Supply Chain Management (ch. 14)

Supply chain Integration

When multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer

Types of Supply Chain Integration

1) Relationship integration: capability to develop and maintain a shared mental framework across companies that describes how they will depend on one another when working together 2) Measurement integration: the idea that performance assessments should be transparent and measurable across the borders of different business units and firms. Each firm is held accountable for meeting its own goals 3) Technology and Planning Integration: information technology systems that connect managers across and through the firms in the supply chain 4) Material and service Integration: requires firms to link seamlessly those outsiders that provide goods/services to them so that they can streamline work processes, in turn, provide smooth, high quality customer experiences. Shared responsibility for satisfying customer requirements. 5)Internal operations integration: capabilities development toward the goal of linking internally performed work into a seamless process that stretches across departmental and functional boundaries. Goal of satisfying customer requirements. 6) Customer integration: competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm and supply chain. profitable over long term.

6 Supply chain components

1. sourcing and procurement of raw materials and supplies 2. production scheduling 3. order processing 4. inventory control 5. warehousing and materials handling 6. transportation

Just-in-time production (JIT)

AKA: lean production, requires manufacturers to work closely with suppliers and transportation providers to get necessary items to the assembly line or factory floor at the precise time they are needed for production. JIT means lower costs, shorter lead times, and products that more closely meet consumer's needs

Electronic Data Interchange (EDI)

Information technology that replaces the paper documents that usually accompany business transactions, such as purchase orders and invoices, with electronic transmission of the needed information to reduce inventory levels, improve cash flow, streamline operations, and increase the speed and accuracy of information transmission

Sourcing and Procurement

Purchasing departments plan purchasing strategies, develop specifications, select suppliers, and negotiate price and service levels. The goal of sourcing and procurement activities is to reduce costs of row materials and supplies

Supply chain team

an entire group of individuals who orchestrate the movement of goods, services, and information from the source to the consumer

Distribution Resource Planning

an inventory control system that manages the replenishment of goods from the manufacturer to the final consumer

Materials requirement planning (MRP)

an inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer

business processes

bundles of interconnected activities that stretch across firms in the supply chain

Order fulfillment Process

highly integrated process, often requires persons from multiple companies and multiple functions to come together and coordinate to create customers satisfaction at a given place and time. Reduce time between order and receipt Shorter lead times: Reduce inventory levels and free up cash that can be used on other projects. Overall, the order fulfillment process involves understanding both internal capabilities and external customer needs, and matching these together so that the supply chain maximizes profits while minimizing costs and waste.

Transportation decision criteria

-Cost -Transit Time -reliability -capability -accessibility -traceability

8 critical business processes of supply chain managers

1) customer relationship management 2) customer service management 3) Demand management 4) Order fulfillment 5) Manufacturing flow management 6) Supplier relationship management 7) Product development and commercialization 8) Returns Management

Benefits of Supply Chain Management

1) lower inventory 2) lower transportation, warehousing, and packaging costs 3) improved customer service 4) higher revenues (clear relationship between supply chain and profitability)

Today supply chain management is: (two key words)?

Both a communicator and physical flow process. A communicator of customer demand that extends from the point of sale all the way back to the supplier, and a physical flow process that engineers the timely and cost-effective movement of goods through the entire supply pipeline

Returns Management

Enables firms to manage volumes of returned product efficiently while minimizing the value of the returned assets to the firms in the supply chain.

Traditional Production Scheduling and Mass customization (build-to-order)

In traditional mass-market manufacturing, production begins when forecasts call for additional products to be made or when inventory control systems signal low inventory levels. Production scheduling based on pushing a product down to the consumer has disadvantages: - risk making products obsolete -that consumers don't want it in the first place Mass customization is a production method whereby products are not made until an order is placed by the customer; products are made according to customer specifications

Supply chain

Modern companies are turning to supply chain management for competitive advantage. A company's supply chain includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from the initial suppliers (the point of origin) to the ultimate customers (the point of consumption).

Outsourcing Logistics Functions

Outsourcing, or Contract Logistics, is a rapidly growing segment of the distribution industry in which a manufacturer or supplier turns over the entire function of buying and managing transportation or another function of the supply chain, such as warehousing

Electronic Distribution

a distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber optic cable or through satellite transmission of electronic signals

Inventory control system

a method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's demand

Automatic Replenishment Program

a real-time inventory system that triggers shipments only when a good is sold to the end user

Customer Relationship Management Process (CRM)

allows companies to prioritize their marketing focus on different customer groups according to each group's long-term value to the company or supply chain. Process includes: 1) segmentation of customers by value 2) generation of customer loyalty

Manufacturing Flow Management

concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process. Firms with flexible manufacturing have the ability to create a wide variety of goods with minimized costs associated with changing production techniques. The goals of the manufacturing flow management process are centered on leveraging the capabilities held by multiple members of the supply chain to improve overall manufacturing output in terms of quality, delivery speed, and flexibility, all of which tie to profitability.

Goal of supply chain management

coordinate and integrate all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, ultimately giving supply chain managers "total visibility" inside and out of the firm. Managers can maximize strengths and efficiencies at each level of the process to create a highly competitive, customer driven supply system that is able to respond immediately to changes in supply and demand.

Product Development and Commercialization Process

group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms

Materials Handling System

moves inventory into, within, and out of the warehouse quickly with minimal handling

Customer service Management

presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced

Demand Management process

seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and creating demand related plans of action prior to actual customer purchasing behavior. In other words, the process allows companies in the supply chain to satisfy customers in the most efficient/effective way possible.

Supplier Relationship management

supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers. Need flexibility. 1) ensuring that firms' manufacturing resources are available. Thus, the supplier relationship management process has a direct impact on each supply chain member's bottom line performance

Order Processing System

system whereby orders are entered into the supply chain and filled

Logistics information system

the link that connects all the logistics functions of the supply chain. (RFID chips)

Logistics

the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumtion