1. Supply Chain Management
Chapter Extension 12
Supply Chain Management
© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

2. Study Question What is a supply chain?
What factors affect supply chain performance?
How does supply chain profitability differ from organizational profitability?
What is the bullwhip effect?
What are the functions of supplier relationship management?
How do information systems affect supply chain performance?

3. What Is a Supply Chain? Network of organizations and facilities
Transforms raw materials into products delivered to customers
Works with companies and consumers up and down the chain
Customers order from retailers
Retailers order from distributors
Distributors order from manufacturers
Manufacturers get raw materials from suppliers
Transportation companies, warehouses, and inventories also involved

4. Supply Chain Relationships
Figure CE12-1

5. What Factors Affect Supply Chain Performance?
Drivers affecting performance:
Facilities
Location, size, and operations methodology
Inventory
All materials in supply chain
Managers must availability and cost
Transportation
Movement of materials along chain
Information
Requests, responses, and communications between organizations

6. Information Purpose Availability Means Transactional or informational
Access and sharing
Means
Methods of transmission

7. Supply Chain Profitability Vs. Organizational Profitability
Difference between sum of revenue generated and sum of costs incurred
Maximum profit from chain
Can not be achieved if organizations maximize profits in isolation
Profitability increases when organizations operate at less than maximum profitability

8. What Is the Bullwhip Effect?
Variety in the size and timing of orders increases at each stage up supply chain
Natural dynamic of multistage nature of supply chain
Unrelated to erratic customer demand
Large fluctuations force distributors, manufacturers, and suppliers to carry large inventories
Reduces overall profitability
Eliminate effect by giving participants access to consumer-demand information
Interorganizational information systems share data

9. The Lawyer’s Full Employment Act
Supply chain profitability at REI
Thousands of products with dozens of distributors
40-some stores, Web storefront, telephone sales
How can they recognize patterns?
Ski boot outages negatively impacts ski-package sales
Distributor must manage inventory and carry more

10. The Lawyer’s Full Employment Act, continued
REI will pay premium
Recoup from binding, ski, and pole distributors
Must negotiate agreement
Agreement goes to lawyers
Project delayed
Lawyers expensive
Negotiations finished at end of season
Start over again next ski season

11. What Are the Functions of Supplier Relationship Management?
SRM
Process for managing contacts between an organization and suppliers
Supplier is any organization that sells something to an organization that has a SRM application
Integrated system
Supports inbound logistics primary activity and procurement support activity
Three basic processes
Source
Purchase
Settle

12. Summary of SRM Processes
Figure CE12-6

13. How Do Information Systems Affect Supply Chain Performance?
Positive impact on supply chain performance
Reduced cost of buying and selling
Sourcing, buying, settling faster, easier, more effective
Expanded supply chain speed
Dollar value of goods exchanged in given period of time
Enabled suppliers and customers to reduce inventory size and costs
Improve delivery scheduling
Enables just-in-time inventory

14. Active Review What is a supply chain?
What factors affect supply chain performance?
How does supply chain profitability differ from organizational profitability?
What is the bullwhip effect?
What are the functions of supplier relationship management?
How do information systems affect supply chain performance?