Chapter 13 and 14
The SIlo Mentality
"I win, you lose" - Using the cheapest suppliers. - Ignoring customers. - Assigning few resources to new product & service design
Supply Chain Environmental Performance
% of SC w/ISO 14000 partners; avg. % of environmental goals met
Silo Mentality Solutions
- Align SC goals with firm goals and incentives. - Performances reviews of managers must include their ability to integrate processes internally and externally.
MANAGING SC Risk
- Increase safety stocks also known as stockpiling and forward buying - Identify backup suppliers and logistics services - Diversify the supply base - Utilize a supply chain IT system - Develop a formal risk management program
Performance measurement systems must:
- Link SC trading partners to achieve breakthrough performance in satisfying the end users - Overlay the entire supply chain to assure that all contribute to supply chain strategy - Be jointly agreed on by all SC members
Managing SC security
- Reducing the risk of intentionally created disruptions in SC operations. - The SC in only as secure as its weakest link. - Security management collaboration should include, for example, contractual requirements for secure systems.
SC: Competitive Weapon
- Understand the end customers - Leverage partner requirements and trade-offs. - Adjust SC member capabilities.
Performance variance
- the difference between the standard & actual performance `
SCM Integration Mdoel
1. Identify Critical SC Trading Partners 2. Review Establish SC strategies. 3. Align SC strategies. 4. Develop Internal Performance measures for key processes. 5. Assess and Improve Internal Integration of Key SC processes. 6. Develop SC performance Measures for Key processes. 7. Assess and Improve External Process Integration and Performance. 8. Extend Process Integration to 2n'd tier SC Partners. 9. Reevaluate the Integration Model Annually.
Obstacles of SC integration
1. The silo mentality 2. Lack of supply chain visibility 3. Lack of knowledge. 4. Lack of Trust 5. Too much VARIABILITY
Total SCM costs
: cost to process orders; purchase and manage inventories; information systems
Environmental sustainability & Green supply chain management (GSCM
Addressing the need for protecting the environment Sharing of environmental responsibility along the SC by having and measuring shared environmental goals Satisfy business and consumer needs Sound environmental practices predominate Adverse global environmental effects are minimized.
SC cash-to-cash cycle time
Avg. # of days between paying for materials and getting paid by SC partners
Traditional Performance Measures
Cost and Profit based performance measures must be used with caution Traditional cost-based information does not reflect the underlying performance of an organization's productive systems; costs & profits can be hidden or manipulated Decisions to maximize current stock prices do not necessarily reflect that the firm is performing well
Supply Chain Operations Reference (SCOR) Model
Developed by the Supply-Chain Council Used for SCM diagnostic benchmarking and process improvement Separates supply chain operations into 6 process categories: Plan Source Make Deliver Return Enable
Sources of Productivity Growth
External factors - Environment, interest rates Improved labor inputs - Education, demographics Economies of scale Technological change - Equipment and management
The Balanced Scorecard
Financial perspective Internal business process perspective Customer perspective Learning & growth perspective
Drawbacks of Performance variance
Managers can be pressured to find ways to make up these variances, resulting in poor decisions Standards can reinforce the idea of functional silos (departments only concerned with what is going on in their department)
Process Integration
Means sharing information and coordinating resources to jointly manage a process or processes.
Understanding End customers
Needs: - Variety of products - Quantity and delivery frequency needed. - Service level desired. - Product quality desired. Price of the Products.
Productivity
Productivity is a common measure on how well resources are being used. In the broadest sense, it can be defined as the following ratio: Outputs/Inputs
Productivity
Productivity is a relative measure - It is meaningful only when you compare it to another value - Compared over time (for the same company, industry, etc.) - Compared to others at the same point in time (competitors, multiple locations, etc.)
Carbon footprint
Reducing greenhouse gas emissions Supply chains evaluate design configurations and various options for reducing total carbon emissions
SCOR Performance Categories
Reliability Responsiveness Agility Cost Asset management
Use of Organization Costs, Revenue, & Profitability Measures
Remember to consider uncontrollable environmental forces (e.g., windfall profits that occur when prices rise due to supply interruptions) It is difficult to accurately attribute cost, revenue, or profit contributions to the various functional or business units
Chapter 14:
SC Performance Measurement
Understanding SC Partner Requirements
Supply chain strategies must consider the potential trade-offs existing between: - Cost - Quality - Quantity - Service
Adjusting SC Member Capabilities
The best SC performers: - Are more responsive to customer needs - Quicker to anticipate changes in the markets - Control costs much better
Goal of SCM
To create value fo end customers and firms i the supply chain.
Process integration requires effort
Training Willing and competent partners Trust Organizational culture change.
SC perfect order fulfillment performance:
average % of orders that arrive on time, complete, and undamaged
Supply chain e-business performance
avg. % of electronic orders received for all SC members
SC delivery performance
avg. % of orders filled by requested delivery date
SC production flexibility:
avg. time required to provide an unplanned 20% increase in production
Demand Driven
supply networks are supply chains with enough flexibility to quickly respond to changes in the marketplace.