To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Chapter 8 Supply-Chain Management

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply Chain Figure 8.2 Supplier of materialsSupplier of services Tier 1 Tier 3 Tier 2 Legend Customer Distribution center Manufacturer

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply Chain Figure 8.3 Electric power utility Home customers Commercial customers Other electric utilities Electric transformers Facility maintenance services Janitorial services Programming services Electric energy backup power Office supplies Fuel supplies

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Integrated Supply Chain SuppliersPurchasing ProductionDistribution Customers Phase 1: Independent supply-chain entities SuppliersCustomers Internal supply chain Materials management department ProductionPurchasingDistribution Phase 2: Internal integration Figure 8.4 Integrated supply chain Customers Suppliers Internal supply chain Phase 3: Supply-chain integration

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply-Chain Process Measures Table 8.1 Purchasing  Percent of suppliers’ deliveries on time  Suppliers’ lead times  Percent defects in purchased materials and services  Cost of purchased materials and services Order Fulfillment  Percent of incomplete orders shipped  Percent of orders shipped on time  Time to fulfill the order  Percent of returned items or botched services  Cost to produce the item or service  Customer satisfaction with the order- fulfillment process Order Placement  Percent orders taken accurately  Time to complete the order- placement process  Customer satisfaction with the order- placement process

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply-Chain Environments Table 8.2Environments Best Suited for Efficient and Responsive Supply Chains FactorEfficient Supply Chains Responsive Supply Chains DemandPredictable; low Unpredictable; high forecast errors CompetitiveLow cost; consistent Development speed; fast prioritiesquality; on-time delivery times; delivery customization; volume flexibility; high- performance design quality New-productInfrequentFrequent introduction ContributionLowHigh margins Product varietyLowHigh

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply-Chain Design Table 8.3Design Features for Efficient and Responsive Supply Chains FactorEfficient Supply Chains Responsive Supply Chains Operations Make-to-stock or Assemble-to-order, make- strategy standardized services;to-order, or customized emphasize high services; emphasize volume, standardized product or service products, or services variety Capacity LowHigh cushion InventoryLow; enable high As needed to enable fast investmentinventory turnsdelivery time Lead timeShorten, but do not Shorten aggressively increase costs Supplier Emphasize low prices; Emphasize fast delivery selection consistent quality; on-time; customization; time deliveryvolume flexibility; high- performance design quality

To Accompany Ritzman & Krajewski, Foundations of Operations Management © 2003 Prentice-Hall, Inc. All rights reserved. Supply-Chain Dynamics (a) Customer Firm A Firm B Firm C Firm A Time (b) Figure 8.5 Materials requirements