SCM Supply Chain Management

Logistics

"Logistics is the part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements."

Supply Chain Management

"Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies."

Counteracting the Bullwhip Effect

1.Change the way suppliers forecast product demand by making this information available at all levels of the supply chainShare real demand information (POS terminals) 2.Eliminate order batching 3.Stabilize pricing 4.Eliminate gaming

Business-to-Business (B2B) Evolution

1970's Automated order entry systems Telephone modem 1970'sElectronic Data Interchange (EDI )Computer to computer sharing 1990'sElectronic Storefronts On-line catalogs 1990'sNet Marketplaces Suppliers and buyers trade on Internet

Sales Revenue Model

A means of selling goods, information, or service directly to customers

Developing Supplier Relationship

A strong supplier base is critical to the success of many organizations Top three criteria for choosing suppliers :Price Quality On-time delivery Note: Choice of suppliers must be consistent with a company's mission.

Intranets

An organization's internal networks

Types of E-Commerce

Business-to-Consumer (B2C) on-line businesses sell to individual consumers: Advertising Revenue Model Subscription Revenue Model Transaction Fee Model Sales Revenue Model Affiliate Revenue Model Intranets Extranets

Affiliate Revenue Model

Companies receive a referral fee for directing business to an affiliate

Transaction Fee Model

Company receives a fee for executing a transaction

Additional measures

Customer service levels Inventory turns Weeks of supply Inventory obsolescence

Components of a Supply Chain for a Manufacturer

External Suppliers Internal Functions

Warehouses can either be

General - used for long-term storage Distribution - used for short-term storage, consolidation, and product mixing

Insourcing vs. Outsourcing

Is product/service technology critical to firm's success? Is product/service a core competency? Is it something your company must do to survive?

Benefits of B2B E-Commerce

Lower procurement administrative costs Low-cost access to global suppliers Lower inventory investment due to price transparency/reduced response time Better product quality because of increased cooperation between buyers and sellers, especially during the product design and development

Global SCM Factors

Managing extensive global supply chains introduces many complications Infrastructure issues like transportation, communication, lack of skilled labor, & scarce local material supplies Resulting in Higher costs and poorer services

Warehouses involved in supply chain distributions include

Plant warehouses Regional warehouses Local warehouses

Internal Functions

Processing, purchasing, planning, quality, shipping

Advertising Revenue Model

Provides users w/information on services & products; provides opportunity for suppliers to advertise

Expectations & Competition

SCM must consider the following trends, improved capabilities, & realities: Consumer Expectations and Competition Globalization Government Regulations and E-Commerce Green Supply Chain Management

Supply Chain Performance Metrics

Traditional measures Additional measures

Warehouses have three roles

Transportation consolidation - warehouses consolidate less-than-truckload (LTL) quantities into truckload (TL) quantities Product mixing - warehouse value added customer service of grouping a variety of products into a direct shipment to the customer Services - are offered can improve customer service by moving goods closer to the customer and thus reducing replenishment time

Sourcing Issues

Vertical integration - a measure of how much of the supply chain is owned or operated by the manufacturer Backward integration - owning or controlling of sources of raw material and components Forward integration - owning or controlling the channels of distribution

Subscription Revenue Model

Web site charges a subscription fee for access to the site

Radio Frequency Identification Technology (RFID)

automated data collection technology which relies on radio waves to transfer data between reader and RFID tag

Business-to-business (B2B) E-commerce

businesses selling to/buying from other businesses

Globalization

capitalize on emerging markets

Information Technology

enablers include the Internet, Web, EDI, intranets and extranets, bar code scanners, and point-of-sales demand information

E-commerce and e-business

uses internet and web to transact business

Crossdocking

Eliminates the storage (customer is known) and order-picking functions of a distribution warehouse while still performing the receiving and shipping functions. 4 types: Manufacturing, Distributor, Transportation, Retail Examples: Home Depot, Wal-Mart, FedEx

Components of a Supply Chain

External Distributors - transport finished products to appropriate locations Logistics managers are responsible for managing the movement of products between locations. Logistics includes: Traffic management - arranging the method of shipment for both incoming and outgoing products or material Distribution management - movement of material from manufacturer to the customer

Major Issues Affecting SCM

Information Technology E-commerce and e-business Business-to-business (B2B) E-commerce

Extranets

Intranets linked to the Internet for suppliers and customers to interact within their system.

Traditional measures

Return on investment Profitability Revenue growth

Supply Chains for Service Orgs

Services are similar (to manufacturers) Internal Operations (example: travel agency has travel planning and travel payment) Integration is key External Distributors Service provider maybe different i.e.; not a part of travel agency

Third-party Service Providers

ease of developing an electronic storefront has allowed the discovery of suppliers from around the world

Supply Chain

is the network of all the activities involved in delivering a finished product/service to the customer Sourcing of: raw materials, manufacturing & assembly, warehousing, order entry & tracking, distribution, delivery

Supply Chain Management

is the vital business function that coordinates and manages all the activities of the supply chain. Coordinates movement of goods through supply chain from suppliers to manufacturers to distributors Promotes information sharing along chain like forecasts, sales data, & promotions

Government Regulations and E-Commerce

issues of Internet government regulations

Consumer Expectations and Competition

power has shifted to the consumer (search & transaction)

Green Supply Chain Management

recycling, sustainable eco-efficiency, and waste minimization

External Suppliers

source of raw material Tier one supplier supplies directly to the processor Tier two supplier supplies directly to tier one Tier three supplier supplies directly to tier two

The Bullwhip Effect

the inaccurate or distorted demand information created in the supply chain Causes generated by demand forecasting updating order batching, price fluctuations, rationing gaming Results in Excessive inventory investment Poor customer service levels Ineffective transportation use Misused manufacturing capacity Lost revenues