Supply Chain Management Common Learning Block I Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

13-2 Supply Chain Basics People / Processes / Technology Chain / Network Levels of Supply Chain First Tier – Factories to main operators Second Tier – Suppliers to First Tier LO1

13-3 Supply Chain Customers’ customers Suppliers’ suppliers Focal Firms – The Initiator End Customer Voice of Customers Values and Expectations LO1

13-4 Supply Chain Focus Products Information Funds Moving From: Suppliers Distribution Retailers Customers Reverse Logistics LO2

13-5 Supply Chain Management Plan / Direct / Control Supply Chains CSCMP – Council of Supply Chain Management Professionals It Encompasses The Following: Procurement / Conversion / Management Links Major Business Functions High Performing Business Model LO3

13-6 Supply Chain Activities Sourcing of Raw Materials and Parts Manufacturing and Assembling Warehousing and Controlling Inventory Entering and Managing Orders Finishing, Customizing and Packaging Distributing Across All Channels Delivering to Final Customers Managing Relationships with Suppliers Managing Relationships with Customers Maintaining Infor. Systems for Monitoring LO4

13-7 Supply Chain Strategy Corporate Strategy Determines Target Mkt Compete on Price, Service, Quality, Innovation, Flexibility or a Combination The Business Plan Demand & Supply Plan Supply Chain (to fill customers orders) LO5

13-8 Interdepartmental Work Functions contribute to goal of securing lowest transportation Costs R&D Procurement Manufacturing LO5

13-9 Supply Chain Financials Optimizing Supply Chain Eliminate Company Vs. Company Supply Chain Vs. Supply Chain Services – Lower Supply Chain Costs Manufacturing – Higher Supply Chain Costs LO6

13-10 Profit Leverage Supply Chain Mgmt Corporate Success Profit Leverage Profit Leverage = Decrease expenses through Supply Chain Management Flows from decreasing expenses and increasing efficiencies Profit Leverage Effect – Providing Industries with greater options for increasing profits through expense reduction. LO7

13-11 Today’s Supply Chain Global Era U.S. Economic Recession of the 1980’s Global Competition (China) Characteristics of The Era Intense Competition in industries New strategies to increase market share Rapid increase in technology / shorter product life cycle e.g. computers, mobile phones, fashion LO7

13-12 Today’s Supply Chain Increased Importance of Supply Chain Use of the internet Use of International Data Networks 2000’s to the present Relationships with suppliers Cooperation replaced adversarial relationships New Strategies Supplier Development / Design Involvement / Full Service Suppliers / Strategic Cost Management LO7

13-13 Supply Chain Management Principles Procurement – All activities required to purchase materials, products, and services. Operations – The planning and manufacturing (conversion) of goods. Logistics – The movement and storage of materials, products, and services Integration – The communication and visibility within companies and suppliers; customers and service providers. LO8

13-14 Supply Chain Estimated to control up to 90% of the cost associated with delivering a final product or service ERP (Enterprise Resource Planning) – An integrated, real-time information sharing module to monitor and control the business Can help firms obtain economies of scale LO8

13-15 Transportation Transportation Operations focuses on timely movement of materials and products within and between organizations Transportation Modes Depend on: Costs / Values / Dimensions / Weights / Time- Definite Delivery / Requirements / Hazardous / Refrigerated Third-party Logistics – Forwarders & Brokers LO8

13-16 Customer Service Delivery of Satisfaction – Typically assigned to logistics or sales Focus of Customer Service Identifying Customers Needs, Wants, and Expectations before, during, and after purchase Customer Service Operations Interfaces with Logistics, Transportation, Operations, Warehousing & Inventory to control costs LO9

13-17 Customer Services Customer Service Operations is important to: The Public Sector (Airports, Ports, & Terminals) The Private Sector (Manufacturers, Wholesalers, Retailers, Carriers, & Third-party logistics providers Due to Increased demand & competition, all industries are involved in Supply Chain e.g. distribution channels, e-commerce, brick and mortar stores, & reverse logistics. Skills to handle customer complaints and communicate consistently

13-18 ERP In ERP, Customer Service Operation is supported as follows: Inventory Stock Status Customer Contact Management Sales Force Management Customer Relationship Management (CRM)

13-19 Warehousing Warehousing is a function of logistics controls and involves: Receiving / Storing / Retrieving / & Distribution Warehousing also provides the following services: Picking / Packing / Final Assembly & Packaging / Putting Multiple Products Together as kits / & Refurbishing

13-20 Warehousing Warehousing is Supported By: WMS (Warehousing Management Systems) within the ERP system. WMS is supported by Integrated Material Handling Systems such as: Equipment to move, put away or retrieve goods Sophisticated flow of information and communication to optimize efficiency

13-21 Demand Planning Demand planning – the process of planning materials from inbound to manufacturing Forecasting – What is needed to have ready for the customer Demand planning focuses on what is needed in order to meet customer inventory levels from forecasting

13-22 Inventory Management Inventory Management involves seeing/controlling & managing inventory levels to maximize efficiency and profitability Interacts with: Warehousing Transportation Demand Planning

13-23 Supply Chain Today Since the 1980’s - Companies have decreased inventory levels & carrying costs Technology is used to a greater extent today to meet customers needs with a high level of service and lower cost ERP manages inventory at all levels and is used to correct errors quickly

13-24 Operations Department Operations Department supports lean and efficient flow of supply management and procurement Global sourcing Risk – Climate / Political / Social Monitors – Availability / Pricing /Currency Fluctuations Protects Reputation – Socially responsible practices

13-25 Operations Department Procurement – Ensures accurate product description, collaborates to determine specifications and quality Procurement balances lowest purchase costs with other impacts on the company including the time it takes to receive products Some suppliers are close to production facilities others are across continents making procurement a global function

13-26 Procurement – A Global Function Procurement must understand International time zones Approaches to mitigating interuptions such as natural disasters, embargoes, strikes and military action

13-27 EDI EDI (Electronic Data Interchange) used in an effort to decrease costs. EDI is used to: Evaluate search engines Vendor performance managementp Purchase order management Bid Management Contract Management