1 Stage 1: Basic Logistics / 15 1.2.2 Stage 2: Total Cost Management / 17 1.2.3 Stage 3: Integrated Logistics Management / 17 1.2.4 Stage 4: Supply Chain Management / 18 1.2.5 Summary / 19 1.3 Supply Chain Structures / 19 1.3.1 Basic Supply Chain Structures / 20 1.3.2 Basic Supply Chain Strategies / 21 1.3.3 The SCOR® Supply Chain Framework / 22 1.3.4 Lean Supply Chain Model / 26 1.3.5 Adaptive, Demand-Driven Supply Chain Model / 29 1.3.6 Components of Adaptive Supply Chain Management / 1.3.7 Demand-Driven Supply Network (DDSN) / 31 1.4 Supply Chain Maturity Model / 34 1.5 Trends in Supply Chain Management / 36 1.6 Goals of Today’s Supply Chains / 38 1.7 Summary / 39 Discussion Questions / 42 References / 43 The Distribution Management Environment / 45 2.1 Defining the Disribution Function / 46 2.2 Revisiting the Supply Chain / 47 29 vi CONTENTS 2.2.1 Basic Supply Chain Distribution Formats 2.2.2 Alternative Distribution Channel Formats 2.3 Role of Distribution Channels / 58 2.3.1 Channel Service Outputs / 60 2.3.2 Other Functions of Distribution Channels 2.4 Distribution Channel Transaction Flows / 64 2.5 Distribution Channel Inventory Flows / 68 2.5.1 Substituting Information for Inventory / 2.5.2 Reverse Logistics / 73 2.5.3 Sustainability / 75 2.6 Summary / 77 Discussion Questions / 79 References / 80 / 49 / 50 / 61 72 PART SCM STRATEGIES, CHANNEL STRUCTURES, AND DEMAND MANAGEMENT / 81 Crafting Business and Supply Chain Strategies / 83 3.1 Defining Business Strategy / 84 3.1.1 Scanning the External and Internal Business Environments / 84 3.1.2 Defining the Enterprise Vision, Mission, and Goals / 91 3.2 Crafting the Supply Chain Strategy / 99 3.2.1 Defining Supply Chain Strategy / 99 3.2.2 Stages of Supply Chain Strategy / 102 3.2.3 Supply Chain Strategy Performance Attributes / 104 3.2.4 Process Drivers of Supply Chain Performance / 105 3.2.5 Applying the Supply Chain Strategy Matrix / 113 3.3 Achieving Strategic Supply Chain “Fit” / 114 3.3.1 Concept of Supply Chain Strategic Fit / 114 3.3.2 Supply Chain Strategy Performance Metrics / 116 3.3.3 Balanced Scorecard Approach / 119 3.4 Supply Chain Strategy and Risk Management / 121 3.4.1 Defining Supply Chain Risk Management / 122 3.4.2 Managing Supply Chain Risk Resiliency / 128 3.4.3 SCRM Maturity Model / 132 3.4.4 Effect of Supply Chain Management on Resiliency / 134 3.5 Summary / 135 Discussion Questions / 138 References / 139 Designing Channel Networks / 141 4.1 Defining Channel Networks / 142 4.1.1 Exploring Channel Systems / 143 4.1.2 Basic Channel Networking Structures / 144 CONTENTS vii 4.2 Network Configuration: Definitions / 146 4.2.1 Reasons for Channel Networks / 147 4.2.2 Network Channel Design Considerations / 148 4.3 Channel Network Design Process / 149 4.3.1 Map Channel Strategy / 149 4.3.2 Segment Marketplace / 155 4.3.3 Channel Positioning / 157 4.4 Channel Selection / 165 4.4.1 Facility Selection Issues / 167 4.4.2 Methods for Locating Channel Network Facilities / 168 4.5 Channel Implementation / 176 4.5.1 Selection of Channel Partners / 176 4.5.2 Role of Channel Power / 177 4.5.3 Managing Channel Conflict / 179 4.5.4 Achieving Strategic Channel Collaboration / 182 4.6 Summary / 185 Discussion Questions / 187 Problems / 187 References / 190 Forecasting in the Supply Chain Environment / 191 5.1 Forecasting: An Overview / 192 5.1.1 Elements of Forecasting / 193 5.1.2 Forecasting Levels / 196 5.2 Forecasting Techniques / 200 5.2.1 Qualitative Techniques / 201 5.2.2 Quantitative Intrinsic Techniques / 204 5.2.3 Basic Quantitative Forecasting Techniques / 204 5.3 Time-Series Analysis / 209 5.3.1 Basics of Time-Series Analysis / 209 5.3.2 Decomposition of a Time Series / 211 5.4 Associative (Correaltion) Forecasting / 222 5.4.1 Simple Associative Model / 223 5.4.2 Correlation Coefficient for Regression / 224 5.4.3 Multiple Variable Associative Forecast / 225 5.5 Alternative Forecasting Methods / 226 5.6 Managing Forecast Performance / 230 5.6.1 Measures of Forecast Error / 231 5.6.2 Why Forecasts Fail / 236 5.7 Summary / 238 Discussion Questions / 239 Problems / 239 Case Study / 242 References / 244 viii CONTENTS Demand Management / 245 6.1 Defining Demand Management / 246 6.1.1 Demand Management Definitions / 247 6.1.2 Components of Demand Management / 247 6.1.3 Formulating Demand Strategies / 248 6.2 Creating the Demand Plan / 250 6.2.1 Demand Planning / 250 6.2.2 Planning Demand / 251 6.2.3 Marketing Plan / 258 6.2.4 Sales Plan / 262 6.2.5 Developing the Demand Forecast / 265 6.3 Creating the Supply Plan / 270 6.3.1 Elements of Production Planning / 271 6.3.2 Resource Planning / 276 6.3.3 Inventory and Distribution Planning / 280 6.4 Balancing the Demand and Supply Plans / 283 6.4.1 S&OP: A Balancing Act / 284 6.4.2 S&OP Foundations / 286 6.4.3 Working with S&OP Planning Grids / 288 6.5 Monthly S&OP Process / 291 6.5.1 Step 1: Data Gathering / 292 6.5.2 Step 2: Demand Planning / 293 6.5.3 Step 3: Supply Planning / 293 6.5.4 Step 4: Pre-Executive S&OP Meeting / 295 6.5.5 Step 5: Executive S&OP Meeting / 296 6.5.6 Benefits of the S&OP Process / 298 6.6 Summary / 298 Discussion Questions / 301 Problems / 301 Case Study / 303 References / 306 PART INVENTORY MANAGEMENT IN THE SUPPLY CHAIN ENVIRONMENT / 307 Managing Supply Chain Inventories / 309 7.1 Inventory Management Basics / 310 7.1.1 The Magnitude of Inventory / 312 7.1.2 Inventory Management Objectives / 312 7.1.3 How Does Inventory Provide Value? / 313 7.1.4 The Purpose of Inventory / 315 7.1.5 The Role of Inventory Management / 316 7.1.6 Classes of Inventory / 317 7.1.7 Function of Inventory / 318 7.1.8 Types of Supply Chain Inventory / 320 CONTENTS ix 7.2 Components of Inventory Decisions / 322 7.2.1 Cycle Inventory / 322 7.2.2 Safety Inventory / 323 7.2.3 Seasonal Inventory / 324 7.2.4 Surplus and Obsolete Inventory / 325 7.3 Inventory Costs / 326 7.3.1 Elements of Inventory Cost / 326 7.3.2 Inventory Valuation / 332 7.4 Inventory Control / 335 7.4.1 Transaction Management / 336 7.4.2 ABC Analysis / 337 7.4.3 Periodic Physical Inventory and Cycle Counting / 340 7.5 Performance Measurement / 342 7.5.1 Customer Service / 342 7.5.2 Financial Statements and Inventory / 344 7.5.3 Inventory Turns and Ratios / 346 7.6 Summary / 349 7.6.1 Supplement: Inventory Valuation Methods / 350 Discussion Questions / 354 Problems / 354 References / 356 Statistical Inventory Management / 357 8.1 Statistical Inventory Replenishment Concepts / 358 8.1.1 Understanding the Demand Driver / 358 8.1.2 Concept of Stock Replenishment / 360 8.1.3 Replenishment Review Interval / 362 8.1.4 Basic Terms of Statistical Inventory Replenishment / 364 8.2 Inventory Replenishment Techniques / 365 8.2.1 Visual Review System / 365 8.2.2 Two-Bin System / 366 8.2.3 Periodic Review / 367 8.2.4 Reorder Point / 367 8.2.5 Time-Phased Order Point (TPOP) / 367 8.2.6 Lean Inventory Systems / 368 8.3 Reorder Point Systems / 368 8.3.1 Reorder Point Basics / 368 8.3.2 Min/Max and Periodic Review / 379 8.4 Order Quantity Techniques / 382 8.4.1 The Economic Order Quantity / 383 8.4.2 Replenishment by Item Class / 392 8.5 Lean Inventory Management / 394 8.5.1 Lean and Supply Chain Management / 395 8.5.2 The Lean Inventory Replenishment Pull System / 397 ... demand plan, creating the supply plan, and balancing demand and supply plans through the sales and operations planning (S&OP) process Part 3, Inventory Management in the Supply Chain Environment,... exploration of how demand management plans are developed and used to drive the tactical strategies of the supply chain Focal points include defining supply chain demand management, creating the demand... of the second edition of Distribution: Planning and Control The purpose of the third edition is twofold: the first is to integrate today’s newest supply chain theories and business practices into