CH 1 - SUPPLY CHAIN MANAGEMENT: AN OVERVIEW

three important issues or challenges for supply chains of the global economy are

(1) more volatility of supply and demand. (2) shorter product life cycles. (3) the blurring of traditional organizational boundaries.

supply and demand have become more volatile for a number of reasons

- terrorism. - Natural catastrophes. - Longer-run issues of supply and demand- global competition of sources of supply and markets (must be able to adapt). - Shorter product life cycles- duplicated quickly. - outsource some parts of their operation

Explain the benefits that can be achieved from implementing supply chain best practices.

1. staying on top of demand 2. flexibility 3. elimination of waste 4. higher profit margins

Core business (TERM)

concentrating on what the company does best and outsourcing the rest. The primary area or activity that a company was founded on or focuses on in its business operations.

Organizational Consolidation

- After World War II, manufacturing became the leading driver of supply chains. -As markets became more fragmented and competitive, these manufacturing firms sought advantage through logistics excellence. - Retail giants such as Walmart, Sears, Kmart, Home Depot, Target, Kroger, McDonald's, and other Big Box Store chains have become powerful market leaders in driving logistics change.

Discuss the development and shaping of supply chains in leading organizations and understand their contributions to their financial viability.

- Globalization - Technology - Organizational Consolidation - The Empowered Consumer - Government Policy and Regulation

Technology

- Individuals and organizations are "connected" 24/7 and have access to information on the same basis via the Internet. - Consumers are much more aware of delivery cycles and to have a greater desire for instant gratification. -Social networks such as Facebook or Twitter are playing an ever increasing role in business organizations and influence supply chain because of their impact on customer demand and the speed of information transfers. - Data Mining - the process of discovering patterns in large data sets involving methods at the intersection of machine learning, statistics, and database systems. "TWITTER AND TWEET OR RETREAT" - CLOUD COMPUTING, is more than a "buzz word" and is revolutionizing information systems. - Collaboration opportunities with individuals and companies throughout the globe have increased which has created market opportunities as employment opportunities increased.

Government Policy and Regulation

- The deregulation of the 1980s and 1990s included transportation, communications, and financial institutions. - Now that domestic transportation is deregulated, it has become possible for transportation services to be purchased and sold in a much more competitive environment. - The deregulation of financial institutions fostered changes in how businesses can operate with respect to cash flows, purchasing cards and short term investments. - The changes made organizations more cognizant of the role that supply chain management could play with asset efficiency and cash flows. - The communications industry was also made more competitive and like the other two industries discussed earlier, the communications industry has undergone much change and has become part of the information revolution with a number of other "players" including cable companies, Internet companies, etc. - Communications efficiency and effectiveness have led to dramatic improvements and opportunities in logistics and supply chains - Supply chain practices have been improved leading to lower cost and better customer service.

Appreciate the important role of supply chain management among private as well as public or nonprofit organizations.

- The network facilities must be capable and flexible to respond and change with the dynamics of the marketplace whether in the short run or the long run. - Private sector companies are placing increased emphasis on strategies to deal with the risk of disruption. - In the private sector, supply chain management drives improved performance by maximizing internal and external capabilities to create a seamlessly coordinated supply chain. - all members in the supply chain contribute to the overall success or failure of the entire supply chain. - public sector procurement serves a broader range of stakeholders, places greater emphasis on accountability and transparency, and allows little or no flexibility for negotiation.

The Empowered Consumer

- Today's consumers are more empowered by the information they have at their disposal from the internet and other sources. - The internet enables buyers to expand their buying alternatives and quickly make comparisons before they purchase, providing additional flexibility - demographics of our society with the increase in two-career families and single-parent households have made time a critical factor for many households so demand quicker response times and more convenient offerings according to their schedules.

Understand the contributions of supply chain management to organizational efficiency and effectiveness for competing successfully in the global marketplace.

- through organizational consolidation, markets became more fragmented and competitive, these manufacturing firms sought advantage through logistics excellence. - The importance of the consolidation and power shift is that the large retailers (Walmart) are accorded special consideration from consumer product companies. - The value-added services that the retailers' demand allow them to operate more efficiently and often more effectively. - The scale of the retailers can also provide possible economies (read cost savings) to the producers of the products but may also add complexity.

Understand the major supply chain challenges and issues facing organizations currently and in the future.

1. supply chain networks - The network facilities must be capable and flexible to respond and change with the dynamics of the marketplace whether in the short run or the long run. 2. complexity - Globalization and consolidation in supply chains increase complexity for organizations in terms of SKUs, customer/supplier locations, transportation requirements, trade regulations, taxes, etc. 3. inventory deployment - SCM provides an opportunity to reduce inventory levels with coordination or integration, which can help reduce inventory levels on horizontal (one firm) and/or vertical (multiple firms) levels in the supply chain. 4. information - Today's technology and communication lead to the collection and storage of vast amounts of data unless data is shared horizontally and vertically in the supply chain and used to make better decisions. 5. cost/value - A challenge for supply chains is the prevention of suboptimization. Global supply chains compete against other global supply chains which accentuates the importance of cost and value at the very end of the chain. 6. organizational relationships - Supply chain management emphasizes a horizontal process orientation that cuts across traditional functional silos within organizations and necessitates collaboration with external vendors, customers, transportation companies, 3PLs, and others in the supply chain. Communication is critical 7. Performance Measurement - metrics are set that appear logical for the subunit of the organization but are suboptimal for the overall organization or supply chain. 8. Technology - important as a facilitator of change that will lead to improved efficiency and effectiveness. The approach necessary is to analyze and adjust or change processes, educate the people involved, and then select and implement the technology to facilitate the changes in the processes. 9. Transportation Management - Economic changes among transportation providers such as shortages of drivers, higher fuel costs, and changes in driver hours of service regulations have led to what some individuals have called a transportation crisis or the "perfect storm," a much greater challenge for users. 10. Supply Chain Security - it is a concert and a potential challenge. Globalization has today increased the risk of supply chain disruptions. 11. Talent Management - the criticality of having educated and talented managers involved in supply chains has attracted much more attention in many organizations.

Explain how efficient and effective supply chains can improve customer fulfillment and cash flow.

Supply chains are an important determinant of improved cash flow since they directly impact cost, revenues, and asset requirements. Cash flow has become one of the most important measures of financial success for business organizations in today's global markets.

Globalization

has replaced the "cold war" of the post-World War II era as the driving force for world economics. Beginning in the 1970s, U.S. firms began procuring more globally. - Where in the world should they source? - Where in the world should they manufacture - Where in the world should they market their products? - From where in the world should they warehouse and distribute? - What global transportation strategies should they utilize?