Chapter 13 Supply chain management, after studying this chapter you will be able to: Introduce the concept of a firm’s supply chain and show how it has evolved over time to its present status, identify current trends that are affecting the characteristics of a supply chain, present the requirements necessary for a successful supply chain,...
DAVIS F O U R T H E D I T I O N AQUILANO CHASE chapter 13 Supply Chain Management PowerPoint Presentation by Charlie Cook © The McGraw-Hill Companies, Inc., 2003 Chapter Objectives Chapter Objectives • Introduce the concept of a firm’s supply chain and show how it has evolved over time to its present status • Identify current trends that are affecting the characteristics of a supply chain • Present the requirements necessary for a successful supply chain • Discuss the impact of technology on a firm’s supply chain • Define in-transit inventory costs and show how they © The McGrawHill impact the purchasing decision.Companies, Inc., 2003 Fundamentals of Operations Management 4e 13–2 Managerial Issues Managerial Issues • Concentration of resources on the firm’s core competencies such as supply chain management • Increasing proportion of purchased goods and services as inputs into products • Increased pressure to reduce inventories • Applying advances in information technology to strategically manage supplier relationships and the supply chain itself FundamentalsofOperations Management4e âTheMcGrawưHill Companies,Inc.,2003 133 DefinitionofSupplyChainManagement DefinitionofSupplyChainManagement ã Supply Chain –The steps and the firms that perform these steps in the transformation of raw inputs into finished products bought by customers • Inbound Logistics –The delivery of goods and services that are purchased from suppliers and/or their distributors • Outbound Logistics –The delivery of goods and services that are sold © The McGrawHill to a firm’s customers and/or distributors Fundamentals of Operations Companies, Inc., 2003 Management 4e 13–4 A Company’s Supply Chain A Company’s Supply Chain Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.1 13–5 The Evolution of Supply Chain Management The Evolution of Supply Chain Management Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.2a 13–6 The Evolution of Supply Chain Management The Evolution of Supply Chain Management Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.2b 13–7 The Trend Toward Reducing The Trend Toward Reducing the Number of Suppliers the Number of Suppliers Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.3 13–8 Key Terms Key Terms • Supplier-Managed Inventories –Inventories in a firm’s facility that are the responsibility of the supplier to maintain and to replenish as necessary • Consignment Inventories –Inventories that are physically present in a firm’s facility but that are still owned by the supplier • EDI (electronic data exchange) –Direct link between a manufacturer’s database © The McGrawHill and that of the vendor Fundamentals of Operations Companies, Inc., 2003 Management 4e 13–9 Key Terms (cont’d) Key Terms (cont’d) • Quick Response (QR) Programs –Just-in-time replenishment system using barcode scanning and EDI • Efficient Customer Response (ECR) –Strategy for bringing distributors, suppliers, and grocers together using bar-code scanning and EDI Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 13–10 Factors Impacting the Supply Chain Factors Impacting the Supply Chain Reduced Number of Suppliers Increased Competition Shorter Product Life Cycles Fundamentals of Operations Management 4e SupplierManaged Inventories Supply Chain Contingent Inventories Shared or Advances In Reduced Technology Risk © The McGrawHill Companies, Inc., 2003 13–11 Requirements for Successful Supply Chain Requirements for Successful Supply Chain Long-Term Long-Term Relationships Relationships Trust Trust Successful Successful Supply SupplyChain Chain Management Management Individual IndividualStrengths Strengths Fundamentals of Operations Management 4e Information Information Sharing Sharing © The McGrawHill Companies, Inc., 2003 13–12 The Role of Logistics in The Supply Chain The Role of Logistics in The Supply Chain • Partnering –Establishing a strategic alliance or partnership with a firm that specializes in transportation or logistics –Using a logistics partner to store finished goods at the logistics partner’s hub or distribution center Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 13–13 The Role of Logistics in The Supply Chain The Role of Logistics in The Supply Chain • In-Transit Inventory Costs –Combination of transportation and carrying costs associated with delivery of raw materials and components that are inbound to the plant Total annual (inbound) costs = Transportation costs + Intransit inventory carrying costs + Purchase costs TC D M X i = = = = = DM + (X/365)iDC + DC Annual demand Transportation cost per unit Transportation time in days Annual cost of capital C = Unit cost per item Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 13–14 The TradeOff between Transportation Costs The TradeOff between Transportation Costs and the Cost of Capital with Respect and the Cost of Capital with Respect to the Shipment of Products to the Shipment of Products Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.4 13–15 Disintermediation Disintermediation • Disintermediation –The trend to reduce many of the steps in the supply chain by reducing the number of intermediaries in the chain • Cross-docking • Direct-to-store shipments –JIT II®: vendor and customer work closely together, eliminating many of the intermediate steps that now exist • Vendor representative located at facility • Direct database linkage with vendor’s © The McGrawHill manufacturing facility Fundamentals of Operations Companies, Inc., 2003 Management 4e 13–16 Major SCM Software Packages Major SCM Software Packages Fundamentals of Operations Management 4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.5 13–17 ... Fundamentals? ?of? ?Operations? ? Management? ?4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.2a 13–6 The Evolution? ?of? ?Supply Chain? ?Management The Evolution? ?of? ?Supply Chain? ?Management Fundamentals? ?of? ?Operations? ?... A Company’s Supply Chain Fundamentals? ?of? ?Operations? ? Management? ?4e © The McGrawHill Companies, Inc., 2003 Exhibit 13.1 13–5 The Evolution? ?of? ?Supply Chain? ?Management The Evolution? ?of? ?Supply Chain? ?Management Fundamentals? ?of? ?Operations? ?... supply chain itself Fundamentals? ?of? ?Operations? ? Management? ?4e © The McGrawHill Companies, Inc., 2003 13–3 Definition? ?of? ?Supply Chain? ?Management Definition? ?of? ?Supply Chain? ?Management • Supply