Supply Chain Management
Douglas M. Lambert, Ph.D.
The Raymond E. Mason Chaired Professor
and Director, The Global Supply Chain Forum
Supply Chain Management
is NOT a New Name
for Logistics
“The Beginning of Wisdom
Is To Call Things By Their
Right Names”
-Confucius
The 1990s and 2000s: An Era of
Terminology Explosion & Confusion
• Supply Chain is not the only term
• We have endured:
–
–
–
–
Demand Chain
Supply-Demand Chain
Value Chain
Value-added Networks
• Each instance claimed to be breakthrough thinking
• The Culprits (most well meaning but some self serving)
– Consultants who try to differentiate their offering based on what
they call it instead of how well they help clients do it
– Academics who want to appear current by using new
terminology
– Software Vendors
Supply Chain Management
(Name Acceptance)
• Professionals have adopted the name
• Procurement specialists
• Manufacturing specialists
• Distribution specialists
Now, they all claim to be supply chain professionals
• Universities have adopted the name
–Many rename “logistics” programs to “supply chain”
–Others combine purchasing, operations management,
and logistics faculties
• Consultants & Software firms have adopted the name
extensively. This is what they sell.
Supply Chain Management Is
As Good As Any Name: WHY??
• A supply chain is a network of companies.
• Every company in the network gains its revenue based on
demand from the end customer.
• Thus, every organization in the network gains it’s revenue
from and is a supplier to the end customers, and for this
reason, supply chain management is as good a name as
any other.
• The network can focus on demand without changing the
name to demand chain.
• The network can focus on value co-creation without
changing the name to value chain or value-adding network.
• It is time to pick a name a get on with implementation.
Supply Chain Management
• Network of companies
• Eight macro-business processes
• Cross-functional integration
• Cross-firm integration
• Value co-creation
Supply Chain Management
Integrating and Managing Business Processes Across the Supply Chain
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Third Edition, Sarasota, FL: Supply Chain Management Institute, 2008, p. 3.
Types of Inter-company Business Process Links
Tier 2
Suppliers
Tier 1
Customers
Tier 1
Suppliers
Tier 2
Customers
1
1
2
2
n
Tier 3 to
Consumers/
End-users
n
1
1
Initial Suppliers
1
2
n
2
1
3
2
3
1
3
n
1
n
Consumers/End-users
Tier 3 to
Initial
suppliers
n
n
n
1
2
1
1
n
n
Managed Process Links
Monitored Process Links
n
Focal Company
Members of the Focal Company’s Supply Chain
Not-Managed Process Links
Non-Member Process Links
Non-members of the Focal Company’s Supply Chain
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Third Edition, Sarasota, FL:
Supply Chain Management Institute, 2008, p. 4.
Functional Involvement in the Supply Chain Management Processes
SUPPLIERS
Business
Processes
Marketing
Sales
Research &
Development
Logistics
Customer Relationship
Management
Marketing Plan
& Resources
Account
Management
Technological
Capabilities
Logistics
Capabilitie
s
Supplier Relationship
Management
Capabilities
Required for
Competitive
Positioning
Sales Growth
Opportunities
Material
Specifications
Inbound
Material Flow
Customer Service
Management
Prioritization
of Customers
Knowledge of
Customer
Operations
Technical
Service
Demand
Management
Competitors’
Initiatives
Competing
Programs in
Customer Space
Order Fulfillment
Role of Logistics
Service in
Marketing Mix
Knowledge of
Customer
Requirements
Manufacturing Flow
Management
Differentiation
Opportunities from
Manufacturing
Capabilities
Knowledge of
Design for
Customer
Requirements Manufacturability
Product Development Product/Service Customer
and Commercialization Gaps in Market Opportunities
Returns Management
Knowledge of
Marketing
Programs
Customer
Production
Purchasing
Finance
Sourcing
Capabilities
Customer
Profitability
Integrated
Planning
Supplier
Capabilities
Total Delivered
Cost
Alignment of
Logistics
Activities
Coordinated
Execution
Priority
Assessment
Cost-toServe
Process
Requirements
Forecasting
Manufacturing
Capabilities
Sourcing
Capabilities
Tradeoff
Analysis
Environmental
Requirements
Network
Design
Made-toOrder
Material
Constraints
Distribution
Cost
Prioritization
Criteria
Production
Planning
Integrated
Supply
Manufacturing
Cost
Product
Design
Logistics
Requirements
Process
Specifications
Material
Specifications
R & D Cost
Product
Reverse
Logistics
Re-
Material
Manufacturing
Capabilities
manufacturing
Specifications
KnowledgeArchitecture,
DesignData BaseCapabilities
Information
Strategy, Information
Visibility
CUSTOMERS
Business
Functions
Revenue &
Costs
Information Architecture, Data Base Strategy, Information Visibility
Note: Process sponsorship and ownership must be established to drive the attainment of the supply chain vision and eliminate the functional barriers that artificially separate the process flows.
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Third Edition, Sarasota, FL:
Supply Chain Management Institute, 2008, p. 8.
CRM and SRM Form the Links
in the Supply Chain
CRM
Customer Service Management
Demand Management
Supplier
Order Fulfillment
Customer
Manufacturing Flow Management
Product Development and Commercialization
Returns Management
SRM
© Copyright, 2010, Douglas M. Lambert
Customer Relationship Management (CRM) &
Supplier Relationship Management (SRM):
The Critical Supply Chain Management Linkages
CRM
CRM
Supplier
D
Wholesaler/
Distributor
B
Manufacturer
C
SRM
P&L for
C as customer
Total Cost Report
for D as supplier
 Revenue
-  Cost
 Profit
 Cost =  Profit
CRM
SRM
SRM
P&L for
B as customer
 Revenue
-  Cost
 Profit
Retailer/
End User
A
P&L for
C as supplier
 Revenue
-  Cost
 Profit
P&L for
A as customer
 Revenue
-  Cost
 Profit
P&L for
B as supplier
 Revenue
-  Cost
 Profit
Supply Chain Performance = Increase in Profit for A, B, C, and D
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Third Edition, Sarasota, FL:
Supply Chain Management Institute, 2008, p. 10.
Supply Chain Management:
Elements and Key Decisions
Supply Chain
Management
Processes
Supply Chain
Management
Components
3) What level of integration and
management should be applied
for each process link?
2) What processes should be
linked with each of these
key supply chain members?
Supply Chain
Network
Structure
1) Who are the key supply
chain members with whom
to link processes?
Source: Douglas M. Lambert, Editor, Supply Chain Management: Processes, Partnerships, Performance, Third Edition, Sarasota, FL:
Supply Chain Management Institute, 2008, p. 4.
For more information see:
http://fisher.osu.edu/centers/scm/
http://www.scm-institute.org/
http://www.thepartnershipmodel.com/