1 Supply Chain Management & Logistics Management Dr. EzzElarab M.Elawoor University of Palestine

2 The flows of apparel and fashion accessory products, services, information, and finances

3 The Emergence of Supply Chain Concept ________________________________________ –Customer base is not limited to a domestic market but expanded to the global market. –Growing number of global competitors –“Everyday low prices” policy and its impact on cost cutting. –Demanding retailers leveraging more consumer information and supplier choices. Deregulation means increased competition Technology –Unlimited access to information –Tools to improve efficiency and effectiveness

4 Supply Chain as a Competitive Leverage Improve the organization’s efficiency to compete in the global market M&As, alliances, … and managed supply chains Supply Chain is an vital and independent concept. © 2003, Coyle, Bardi, and Langley.

5 A supply chain is a set of three or more firms directly linked by one or more of the chain and insure the flows of products, services, information, from a point of origin to a point of consumption. © 1999, Min et al.

6 A basic supply chain is a firm, an immediate supplier, and an immediate customer directly linked by one or more of the upstream and downstream flows of products, services,finances, and information. © 1999, Min et al.

7 SUPPLIER FIRM DIRECT SUPPLY CHAIN CUSTOMER Tommy Hilfiger in Hong Kong May Department Stores in St. Louis Sewing shops in Hong Kong © 1999, Min et al.

8 An extended supply chain includes suppliers of the immediate supplier and customers of the immediate customer, all linked by one or more of the upstream and downstream flows of products, services, finances, and information. © 1999, Min et al.

9 SUPPLIER EXTENDED SUPPLY CHAIN CUSTOMER SUPPLIER’S SUPPLIER... CUSTOMER’S CUSTOMER FIRM... Yarn suppliers in Korea Sewing shops in Hong Kong Tommy Hilfiger in Hong Kong Lord & Taylor in New York May Department Stores in St. Louis © 1999, Min et al.

10 An ultimate supply chain includes all the firms involved in all the upstream and downstream flows of products, services, finances, and information from the ultimate supplier to the ultimate customer. © 1999, Min et al.

11 SUPPLIER ULTIMATE SUPPLY CHAIN CUSTOMER ULTIMATE SUPPLIER... ULTIMATE CUSTOMER FIRM... FINANCIAL PROVIDER THIRD PARTY LOGISTICS SUPPLIER MARKET RESEARCH FIRM Tommy Hilfiger © 1999, Min et al.

12 Cooperative relationships between two companies are distinguished from supply chains, since this type of relationship does not involve any one company in simultaneous upstream and downstream relationships. © 1999, Min et al.

13 SELLERBUYER Channel Partnership © 1999, Min et al.

14 There is a definite demarcation between supply chains as phenomena that exist in business and the management of those supply chains. © 1999, Min et al.

15 Definitions of supply chain management fall into two categories: Supply Chain Management as a management philosophy and Supply Chain Management as a set of activities to implement a management philosophy both within a firm and across the firms. © 1999, Min et al.

16 The Supply Chain Philosophy A business philosophy that guides firms to manage the flows from supplier to ultimate user in a synchronized way The characteristics of SCM Philosophy: - to viewing the channel as a whole, and to managing the total flow of goods inventory from the supplier to the ultimate customer, - to synchronize and converge intrafirm and interfirm operational and strategic capabilities into a unified whole, –A unique concept to create unique and individualized sources of customer _______, leading to customer satisfaction.

17 A Supply Chain Orientation is the implementation by SCM of the systemic, strategic implications of the tactical activities and processes involved in managing the various flows in a supply chain. © 1999, Min et al.

18 Supply Chain Management is the implementation of a supply chain orientation across the whole process. © 1999, Min et al.

19 Supply Chain Management is the systemic, strategic implementation of the traditional business functions, the tactics, and the processes across these business functions within a particular company and across companies within the supply chain, for the purposes of improving the long- term performance of the involve companies and the business as a whole. © 1999, Min et al.

20 SUPPLY CHAIN MANAGEMENT OVERVIEW Supply Chain Management Consequences Differential Advantage Lower Costs Improved Customer Value and Satisfaction Supply Chain Orientation Willingness to address: Supply Chain Philosophy © 1999, Min et al.

21 Logistics in Supply Chain Management

22 Logistics in a Supply Chain Across Firms “Logistics is _____________________________ that plans, implements, and controls the efficient ____ and _____ of goods, ______, and __________ from the point of _____ to the point of __________ in order to meet customers’ requirements.” (Council of Logistics Management 1998)

23 A View of Business Logistics in a Firm © 2003, Coyle, Bardi, and Langley.

24 Logistics Management in a Firm’s Generic Value Chain Source: Michael E. Porter (1985), Competitive Advantage, p. 46

25 Traditional Logistics Management Suppliers Mfg. Distrib. Customers Adapted from Langley and Rutner

26 An Example of Traditional Approach: Team Hanes (Licensed Sports Apparel) Raw Material Inventory Manufacturer DC Inventory Retailer DC Inventory In-Store Model Stocks Production DC Replenishment Store Replenishment Consumer Demand Production OrdersRetailer Case OrdersStore Item Orders Product FlowsInformation Flows Adapted from Langley and Rutner

27 Emergence of Integrated Logistics Concept within a Firm © 2003, Coyle, Bardi, and Langley.

28 Integrated Logistics Concept in a Supply Chain © 2003, Coyle, Bardi, and Langley.

29 The Role of Logistics in SCM ______________________ –Visibility –Pull systems ________________________ –levels must be tailored to each customer –not all customers require the same service __________________________ –Coordination of supply chain activities may lower the landed cost. ____________________________ –Real-time two way information flows –Collaborative planning, implementation, and control of logistics activities in a supply chain

30 An example of Supply Chain Approach: Team Hanes Blank Garment Inventory Team Hanes DC Inventory In-Store Model Stocks ProductionStore Replenishment Consumer Demand Product FlowsInformation Flows Adapted from Langley and Rutner

31 Average Throughput Time of Dry Grocery Chain before and after ECR Implementation © 2003, Coyle, Bardi, and Langley.

32 Inventory Turns & Running Lean Number of times Dell and Compaq turn inventory over in each quarter, calculated at an annual rate. © 2003, Coyle, Bardi, and Langley.

33 Total Supply Chain Management Cost (All Sectors) Revenue % © 2003, Coyle, Bardi, and Langley.

34 Remember SCM concepts are Beyond Logistics Management Dell Computer's direct relationships with its customers create valuable information that, in turn, allows it to coordinate its entire value chain back through manufacturing to product design (with other firms). Wal-Mart, with its customer information and logistics capabilities, functions as a supply chain leader in its supply chain with manufacturers such as Procter & Gamble and the end users. Adidas brand is associated with high ideals such as commitment and honesty, and Adidas makes sure these ideal words apply to its supply chain members.

35 … and also remember Logistics Management has been evolving FROMTO

36 Chapter Summary and Review Questions So, what is supply chain philosophy? And SCO and SCM? Why supply chain-related concepts are gaining popularity today? What is logistics? What is the relationship between logistics and supply chain management?

37 Discussion