In this chapter we will discuss: Supply chain & supply chain management, purchasing and logistics, measuring supply chain performance, supply chain dynamics—the bullwhip effect, improving supply chain performance, supply chain structural improvements, supply chain infrastructural improvements, technology and supply chain management.
Operations Management Contemporary Concepts and Cases Chapter Ten Supply Chain Management McGrawHill/Irwin Copyright © 2011 by The McGrawHill Companies, Inc. All rights reserved Chapter Ten Outline Supply Chain & Supply Chain Management Purchasing and Logistics Measuring Supply Chain Performance Supply Chain Dynamics—the Bullwhip Effect Improving Supply Chain Performance Supply Chain Structural Improvements Supply Chain Infrastructural Improvements Technology and Supply Chain Management 102 Supply Chain The set of entities and relationships that cumulatively define materials and information flows both downstream toward the customer and upstream toward the very first supplier 103 Supply Chain Management “The design and management of seamless, valueadded processes across organizational boundaries to meet the real needs of the end customer.” Institute for Supply Management 104 A Typical Supply Chain 105 SCOR is founded on five distinct management processes Plan Deliver Return Suppliers’ Supplier Source Make Return Deliver Return Supplier Source Make Return Deliver Return Your Company Internal or External Source Return Make Deliver Source Return Return Customer Customer’s Customer Internal or External SCOR Model Building Block Approach SCOR = Supply Chain Operations Referencemodel 106 Purchasing and Logistics The purchasing function: sources inputs into the transformation process of the firm from other forprofit and nonprofit organizations – Global sourcing The logistics function: typically responsible for the actual movement and storage of goods across organizations in a supply chain – Reverse logistics 107 Measuring Supply Chain Performance (1) Delivery – – – On time delivery of entire orders Fill rate Lead time Quality – – – Product or service performance Conformance to specifications Customer satisfaction 108 Measuring Supply Chain Performance (2) Flexibility – – Time to change volume of output by a fixed amount Time it takes to change the mix of products or services delivered Time – Total throughput time – Cash to cash cycle Days in inventory + days in accts receivable days in accounts payable 109 Measuring Supply Chain Performance (3) Cost – Materials and components – Fabrication and assembly – Logistics WIP among supply chain members Finished goods to the customer 1010 System Dynamics in Supply Chains Supply chain is a highly interactive system. Decisions in each part of the chain affect the other parts There is an accelerator (bullwhip) effect Even with perfect information, replenishment lead times lead to an accelerator effect The best way to improve a supply chain is to reduce the total replenishment time and to feed back actual demand information to all levels 1011 Improving Supply Chain Performance Basic Ways to Improve Supply Chain Structure: – Change structure Capacity, Facilities, Process technology, Vertical integration – Change infrastructure People, Information systems, Organization, Production and inventory control, Quality control systems 1012 Supply Chain Structural Improvements Forward and Backward integration Major process simplification Changing the configuration of factories, warehouses, or retail locations Major product redesign Working with thirdparty logistics providers 1013 Supply Chain Infrastructure Improvements Crossfunctional teams Partnerships with suppliers and customers Setup time reduction to reduce lot sizes Integrated information systems Crossdocking—keeps goods out of warehouses 1014 Technology and SCM Growth of ecommerce – B2B (businesstobusiness) – B2C (businesstoconsumer) Fundamental processes in supply chains: – Order placement Information before order is entered Actual order entry – Order fulfillment Direct link to internal operations & suppliers 1015 Processes for e-Procurement (Figure 10.6) REQUEST Requirement Selection Requisition Approval BUY Requisition Source Negotiate Contract SUPPLY Confirm Process Order Ship Invoice PAYMENT Receive Deliver Match Pay 1016 Types of e-procurement Online catalogs listing products, prices, etc Thirdpart auctions—reverse auctions Private exchanges to connect suppliers 1017 Problems with e-procurement Too much focus on technology; not enough on systems Insufficient concern about joint value propositions so that both partners benefit Fragmented efforts within and across companies Record accuracy and data issues 1018 Summary Supply Chain & Supply Chain Management Purchasing and Logistics Measuring Supply Chain Performance Supply Chain Dynamics—the Bullwhip Effect Improving Supply Chain Performance Supply Chain Structural Improvements Supply Chain Infrastructural Improvements Technology and Supply Chain Management 1019 End of Chapter Ten 1020 ... 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