Business Plug-in B8
SUPPLY CHAIN
MANAGEMENT
McGraw-Hill/Irwin
©2008 The McGraw-Hill Companies, All Rights Reserved
8-2
BASICS OF SUPPLY CHAIN
• The supply chain has three main links:
1. Materials flow from suppliers and their
“upstream” suppliers at all levels
2. ______________ of materials into
semifinished and finished products
through the organization’s own
production process
3. Distribution of products to customers and
their “downstream” customers at all
levels
8-3
BASICS OF SUPPLY CHAIN
• Organizations must embrace technologies
that can effectively manage supply chains
8-4
USING IT TO DRIVE THE SUPPLY
CHAIN
•
The four primary drivers of supply chain
management
1.
2.
3.
4.
•
Facilities
Inventory
Transportation
____________
Organizations use these four drivers to
support either a supply chain strategy
focusing on efficiency or a supply chain
strategy focusing on ______________.
8-5
USING IT TO DRIVE THE SUPPLY
CHAIN
8-6
FACILITIES DRIVER
• Facility – processes or transforms
inventory into another product, or
stores the inventory before shipping
to the next facility
• Three primary facilities components
1. _________
2. Capacity
3. Operational design
8-7
FACILITIES 1:
Location
• Location efficiency – centralize
the location to gain economies of
scale, which increases efficiency
• Location effectiveness –
____________ the locations to be
closer to the customers or
suppliers, which increases
effectiveness
8-8
FACILITIES 2:
Capacity
• Capacity efficiency – minimal
excess capacity with the ability
to produce only what is required
• Capacity effectiveness – large
amounts of excess capacity
which can handle wide swings in
__________
8-9
FACILITIES 3:
Operational Design
•
•
Operational design efficiency – product
focus design allows the facility to become
highly efficient at producing one single
product, increasing efficiency
Operational design effectiveness –
___________ focus design allows the
facility to perform a specific function on
many different types of products, increasing
effectiveness
8-10
FACILITIES DRIVER
8-11
INVENTORY DRIVER
• Inventory – offsets uncertainty in
_________ and/or demand
• Inventory management and control
software – provides control and
_________ to the status of individual
items maintained in inventory
• Two primary inventory components
1. Cycle inventory
2. Safety inventory
8-12
INVENTORY 1:
Cycle Inventory
• Cycle inventory – the ________
amount of inventory held to satisfy
customer demands between inventory
deliveries
– Efficiency – holding _______ amounts
of inventory and processing orders
weekly or even daily
– Effectiveness – holding large amounts
of inventory and processing deliveries
only once a month
8-13
INVENTORY 2:
Safety Inventory
• Safety inventory – extra inventory
held due to uncertainty in supply
and/or demand
– Safety inventory efficiency – holding
small amounts of safety inventory (____
uncertainty in supply/demand)
– Safety inventory effectiveness –
holding large amounts of safety inventory
(high uncertainty in supply/demand)
8-14
INVENTORY DRIVER
8-15
TRANSPORTATION DRIVER
• Transportation – moves
inventories between the different
stages in the supply chain
• Two primary inventory
components
1. Method of transportation
2. Transportation _________
8-16
TRANSPORTATION 1:
Method of Transportation
• Global inventory management
system – provides the ability to
locate, track, and ________ the
movement of components or material
anywhere upstream or downstream in
the supply chain
– Method of transportation efficiency
– Method of transportation effectiveness
8-17
TRANSPORTATION 2:
Transportation Route
•
•
Transportation planning software –
tracks and ________ the movement of
materials to ensure the delivery of
materials and finished goods at the right
time, the right place, and the lowest cost
Distribution management software –
coordinates the transportation of materials
from a manufacturer to distribution centers
to the final customer
– Transportation route efficiency
– Transportation route effectiveness
8-18
TRANSPORTATION DRIVER
8-19
INFORMATION DRIVER
• Information – an organization must
decide what information it wants to
share, and how it will share, with its
supply chain partners
• Two primary information components
1. Information sharing
2. Push versus ______ strategy
8-20
INFORMATION 1:
Information Sharing
•
•
Information sharing efficiency – freely
share large quantities of information to
increase the speed and decrease the
costs of supply chain processing
Information sharing effectiveness –
share only selected information with
certain entities, which will _________
the speed and increase the costs of
supply chain processing
8-21
INFORMATION 2:
Push vs. Pull Information Strategy
•
Pull information strategy (efficiency)
–
Supply chain partners are responsible for
pulling all relevant information
– Pull technology – pulls information
•
Push information strategy
(effectiveness)
–
Organization takes the responsibility to push
information out to its supply chain partners
– Push technology – sends information
8-22
INFORMATION DRIVER
8-23
APPLYING A SUPPLY CHAIN
DESIGN
8-24
FUTURE SUPPLY CHAIN TRENDS
• Fastest growing SCM components
– Supply chain _______ management
(SCEM)
•
Real-time issues resolution
– Selling chain management
•
In the selling phase
– Collaborative engineering
•
In the design phase
– Collaborative demand planning