1. 1 Chapter 2 Strategic Supply Chain Management for Distribution

2. 2 Introduction Supply chains can be linear or circular. Most are more complicated. Supply Chain All contributors to a final product and its delivery to the consumer or end user.

3. 3 Introduction Introduction A Typical Supply Chain View

4. 4 Evolution of Supply Chain Management 1970 and earlier Supply chain not considered as a competitive unit. Companies seek more profit by outmaneuvering their suppliers and customers. Vertical integration – early attempts at SCM Scientific methods like EOQ & SPC applied JIT and TQM adopted in Japan but not US.

5. 5 Evolution of Supply Chain Management 1970 –1980 Arab Oil Embargo of 1973 makes holding inventory more profitable. Japan continues research on TQM, JIT and setup reduction. Distribution not emphasized in the Japanese research efforts.

6. 6 After 1980 Inflation reigns in – inventory profits dry up Competition from Europe and Japan. American manufacturers seriously consider JIT and TQM. Distributors under pressure to adopt. JIT pushes inventory upstream as demand for local inventory soar. JIT fails to fully benefit the end user. Can information sharing help? Evolution of Supply Chain Management

7. 7 Supply Chain Management Goals Start with the end user and work backwards Lowest possible cost Meet user’s needs at the right time & place Understand end user’s needs

8. 8 New Expectations for Distributors Increase information gathering, handling, and analysis – volume and/or quality. How? Surveys Information sharing E-business systems Information sharing E-business systems Information analysis Improve SC efficiency Information automation

9. 9 Alliances Alliances are key to information exchange Alliances are key to information exchange Closer relationship with end users and suppliers Closer relationship with end users and suppliers Examples Examples VMI and I/S – Retail Industry VMI and I/S – Retail Industry Franchise arrangements with distributors with detailed expectations for information exchange and support for the manufacturer’s products Franchise arrangements with distributors with detailed expectations for information exchange and support for the manufacturer’s products

10. 10 Evolving Channels Manufacturer/distributor/3PL/end user relationships are unclear The SCM principles of alliances and cooperation in the supply chain would be the path to E-Business. E-Business was the enabler to SCM and vice versa.