2. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 1 Supply Chain Management Chapter 10

3. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 2 Outline Definitions and Terminology System Interactions Coordination in Supply Chain Measuring Supply Chain Performance Structural Improvement Improvement in Infrastructure The Internet and Supply Chains Virtual Supply Chains

4. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 3 Definitions and Terminology Supply Chain Supply Chain Management Distribution Channel Demand management Logistics management

5. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 4 Supply Chain The sequence of business processes and information that provides a product or service from suppliers through manufacturing and distribution to the ultimate consumer.

6. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 5 Supply Chain Management Planning, design, and control of the flow of information and materials along the supply chain in order to meet customer requirements in an efficient manner, now and in the future.

7. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 6 Distribution Channel The route from the producer forward through the distributors to the customer

8. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 7 Demand Management Managing the demand for goods or services along the supply chain. Demand can be managed through such mechanisms as products, pricing, promotion, and distribution.

9. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 8 Logistics Management If broadly defined, it is the same as supply chain management. Narrowly defined, logistics management is concerned with inbound transportation and outbound distribution.

10. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 9 A Typical Supply Chain (Figure 10.1)

11. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 10 System Interactions (System Dynamics in Supply Chains) Supply chain is a highly interactive system There is an accelerator effect The best way to improve a supply chain is to reduce the total replenishment time and to feedback actual demand information to all levels.

12. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 11 Widget Example (Figure 10.2): Retail Level

13. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 12 Widget Example (Figure 10.2): Wholesale Level

14. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 13 Widget Example (Figure 10.2): Factory Level

15. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 14 Coordination in the Supply Chain Example of need realization in grocery industry (efficient consumer response, ECR, program) Need for coordination both across firms and within firms Use of cross-functional teams Parallel between supply chain and quality improvement

16. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 15 Measuring Supply Chain Performance DeliveryQualityTimeCost

17. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 16 Structural Improvement Basic Ways to Improve Supply Chain Structure: –Change structure Capacity, Facilities, Process technology, vertical integration –Change infrastructure People, Information systems, Organization, Production and inventory control, Quality control systems

18. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 17 Forms of Structural Change Forward and Backward Integration Major process simplification Changing the configuration of factories, warehouses, or retail locations Major product redesign Outsourcing logistics to a third party.

19. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 18 Improvement in Infrastructure Cross-functional teams Partnerships Set-up time reduction Information systems Cross-docking

20. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 19 The Internet and Supply Chains Fundamental processes in supply chains: –Order placement –Order fulfillment e-Procurement and its types Potential problems with e-Procurement

21. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 20 Processes for e-Procurement (Figure 10.3) RequirementSelectionRequisitionApproval REQUEST RequisitionSourceNegotiateContract BUY Confirm Process Order ShipInvoice SUPPLY ReceiveDeliverMatchPay PAYMENT

22. Irwin/McGraw-Hill  The McGraw-Hill Companies, Inc. 2004 21 Virtual Supply Chains “Virtual Companies”: –Highly flexible –Successful in highly dynamic environment –Computer and the Internet are the main catalysts –May lead to “hollow corporations” Virtual Supply Chain consists of at least one virtual company that coordinates all activities of the supply chain