LSCM chapter 1
issues or challenges for supply chains In the global economy
(1) more economic and political risk, (2) shorter product life cycles, and (3) the blurring of traditional organizational boundaries
organizational relationships
-SCM 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. In other words, internal collaboration or cooperation with marketing, sales, operations or manufacturing, and accounting or finance are very important as well as collaboration or cooperation with external organizations -communication is critical to explain the opportunities for system tradeoffs that will make the supply chain more competitive.
SCM
-SCM is the art and science of integrating the flows of products, information, and financials through the entire supply pipeline from the vendor's vendor to the customer's customer. -SCM can be viewed as a pipeline or conduit for the efficient and effective flow of products, materials, services, information, and financials from the supplier's supplier through the various intermediate organizations or companies out to the customer's customers, or a system of connected networks between the original vendors and the ultimate final consumer. The extended enterprise perspective of SCM represents a logical extension of the logistics concept, providing an opportunity to view the total system of interrelated companies for increased efficiency and effectiveness.
physical distribution (outbound logistics)
-SCM represents the third phase of an evolution that started in the 1960s with the development of the physical distribution concept that focused on the outbound side of a firm's logistics system. -the initial focus on physical distribution or outbound logistics was logical since finished goods were usually higher in value, which meant that their inventory, warehousing materials-handling, and packaging costs were relatively higher than their raw materials inputs.
cost and value
-a challenge for supply chains is the prevention of sub optimization -global supply chains compete against each other, which means that the cost and value at the very end of the supply chain are what important
supply chain security
-globalization has obviously increased the risk of interruptions or shutdowns of supply chains -in addition, supply chains must be prepared in the case of a terrorist attack
bullwhip effect
-if there were long time intervals between orders, the members of the supply chain were faced with much uncertainty about the level and pattern of the demand, which usually resulted in higher inventory or stockout costs, a phenomenon known as the bullwhip effect
technology examples
-is a change driver, but it is also 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.
performance measurement
-performance measurement is important because lower-level metrics in an organization must connect directly to the high-level performance to achieve goals -in some instances, metrics are set that appear logical for the subunit of the organization but are suboptimal for the overall organization or supply chain
Technology
-technology has had a major impact on supply chains as a facilitator of change as companies have transformed their processes. -"click here" generation. We can pull information as we need it. This is what we have become. We no longer have to wait for info to be "pushed" because we now can "pull" information as we need it -many companies see opportunities to "data mine" the tweets to uncover demand-related information for improved forecasting -technology has allowed individuals and smaller organizations to connect to the worlds "knowledge pools" to create an unbelievable set of opportunities for collaboration in supply chains -the world has become "flat"- traditionally underdeveloped countries such as china and india have become enabled and can participate in the global economy much more readily. The world is no longer titled toward the US and European countries In term of the economic advantage
information
-the accumulation and storage of data are almost useless unless the data are shared horizontally and vertically in the supply chain and used to make better decisions about inventory, customer service, transportation, and so forth -information can be a substitute for inventory because it can reduce uncertainty
Government policy and regulation
-the deregulated sectors include transportation, communications, and financial institutions, which are cornerstones of the infrastructure for most organizations
information flow (1)
-the information flow- primarily sales or demand data which is the trigger for replenishment and the basis for forecasting -information can be a substitute for inventory (inventory can be eliminated from the supply chain by timely, accurate information about demand)
transportation management
-transportation can be viewed as the glue that makes the supply chain model function -critical outcomes of the supply chain are to deliver the right product, at the right time, in the right quantity and quality, at the right cost, and to the right destination -challenges for transportation include:shortages of drivers, higher fuel costs, changes in driver hours regulations,level of maintenance for the existing transportation infrastructure (roads, bridges, ports, waterways, tracks and airports) and the need to increase capacity to meet the growth in demand.
a supply chain is an extended enterprise that....
A supply chain is an extended enterprise that crosses the boundaries of individual firms to span the related activities of all the companies involved in the total supply chain. This extended enterprise should attempt to execute or implement a coordinated, two-way flow of goods and services, information, cash, and demand.
vendor-managed inventory (VMI)
This service usually means that the manufacturer will manage the inventory of its products (and possibly related products) at the retailer's warehouse(s) and reorder as appropriate for customer fulfillment. The manufacturer may also have a representative at the designated retail warehouse locations to assure accuracy and timely delivery. The retailer should experience lower costs associated with increased sales (fewer-stock outs, more complete orders, etc) because of the more accurate and timely information of product orders at the store level .
BRIC factor
acronym for the 4 countries Brazil, Russia, India and China. These 4 countries have a population of well over 3.0 billion. These 4 countries have been a leading force in the changing world marketplace in this era of globalization
"landed prices"
consumer prices is also known as "landed prices"
Transportation
deregulation occurred at the federal level and led to lower prices to users and improved service due to transportation services being purchased and sold in a more competitive environment. Transportation companies were allowed to offer more than transportation services eg. Order fulfillment, inventory management and warehousing
VISTA countries
developing, low-cost countries which include: Vietnam, Indonesia, South Africa, Turkey, and Argentina.
inventory deployment
effective SCM usually provides an opportunity to reduce inventory levels -coordination or integration can help reduce inventory levels on a horizontal (single-firm) and vertical (multiple-firm) levels in the supply chain -strategies such as compression and postponement can also have a positive effect
forward flow
forward flow information can take many forms such as advance shipment notices, order status information, inventory availability and so on. The overall impact has been to reduce uncertainty with respect to order replenishment, which also contributes to lowering inventory and improving replenishment time. A related aspect of forward information flow has been the increased utilization of bar codes and RFID tags, which can increase inventory visibility and help reduce uncertainty and safety stock.
deregulation of financial institutions
fostered changes in how businesses operate. For example, the opportunity to invest cash at the end of the day in the global overnight money market for periods of 6 to 10 hours made many companies more cognizant of the value of the asset liquidity and asset reduction, especially inventory.
5 major external forces driving the rate of change and shaping our economic and political landscape
globalization, technology, organizational consolidation, the empowered consumer, and government policy and regulation
complexity
organizations need to continually evaluate the areas of complexity by evaluating processes, training people and exploiting technology -SKUs are used which exacerbates problems for inventory management and order fulfillment. Companies rationalize SKUs to eliminate the slow movers and items that do not contribute to profitability -locations also need to analyzed to eliminate high-cost or duplicative operations -customer service levels need to be rationalized, as do vendors or supplier alternatives
product flow (2)
product flow is a two-way flow in today's environment because of the growing importance of reverse logistics systems for returning products that are unacceptable to the buyer because they are damaged, obsolete, or worn out.
4 flows of the integrated supply chain model
the four flows of the integrated supply chain model (1.7) are important to the success of SCM (products/service flow, information flow, cash flow, and demand flow
demand flow (4)
the fourth and final flow is demand flow. It reflects the growth in technology, which provides organizations the ability to better synchronize supply and demand by detecting and understanding demand "signals" and making appropriate adjustments to demand changes more effectively.
logistics or integrated logistics management concept
the logistics or integrated logistics management concept developed in a growing number of institutions. Logistics, in its basic form, added inbound logistics to the outbound logistics of physical distribution.
procurement
the more integrated nature of marketing, sales, and manufacturing with logistics is also an important dimension of the value chain. Logistics authors would usually include procurement as an element of logistics, but the value chain depicts in as a support activity for all the primary activity since they all may do some purchasing of services and materials
financials/cash flow (3)
the third flow is financials or more specifically, cash. They are viewed as one-directional or backwards. A major impact of supply chain compression and faster order cycle times has been faster cash flow. Cash flow measures have become and important metric of the financial markets to gauge the viability or vulnerability or companies.
systems or total cost concept
the underlying logic of the systems or total cost concept was also the rationale for logistics management.
value chain concept
the value chain concept was developed as a tool for competitive analysis and strategy.
communications industry
was also made more competitive, and businesses and the general consumer population are all being impacted by the many changes in this industry from cell phones to e-mail, text messaging, and the Internet. Eg. Asset visibility, quick response replenishment, improved transportation scheduling and rapid order entry.
National Council of Physical Distribution Management (NCPDM
was organized to foster leadership, education, research and interest in physical distribution management in certain industries such as consumer packaged and grocery products, high-tech companies and other consumer product companies.