McGraw-Hill/Irwin © The McGraw-Hill Companies, All Rights Reserved CHAPTER 10 Extending the Organization— Supply Chain Management

10-2 LEARNING OUTCOMES 10.1 List and describe the components of a typical supply chain 10.2 Define the relationship between decision making and supply chain management 10.3 Describe the four changes resulting from advances in IT that are driving supply chains 10.4 Summarize the best practices for implementing a successful supply chain management system

10-3 SUPPLY CHAIN MANAGEMENT The average company spends nearly half of every dollar that it earns on production In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains

10-4 BASICS OF SUPPLY CHAIN The supply chain has three main links: 1.Materials flow from suppliers and their “upstream” suppliers at all levels 2.Transformation of materials into semifinished and finished products through the organization’s own production process 3.Distribution of products to customers and their “downstream” customers at all levels

10-5 BASICS OF SUPPLY CHAIN Organizations must embrace technologies that can effectively manage supply chains

10-6 BASICS OF SUPPLY CHAIN

10-7 INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN IT’s primary role is to create integrations or tight process and information linkages between functions within a firm

10-8 INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN Factors Driving SCM

10-9 Visibility Supply chain visibility – the ability to view all areas up and down the supply chain Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain

10-10 Consumer Behavior Companies can respond faster and more effectively to consumer demands through supply chain enhances Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

10-11 Competition Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain Supply chain execution (SCE) software – automates the different steps and stages of the supply chain

10-12 Competition SCP and SCE in the supply chain

10-13 Speed Three factors fostering speed

10-14 SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS

10-15 SUPPLY CHAIN MANAGEMENT SUCCESS FACTORS SCM industry best practices include: 1.Make the sale to suppliers 2.Wean employees off traditional business practices 3.Ensure the SCM system supports the organizational goals 4.Deploy in incremental phases and measure and communicate success 5.Be future oriented

10-16 SCM SUCCESS STORIES Top reasons why more and more executives are turning to SCM to manage their extended enterprises

10-17 SCM SUCCESS STORIES Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains DSSs allow managers to examine performance and relationships over the supply chain and among: –Suppliers –Manufacturers –Distributors –Other factors that optimize supply chain performance

10-18 SCM SUCCESS STORIES

10-19 OPENING CASE STUDY QUESTIONS SecondLife 1.Would you need supply chain management systems in a virtual world such as Second Life? Why or why not? 2.How could a real company augment its supply chain management system through Second Life? 3.If you were an apparel company, such as Nike or REI, what would your virtual SCM system look like? Create a drawing of this system and be sure to include all upstream and downstream participants?

10-20 CHAPTER TEN CASE RFID – Future Tracking 1.What are some advantages and disadvantages of tagging students with RFID tags? 2.What are some advantages and disadvantages of tagging children’s pajamas with RFID tags? 3.Do you agree or disagree that tagging students with RFID tags is a violation of privacy rights? Explain why

10-21 CHAPTER TEN CASE RFID – Future Tracking 4.Do you agree or disagree that tagging children’s pajamas with RFID tags is a violation of privacy rights? Explain why 5.Describe the relationship between privacy rights and RFID 6.Determine a way that schools could use RFID tags without violating privacy rights