This power point file was originally prepared By the following MBA Students of Southern Illinois University while Dr. Eom was a visiting professor during the summer of 2001 academic year: April Howard, Angela Boyd Dan Scherer, Laurence Berrouet Supply Chains and Supply Chain Management

Definition- Supply Chain describes all the activities related to the acceptance of an order from an customer and fulfilling it (Turban, McLean, and Wetherbe 2001). collection of physical entities, such as manufacturing plants, distribution centers, conveyances, retail outlets, people and information, which are linked together into processes supplying goods or services from source through consumption (Laudon & Laudon 2001)

Efficient and Effective In an efficient and effective supply chain, all components are integrated and linked from one phase to the next and it all flows well. A simple supply chain links a company that manufactures a product with its suppliers and its distributors.

Inventory replenishment system triggered by customer purchases Best in industry Small inventory costs Allows Wal-Mart to adjust purchases of goods to meet customer demands Lowest payout of sales revenue for overhead among competitors

Supply Chain Management Plan, organize, and coordinate all the supply chain’s activities Relay team running a race The loop Eliminate delays and cut the amount of resources tied up along the way Streamline the company’s internal operations or reduce inventory costs by switching to JIT

Four decision areas Location- geographic placement of production facilities, stocking points, and sourcing points Product- what products to produce, which plants to produce them in, etc. Inventory- means by which inventories are managed Transportation- how much does it cost to transport?

Goals/Benefits Puts focus on improving service ability to customers, improving efficiency, reducing inventory, reducing cycle & lead times, and reducing costs Reducing uncertainty and risks in the supply chain Non-global supply chains = suppliers closer to customers, better communication, smoother flow, and responsiveness to customers increases

Supply Chain Components Upstream supply chain Internal supply chain Downstream Supply Chain

Upstream Supply Chain Includes suppliers and their suppliers For Example: a cow farmer and dairy producer

Internal Supply Chain Includes all the internal process to turn material inputs into final products or services This would include all the steps necessary to turn milk and other material inputs, including chocolate, wooden Popsicle sticks, cardboard boxes, and ice cream into boxes of ice cream bars

Downstream Supply Chain Consists of all the necessary components to deliver the product to end users This component consists of distributors, grocery and convenience stores, advertisers, and the local ice cream man

Reverse Logistics This occurs when a supply chain goes in reverse order from the consumer back to the manufacturer. Reverse Logistics might occur if a product or service is defective based on the customer or manufacturer standards. (recalls or returns)

Supply Chain Problems Delays in production, distribution etc. Expensive Inventories Lack of partners’ coordination Uncertainties in deliveries Poor demand forecast Interference with production Poor quality

Uncertainty The major problem of the supply chain is uncertainty. The major source of the uncertainty is the demand forecast which can be influenced by the following factors: Competition Prices Weather conditions Technological development Customer confidence

Delivery Time Another uncertainty that causes problems is delivery time. Delivery time may depend on the following: Machine failures Road conditions Traffic jams, etc.

Global Supply Chain Problems Can be very long and complex Possible cross-broader problems Need information technology support of communication and collaboration Possible delays due to customs, tax, translations, and politics

Solutions to the Problems To solve the problems of supply chains there must be coordination. Coordination must exist between suppliers and manufacturers in order to adequately meet the demand of consumers. This balance or coordination can be produced by eliminating or at least minimizing the uncertainties within the supply chain.

Removing Uncertainties Many things can be done to improve coordination and remove uncertainties within the supply chain: Companies can use outsourcing during demand peaks instead of trying to do it all themselves. They can also buy rather than make production inputs when demand is high. The chain can be configured with optimal shipping plans as well as use fewer suppliers. There needs to be a strategic partnership with suppliers to gain an advantage over competitors. Companies can use just-in-time approaches so small amounts of supplies are delivered when needed in order to reduce inventory costs. They can also manufacture outputs only after orders are received. Supplier-buyer relationships can be improved. The use of e-commerce, the Internet and other new developing information technologies can also greatly reduce the amount of uncertainties within the supply chain.

Information Technology Solutions Some IT solutions include: Automate order taking Internet application Web based ordering or intelligent agents Electronic payments Make-to-order (JIT) Tracking systems

SCM AND INTERNET- BASED TECHNOLOGIES The explosion of information technology, especially the Internet-based technologies, has revolutionized the way organizations conduct their business and handle relations with their different partners.

INTERNET-BASED TOOLS The Internet in forms of Intranets and Extranets can assist the firms in achieving cost reductions and maximizing productivity along the supply chain while remaining market- flexible

SOME ADVANTAGES OF INTRANETS- EXTRANETS Facilitates exchanges of information and funds (between the firm and its clients and suppliers) Allows “paperless”, faster and more accurate communication and transactions Increase customers’ satisfaction ( faster transaction recording, faster delivery of product…)

SOME ADVANTAGES OF INTRANETS- EXTRANETS Enterprises have access to all kinds of information Firms can better choose suppliers and get better deals Companies can reach customers faster and more effectively

SOME ADVANTAGES OF INTRANETS- EXTRANETS Firms can develop and improve marketing strategies, conduct market researches, discover new ideas, new techniques and develop new products/services, improve the manufacturing processes, and much more.

ISSUES WITH INTERNET TECHNOLOGIES Using new technologies imply changes in the organization’s infrastructure and the manner in which business is done. But managerial literature reminds us that where there is change, there will be resistance. And resistance can come from any part of the supply chain from employees to suppliers and clients. Therefore, the companies need to be careful while implementing its new systems. They need to monitor reactions and come up with ways to facilitate the learning process.

SCM AND INTERNET-BASED TECHNOLOGIES The explosion of information technology, especially the Internet-based technologies, has revolutionized the way organizations conduct their business and handle relations with their different partners.

Questions?