Eight management component of supply chain Lec 3 Hibat Alla Faisal HIBAT ALLA FAISAL 1 The Eight Key SCM Processes • Successful supply management require a change from managing individual functions to managing a set of integrated processes. In many leading corporations, management has concluded that they cannot optimize product flows without first implementing a process approach to the business. • The value of having standard business processes in place is that managers from organizations across the supply chain can use a common language and can link up their companies' processes with those of the other supply chain members. HIBAT ALLA FAISAL 2 HIBAT ALLA FAISAL 3 1. Customer Relationship Management: • The CRM process provides the structure of how relationships with customers are developed and maintained. • Through this process, management identities key customers and customer groups to be targeted as part of the firm's business mission. • The goal is to segment customers based on their value over time and to increase customer loyalty by providing customized products and services appropriate to the particular value proposition. HIBAT ALLA FAISAL 4 • Leaders in this process create cross-functional customer teams to tailor product and service agreements (PSA) that meet the needs of key accounts and customer segments and document how the two firms will engage in business. • The PSAs specify levels of performance for the firm. They also provide the basis for performance reports that measure the profitability of individual customers as well as the firms financial impact on the customer's financial performance. • CRM teams will then work with key customers to improve processes and eliminate demand variability and non-value added activities. HIBAT ALLA FAISAL 5 2. Customer Service Management: • The customer service management process represents the company's face to the customer. • It is the key point of contact for administering the PSAs developed by customer teams during the customer relationship management process. • Customer service provides the customer with real-time information on promised shipping dates and product availability through interfaces with stich functional areas as manufacturing and logistics. • The customer service process may also include assisting the customer with product application. HIBAT ALLA FAISAL 6 3. Demand Management: • Demand management is the process that balances customer requirements with supply chain capabilities. With the right process in place, management can match supply with demand proactively and execute the plan will minimal disruptions. • It is important to note that this process is not limited to forecasting. • It also includes synchronizing supply and demand, increasing flexibility, and reducing variability. HIBAT ALLA FAISAL 7 • Demand management entails controlling all of those practices that increase demand variability, including end-of-quarter loading and terms of sale that encourage volume bays. • A good demand management system uses point-of-sale and key customer data to reduce uncertainty and provide efficient flows throughout the supply chain. • It also effectively coordinates marketing requirements and production plans. HIBAT ALLA FAISAL 8 4. Order Fulfillment: • This supply chain process involves more than just tilling orders. It also encompasses all activities necessary to define customer requirements. • Design a network, and enable a firm to meet customer requests while minimizing the total delivered cost. • While match of the actual order fulfillment work will be performed by the logistics function, the process needs to be implemented crossfunctionally and coordinated with key suppliers and customers. HIBAT ALLA FAISAL 9 • The objective is to develop a seamless system from the supplier to the firm, and then on to the various customer segments. HIBAT ALLA FAISAL 10 5. Manufacturing Flow Management: • Manufacturing flow management includes all activities necessary to obtain, implement, and manage manufacturing flexibility in the supply chain and to move products through the plants. • The ability to make a wide variety of products in a timely manner at the lowest possible cost is a reflection of this process, to achieve the desired manufacturing flexibility level, planning and execution must extend beyond the four walls of the manufacturer and out to the supply chain partners. HIBAT ALLA FAISAL 11 6. Supplier Relationship Management: • The SRM process provides the structure for relationships with suppliers are developed and maintained. • As the name suggests, this process is a mirror image of customer relationship management. And as is the case for CRM, it involves developing close relationships with a small subset of suppliers based on the value that these suppliers bring to the firm over time. • Note that these are long-term relationships that provide win-win outcomes for both parties. HIBAT ALLA FAISAL 12 • For each key supplier, the firm should negotiate a product and service agreement that defines the terms of the relationship. • For less critical suppliers, the firm should follow the more traditional approach of simply providing the PSA, which in most cases would he non-negotiable. • In short, supplier relationship management is about defining and managing these PSAs. HIBAT ALLA FAISAL 13 7. Product Development and Commercialization: • The supply chain management process provides the structure for working with customers and suppliers to develop products and bring them to market. • Effective implementation of this process not only enables management to coordinate the efficient flow of new products across the supply chain but also helps other members of the supply chain to ramp up manufacturing, logistics, marketing, and other activities necessary to support product commercialization. HIBAT ALLA FAISAL 14 • A product development and commercialization process team would work with CRM process teams to identify customer needs (both articulated and unarticulated), with the SRM process teams to select materials and suppliers, and with the manufacturing Flow management process team to develop production technology appropriate to the product/market combination. HIBAT ALLA FAISAL 15 8. Returns Management. • Returns management is the process by which activates associated with returns, reverse logistics, gatekeeping and return avoidance are managed within the firm and across key members of the supply chain avoidance. • Which is a key part of this process, involves finding ways to minimize the number of return requests. • It can include ensuring that the products quality and user friendliness are at the high attainable level before the product is sold and shipped. HIBAT ALLA FAISAL 16 • Avoidance could also entail changing promotional programs that load the pipeline when there Is no realistic chance that the product shipped will be sold. • Properly implemented, then, the returns management process enables firms not only to manage the reverse product How efficiency but also to identify opportunities to reduce unwanted returns and to control reusable assets such as containers. • Effective returns management is an important part of SCM and provides an opportunity to achieve a sustainable competitive advantage. HIBAT ALLA FAISAL 17 • Each of the eight supply chain management processes has both strategic and operational elements—that is, a strategic element in which the firm establishes and strategically manages the process and an operational element in which the firm executes the process. • The strategic elements should he led by a management team comprised of representatives from. HIBAT ALLA FAISAL 18 • multiple functions including marketing and sales, finance, production, [purchasing, logistics, and research and development. • This team is responsible for developing the procedures at the strategic level and seeing that they are implemented the strategic team also identifies how the external partners will he integrated into the supply chain. • The operational component of each process. where the day-to-day) activities take place. is executed by the managers within each functional area. HIBAT ALLA FAISAL 19 HIBAT ALLA FAISAL 20 Thank you HIBAT ALLA FAISAL 21
