10 – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Integration 10 For Operations Management, 9e by Krajewski/Ritzman/Malhotra © 2010 Pearson Education PowerPoint Slides by Jeff Heyl

10 – 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Integration The effective coordination of supply chain processes through the seamless flow of information up and down the supply chain A river that flows from raw material suppliers to consumers  Upstream  Downstream Mitigating the effects of supply chain disruptions

10 – 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Integration Upstream Tier 3Tier 2Tier 1 Downstream Information flows Cash flows Tomato suppliers Tomato paste factories Tomato grading stations Retail sales Consumers Ketchup factory Figure 10.1 – Supply Chain for a Ketchup Factory

10 – 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Dynamics Bullwhip effect  Upstream members must react to the demand  Slightest change in customer demand can ripple through the entire chain External causes Internal causes

10 – 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Dynamics Consumers’ daily demands Retailers’ daily orders to manufacturer Manufacturer’s weekly orders to package supplier Package supplier’s weekly orders to cardboard supplier 9,000 7,000 5,000 3,000 0 Order quantity Month of April Day 1Day 30Day 1Day 30Day 1Day 30Day 1Day 30 Figure 10.2 – Supply Chain Dynamics for Facial Tissue

10 – 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Dynamics Integrated supply chains  High degree of functional and organizational integration minimizes disruptions  Integration must include linkages between the firm, its suppliers, and its customers  SCOR model Plan Source Make Deliver Return

10 – 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chain Dynamics First-Tier SupplierService/Product Provider Support Processes External Suppliers Support Processes Supplier relationship process New service/ product development process Order fulfillment process Business- to-business (B2B) customer relationship process External Consumers Supplier relationship process New service/ product development process Order fulfillment process Business- to-business (B2B) customer relationship process Figure 10.3 – External Supply Chain Linkages

10 – 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. New Service or Product Development DesignAnalysisDevelopmentFull Launch  Service or product not profitable  Need to rethink the new offering or production process  Post-launch review Figure 10.4 – New Service/Product Development Process

10 – 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supplier Relationship Process Design collaboration  Early supplier involvement  Presourcing  Value analysis Negotiation  Obtain an effective contract that meets the price, quality, and delivery requirements  Competitive orientation  Cooperative orientation

10 – 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supplier Relationship Process Buying  Procurement of the service or material from the supplier  e-purchasing  Loss of control Information exchange  Radio frequency identification (RFID)  Vendor managed inventories (VMI)

10 – 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. The Customer Relationship Process Customer relationship management (CRM) programs identify, attract, and build relationships with customers Marketing  Electronic commerce (e-commerce)  Business-to-Consumer (B2C) systems  Business-to-Business (B2B) systems

10 – 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. The Customer Relationship Process Customer service  Helps customers with answers to questions, resolves problems, and, provides general information  Call centers Order placement  Execute a sale, register the specifics, confirm acceptance, and track progress  Internet provides advantage

10 – 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Performance measures  Costs  Time  Quality  Environmental impact Levers for Improved Supply Chain Performance

10 – 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Performance Measures TABLE 10.1 | SUPPLY CHAIN PROCESS MEASURES Customer RelationshipOrder FulfillmentSupplier Relationship  Percent of orders taken accurately  Time to complete the order placement process  Customer satisfaction with the order placement process  Customer’s evaluation of firm’s environmental stewardship  Percent of incomplete orders shipped  Percent of orders shipped on-time  Time to fulfill the order  Percent of botched services or returned items  Cost to produce the service or item  Customer satisfaction with the order fulfillment process  Inventory levels of work- in-process and finished goods  Amount of greenhouse gasses emitted into the air  Percent of suppliers’ deliveries on-time  Suppliers’ lead times  Percent defects in services and purchased materials  Cost of services and purchased materials  Inventory levels of supplies and purchased components  Evaluation of supplier’s collaboration on streamlining and waste conversion  Amount of transfer of environmental technologies to suppliers

10 – 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Supply Chains and the Environment Sustainability  Environmental stewardship  Environmental protection  Productivity improvement  Risk minimization  Innovation Reverse logistics  Planning, implementing, and controlling flows from consumption back to origin  Closed-loop supply chain