Introduction
to
Chapter 14: Supply Chain Management
Designed & Prepared by Laura Rush
B-books, Ltd.
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Learning Outcomes
LO1
Define the terms supply chain and supply chain
management, and discuss the benefits of supply chain
management
LO2
Discuss the concept of supply chain integration and
explain why each of the six types of integration is
important
LO3
Identify the eight key processes of excellent supply chain
management, and discuss how each of these processes
impacts the end customer
LO4
Discuss the key strategic decisions supply chain
managers must make when designing their companies’
supply chains
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Learning Outcomes
LO5
Describe the logistical components of the supply chain
LO6
Explain why supply chain performance measurement is
necessary and important
LO7
Discuss why the supply chains of the present and future
will be both environmentally conscious and sustainable,
and the implications of these changes
LO8
Discuss new technology and emerging trends in supply
chain management
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Supply Chains
The connected chain of all the
business entities, both internal
and external to the company,
that perform or support the
logistics functions.
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4
Supply Chains
Supply Chain Management- A
management system that
coordinates and integrates all
of the activities performed by
supply chain members into a
seamless process, from the
source to the point of
consumption, resulting in
enhanced customer and
economic value.
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Supply Chain Integration
System
Approach
A key principle of supply chain
management – that multiple firms
work together to perform tasks as
a single, unified system, rather
than as several individual
companies acting in isolation.
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.
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Relationship Integration
Relationship
Integration
The ability of two or more
companies to develop social
connections that serve to guide
their interactions when working
together.
Role
Specificity
When each firm in a supply chain
has clarity in terms of knowing
which firm is the leader, which
firms are the followers, and which
responsibilities are assigned to
each firm.
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Measurement Integration
Measurement
Integration
The performance assessment of
the supply chain as a whole that
also holds each individual firm or
business unit accountable for
meeting its own goals
ActivityBased
costing (ABC)
An accounting method used in
measurement integration to
assess the costs associated with
each supply chain activity
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Technology and Planning
Integration
Technology
and planning
integration
The creation and maintenance of
information technology systems
that connect managers across and
through the firms in the supply
chain
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Material and Service Supplier
Integration
Material and
Service
Supplier
Integration
The strategic alignment between a
firm and its supply chain materials
and services providers that
enables the firm to streamline
work processes and provide
smooth, high-quality customer
experiences.
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Internal Operations Integration
Internal
Operations
Integration
Links internally performed work
into a seamless process that
stretches across departmental
and/or functional boundaries, with
the goal of satisfying customer
requirements
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Customer Integration
A competency that enables firms to
offer long-lasting, distinctive,
value-added offerings to those
customers who represent the
greatest value to the firm or
supply chain
Customer
Integration
ABC
Segmentation
The supply-chain process whereby
customers are placed into groups
A, B, and C according to their
overall long-term value to the firm
and to the extent to which the firm
can serve their desires
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Customer Relationship
Management
Customer Relationship
Management Process - The
prioritization of a firm’s marketing
focus on different customer
group’s long-term value to the
company or supply chain;
designed to identify and
build relationships with good
customers.
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Customer Service Management
Customer Service Management
Process- A multi-company, unified
response system to the customer
whenever complaints, concerns,
questions, or comments are voiced;
designed to ensure that customer
relationships remain strong.
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Demand Management
Demand Management Process- The
alignment of supply and demand
throughout the supply chain to
anticipate customer requirements
at each level and create demandrelated plans of action prior to
actual customer purchasing
behavior.
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Order Fulfillment
Order Fulfillment Process- A
supply chain management process
involves generating, filing,
delivering, and providing on-thespot service for customer orders.
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Manufacturing Flow Management
Manufacturing Flow Management
Process - A process that ensures
that firms in the supply chain have
the resources they need.
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17
Supplier Relationship
Management
Supplier Relationship Management
Process - A supply chain
management process that supports
manufacturing flow by identifying
and maintaining relationships
with highly valued suppliers.
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Product Development and
Commercialization
Product Development and
Commercialization Process- The
group of activities that facilitates
the joint development and
marketing of new offerings among
a group of supply chain partner
firms.
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Returns Management
Returns Management Process- A
process that enables firms to
manage volumes of returned
product efficiently, while
minimizing costs and maximizing
the value of the returned assets
to the firms in the supply chain.
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Supply Chain Management
Lean Supply Chain Management – The strategy
that focuses primarily on
the removal of waste from the supply chain to
achieve the lowest total cost to
the members of the supply chain system.
Agile Supply Chain Management – The supply chain
strategy that focuses primarily on
the ability of the firm to fulfill customer demand,
even if this means somewhat higher costs.
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Logistical Components of the
Supply Chain
Supply
Chain
Team
Logistics Information System
Sourcing & Procurement
Order Processing
Inventory Control
Warehouse & Materials Handling
Transportation
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Supply Chain Performance
Measurement
A good metric is characterized by five qualities:
•Creates understanding of strategic objectives
and tactical plans
•Promotes behaviors that are consistent with
achieving these objectives
•Allows for recording of actual results/outcomes
•Allows companies to compare themselves to
competitors and customer expectations
•Motivates continuous improvement
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Supply Chain Management
Green Supply Chain
Management—the integration of
environmentally conscious thinking
into all phases of key supply chain
management processes.
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Sustainability
Supply Chain Sustainability—A
sustainable supply chain employs
renewable natural
resources wherever possible.
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Trends in Supply Chain
Management
Globalization of supply chain management
Advanced computer technology
Outsourcing of logistics functions
Electronic distribution
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