1. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 14 Supply Chain Management © iStockphoto.com/Robert Byron

2. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 2 Supply Chains Supply Chain The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function LO 1

3. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 3 Benefits of Supply Chain Management Supply chain oriented companies commonly report: Lower inventory, transportation, warehousing, and packaging costs Greater supply chain flexibility Improved customer service Higher revenues Increased performance and profitability LO 1

4. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 4 the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption. Logistics is… Logistics LO 4

5. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 5 Logistical Components of the Supply Chain Supply Chain Team Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System LO 4

6. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 6 Sourcing and Procurement  Plan purchasing strategies  Develop specifications  Select suppliers  Negotiate price and service levels  Reduce costs The Role of Purchasing: LO 4 © iStockphoto.com/Maria Toutoudaki

7. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 7 Production Scheduling Push / Pull Strategy Traditional Focus Push Start of Production Manufacturing Inventory- Based Mass Production Customer Focus Pull Customer-Order Based Mass Customization LO 4

8. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 8 Just-in-Time Manufacturing A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials at the precise time they are needed on the production line. JIT LO 4

9. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 9 Benefits of JIT  For manufacturers: reduces raw material inventories; immediate shipping of products  For suppliers: daily or hourly deliveries rather than weekly  For customers: lower costs; shorter lead times; products tailored to customer needs LO 4

10. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 10 Order Processing Order processing is becoming more automated through the use of computer technology known as ELECTRONIC DATA INTERCHANGE (EDI). a system whereby orders are entered into the supply chain and filled. An Order Processing System is… LO 4

11. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 11 Inventory Control Inventory Control System Inventory Control System A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand LO 4

12. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 12 Warehousing and Materials Handling LO 4 Most manufacturers today have moved to AUTOMATED materials-handling systems to minimize the amount of handling. a method of moving inventory into, within, and out of the warehouse. A Materials-Handling System is…

13. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 13 Exhibit 14.1 Criteria for Ranking Modes of Transportation LO 4

14. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 14 Trends in Supply Chain Management Electronic distribution Outsourcing of logistics functions Advanced computer technology LO 5

15. Chapter 14 Copyright ©2012 by Cengage Learning Inc. All rights reserved 15 Green Supply Chain Management Requires integrating green thinking into all phases of the supply chain –Green materials sourcing –Environmental impact of packaging, shipment, use –Incorporate end-of-life management Recycling Clean disposal LO 5