Copyright Cengage Learning 2013 All Rights Reserved 1 Chapter 14: Supply Chain Management Introduction to Designed & Prepared by Laura Rush B-books, Ltd.

Copyright Cengage Learning 2013 All Rights Reserved 2 Learning Outcomes LO 1 LO 2 LO 3 Define the terms supply chain and supply chain management, and discuss the benefits of supply chain management Discuss the concept of supply chain integration and explain why each of the six types of integration is important Identify the eight key processes of excellent supply chain management, and discuss how each of these processes impacts the end customer Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains LO 4

Copyright Cengage Learning 2013 All Rights Reserved 3 Learning Outcomes Describe the logistical components of the supply chain Explain why supply chain performance measurement is necessary and important Discuss why the supply chains of the present and future will be both environmentally conscious and sustainable, and the implications of these changes Discuss new technology and emerging trends in supply chain management LO 6 LO 7 LO 5 LO 8

4 Supply Chains 4 The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics functions. Copyright Cengage Learning 2013 All Rights Reserved

5 Supply Chains Supply Chain Management- A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value. Copyright Cengage Learning 2013 All Rights Reserved

6 Supply Chain Integration System Approach System Approach A key principle of supply chain management – that multiple firms work together to perform tasks as a single, unified system, rather than as several individual companies acting in isolation. Supply Chain Integration Supply Chain Integration When multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer. Copyright Cengage Learning 2013 All Rights Reserved

7 Relationship Integration Relationship Integration Relationship Integration The ability of two or more companies to develop social connections that serve to guide their interactions when working together. Role Specificity Role Specificity When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which firms are the followers, and which responsibilities are assigned to each firm. Copyright Cengage Learning 2013 All Rights Reserved

8 Measurement Integration Measurement Integration Measurement Integration The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals Activity- Based costing (ABC) An accounting method used in measurement integration to assess the costs associated with each supply chain activity Copyright Cengage Learning 2013 All Rights Reserved

9 Technology and Planning Integration Technology and planning integration The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain Copyright Cengage Learning 2013 All Rights Reserved

10 Material and Service Supplier Integration The strategic alignment between a firm and its supply chain materials and services providers that enables the firm to streamline work processes and provide smooth, high-quality customer experiences. Copyright Cengage Learning 2013 All Rights Reserved

11 Internal Operations Integration Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements Copyright Cengage Learning 2013 All Rights Reserved

12 Customer Integration Customer Integration Customer Integration A competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain ABC Segmentation The supply-chain process whereby customers are placed into groups A, B, and C according to their overall long-term value to the firm and to the extent to which the firm can serve their desires Copyright Cengage Learning 2013 All Rights Reserved

13 Customer Relationship Management Customer Relationship Management Process - The prioritization of a firm’s marketing focus on different customer group’s long-term value to the company or supply chain; designed to identify and build relationships with good customers. Copyright Cengage Learning 2013 All Rights Reserved

14 Customer Service Management Process- A multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; designed to ensure that customer relationships remain strong. Copyright Cengage Learning 2013 All Rights Reserved

15 Demand Management Demand Management Process- The alignment of supply and demand throughout the supply chain to anticipate customer requirements at each level and create demand- related plans of action prior to actual customer purchasing behavior. Copyright Cengage Learning 2013 All Rights Reserved

16 Order Fulfillment Order Fulfillment Process- A supply chain management process involves generating, filing, delivering, and providing on-the- spot service for customer orders. Copyright Cengage Learning 2013 All Rights Reserved

17 Manufacturing Flow Management 17 Manufacturing Flow Management Process - A process that ensures that firms in the supply chain have the resources they need. Copyright Cengage Learning 2013 All Rights Reserved

18 Supplier Relationship Management Process - A supply chain management process that supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers. Copyright Cengage Learning 2013 All Rights Reserved

19 Product Development and Commercialization Product Development and Commercialization Process- The group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms. Copyright Cengage Learning 2013 All Rights Reserved

20 Returns Management Returns Management Process- A process that enables firms to manage volumes of returned product efficiently, while minimizing costs and maximizing the value of the returned assets to the firms in the supply chain. Copyright Cengage Learning 2013 All Rights Reserved

21 Supply Chain Management Lean Supply Chain Management – The strategy that focuses primarily on the removal of waste from the supply chain to achieve the lowest total cost to the members of the supply chain system. Agile Supply Chain Management – The supply chain strategy that focuses primarily on the ability of the firm to fulfill customer demand, even if this means somewhat higher costs. Copyright Cengage Learning 2013 All Rights Reserved

22 Logistical Components of the Supply Chain Supply Chain Team Sourcing & Procurement Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System Copyright Cengage Learning 2013 All Rights Reserved

23 Supply Chain Performance Measurement A good metric is characterized by five qualities: Creates understanding of strategic objectives and tactical plans Promotes behaviors that are consistent with achieving these objectives Allows for recording of actual results/outcomes Allows companies to compare themselves to competitors and customer expectations Motivates continuous improvement Copyright Cengage Learning 2013 All Rights Reserved

24 Supply Chain Management Green Supply Chain Management—the integration of environmentally conscious thinking into all phases of key supply chain management processes. Copyright Cengage Learning 2013 All Rights Reserved

25 Sustainability Supply Chain Sustainability—A sustainable supply chain employs renewable natural resources wherever possible. Copyright Cengage Learning 2013 All Rights Reserved

26 Trends in Supply Chain Management Electronic distribution Outsourcing of logistics functions Advanced computer technology Globalization of supply chain management Copyright Cengage Learning 2013 All Rights Reserved