1. Supply Chains http://www.managementsupport.com

2. Outline Strategic Importance of Supply Chains Supply Chain Economics
Supply Chain Strategies
Managing the Supply Chain
Internet Purchasing
Vendor Selection
Materials Management
Benchmarking Metrics
Value Chains
Global Supply Chains

3. Supply-Chain Support for Overall Strategy
Supply demand at lowest possible cost
Select primarily for cost
Low Cost
Respond quickly to changing requirements and demand to minimize stockouts
Select primarily for capacity, speed, and flexibility
Response
Share market research; jointly develop products and options
Select primarily for product development skills
Differentiation
Supplier’s
goal
Primary Selection Criteria
This and the following two slides look at how supply-chain strategy can support overall strategy.

4. Make/Buy Considerations
Reasons for Making Reasons for Buying
Maintain core competencies and protect personnel from layoff
Lower production cost
Unsuitable suppliers
Assure adequate supply
Utilize surplus labor and make a marginal contribution
Frees management to deal with its primary business
Lower acquisition cost
Preserve supplier commitment
Obtain technical or management ability
Inadequate capacity
Ask students to consider the product characteristics which might cause a company to choose one or the other of the make/buy options.

5. Forms of Vertical Integration
Iron Ore
Silicon
Farming
Raw Material
(Suppliers)
Steel
Flour Milling
Backward
Integration
Integrated
Circuits
Current
Transformation
Automobiles
Students should be asked to consider why, other than on a “cost” basis, a company might want to consider vertical integration.
Distribution
System
Forward
Integration
Circuit Boards
Computers
Watches
Calculators
Finished Goods
(Customers)
Dealers
Baked Goods

6. Supply Chain vs. Value Chain
Supply chain: often focuses on activities that get raw materials and sub-assemblies into manufacturing operations smoothly and economically.
Value chain: looks at every step from raw materials to the eventual end-user (even including disposing of packaging after use). The goal is to deliver maximum value to the end user for the least possible total cost.

7. Maximizing Value
VCM needs to look at the entire value-adding process. Just optimizing one step usually is not a good solution. Because of the numerous interactions between functional areas (internal) and firms (external), any optimization actions should focus on the entire system, not just on a sub-system or on one task in a transformation process.

8. Measuring Value-Chain Effectiveness
A suggested measure is called the IPC ratio which compares cycle times for three elements: Information, Products, and Cash. Ideally, information and cash should take less time to flow through the VC than actual product creation and distribution.

9. E-Commerce Benefits for the Value Chain
The biggest benefit is time.
E-commerce operations can give a firm invaluable information about trends and changing needs in its market.
E-commerce can help a firm to cut costs and provide more flexibility in availability inquiries, order processing, billing, and other distribution activities..
If the firm can fulfill an order faster, complete a sale, or electronically transfer information from one channel to another, you can cut process time. Shorter process time lets the firm respond to more customer requests, lets its customers carry smaller inventories, and speeds the flow of both information and payments.
Functions may provide product and information requests, surveys, complaints, and resolutions. This data can help shape business strategies and focus marketing tactics.