McGraw-Hill/Irwin © 2008 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 Gearing Up At REI 1.Describe how an SCM system might improve REI’s business operations 2.Provide an illustration of REI’s SCM system including all upstream and downstream participants
10-20 CHAPTER TEN CASE BudNet Anheuser-Busch’s top-secret nationwide data network, BudNet, knows every time a six-pack moves off of a store shelf Information is entered into BudNet nightly from several thousand Anheuser-Busch distributors and sales representatives Anheuser-Busch has made a deadly accurate science out of determining what beer lovers are buying, as well as when, where, and why
10-21 Chapter Ten Case Questions 1.Describe how an SCM system can help a distributor such as Anheuser-Busch make its supply chain more effective and efficient 2.SCM is experiencing explosive growth. Explain why this statement is true using BudNet as an example 3.Evaluate BudNet’s effect on each of the five factors that are driving SCM success