1. McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

2. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin LEARNING OBJECTIVES 15-2 Learning Objectives What is supply chain management? How do supply chains add value? How does a supply chain work? How is a supply chain managed?

3. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-3 Nicole Miller Retailer Nicole Miller Website

4. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-4 Supply Chain Management

5. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-5 Supply Chain, Marketing Channels, and Logistics are Related Marketing channelLogistics managementSimilar but different

6. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-6 Behind the Scenes at Costco

7. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-7 Which of the following is a common activity associated with logistics management? A. demand forecasting. B. inventory control. C. return goods handling. D. order processing. E. all of the above.

8. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-8 Supply Chains Add Value

9. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-9 Supply Chains Streamline Distribution Reduce number of transactions Increase value for consumers More efficient and effective FedEx Commercial

10. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-10 Supply Chain Management Affects Marketing Fulfilling delivery promisesMeeting customer expectationsReliant on an efficient supply chain

11. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-11 Marketing managers often focus on ____________, while logistics managers focus on _____________, causing conflict when trying to provide value to customers. A. maximizing sales; minimizing costs B. presentation; packaging C. cross-tracking; double accounting D. minimizing costs; maximizing sales E. decentralization; centralization

12. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-12 1. How does supply chain management add value? Check Yourself

13. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-13 Information Flows

14. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-14 Data Warehouse

15. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-15 Electronic Data Interchange Advanced shipping notice Intranet ExtranetCPFR Vendor- Managed inventory

16. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-16 Pull and Push Supply Chain Pull Orders based on sales data More accurate inventory Better when demand is uncertain Push Merchandise allocated based on forecast Does not need sophisticated IS system Good for steady demand items

17. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-17 1. What are the various supply chain links associated with each information flow step? 2. What is the difference between push and pull supply chains? Check Yourself

18. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-18 Making Merchandise Flow

19. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-19 Bakery with Conscience

20. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-20 How does Dell’s Merchandise Flow

21. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-21 Distribution Center vs. Direct Store Delivery What are the advantages of a distribution center?

22. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-22 The Distribution CenterDistribution Center Shipping to store Preparing to ship Getting Merchandise Floor Ready Storing and Cross-Docking Receiving and checking using UPC and RFID Management of inbound transportation ABC News Segment on a Walgreens Warehouse

23. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-23 Inbound Transportation Dispatcher coordinates deliveries Manufacturer may pay transportation expenses or retailers may negotiate directly with trucking companies and pay expenses

24. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-24 Receiving and Checking Receiving Arrival receipt Checking Undamaged Ordered = received Radio Frequency Distribution (RFID) Tags Container computer chips

25. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-25 Storing and Cross-DockingCross-Docking TraditionalCross-dockingCombinations

26. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-26 Getting Merchandise Floor-Ready Ticketing and marking Increasingly firms are forcing suppliers to ship floor ready merchandise

27. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-27 Shipping Merchandise to Stores Shipping merchandise to stores is complex for multi-store chains Distribution centers use sophisticated routing and scheduling systems

28. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-28 RFID tags have dramatically reduced the time and labor associated with: A. the Four Ps. B. promotion and advertising. C. checking and receiving merchandise. D. franchising. E. demand forecasting.

29. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-29 Inventory Management Through Just-In-Time Systems Just-In-Time Systems Just-in-time (JIT) Quick response (QR) Zappos Website

30. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-30 Benefits of JIT Systems Reduced lead time Increased product availability and lower inventory investment

31. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-31 For a JIT system to be successful, the firm and its vendors need to do all of the following EXCEPT: A. cooperate. B. compete. C. develop EDI systems. D. develop CPFR systems. E. share data.

32. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-32 1. What happens at each step of the merchandise flow in a typical supply chain? 2. Why are just-in-time supply chain systems becoming so popular? Check Yourself

33. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-33 Managing the Supply Chain Supply chain or channel conflict

34. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-34 Managing Supply Chains Through Vertical Integration Independent or conventional supply chain

35. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-35 Types of Vertical Marketing Systems Independent or conventional supply chain Administered vertical marketing system Contractual vertical marketing system Corporate vertical marketing system

36. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-36 Managing Supply Chains Through Strategic Relationships Strategic Relationships Mutual Trust Open Communications Common Goals

37. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-37 Relationship of supply chain members

38. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-38 1. What are the different types of vertical marketing systems? 2. How do firms develop strong strategic partnerships with their supply chain partners? Check Yourself

39. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-39 Glossary Merchandise cartons that are cross-docked are prepackaged by the vendor for a specific store. Return to slide

40. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-40 Glossary Manufacturers can ship merchandise either directly to a store or to a distribution center, where it is then shipped to the store. Return to slide

41. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-41 Glossary Electronic data interchange (EDI) is the computer- to-computer exchange of business documents from a retailer to a vendor and back. Return to slide

42. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-42 Glossary Just-in-time inventory systems are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems. Return to slide

43. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-43 Glossary Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products. Return to slide

44. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-44 Glossary A strategic relationship or partnering relationship involves the supply chain members being committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial. Return to slide

45. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-45 Glossary Supply chain management is a set of approaches and techniques firms employ to integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels that their customers require. Return to slide

46. © McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 15-46 Glossary Vendor-managed inventory (VMI) is an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores. Return to slide