SUPPLY CHAIN MANAGEMENT
Douglas M. Lambert, Ph.D.
Prime F. Osborn III Eminent Scholar Chair in Transportation
University of North Florida
How are these Terms Different?

Logistics Management

Supply Chain Management

Value Chain Management

Demand Chain Management
1998 CLM DEFINITION OF LOGISTICS
….is that part of the supply chain process that
plans, implements, and controls the efficient,
effective flow and storage of goods, services,
and related information from the point-oforigin to the point-of-consumption in order to
meet customers' requirements.
[Council of Logistics Management, 1998]
2003 CLM DEFINITION OF LOGISTICS
… is that part of Supply Chain Management
that plans, implements, and controls the
efficient, effective forward and reverse flow
and storage of goods, services, and related
information between the point of origin and
the point of consumption in order to meet
customers’ requirements.
[Council of Logistics Management, 2003]
SUPPLY CHAIN MANAGEMENT
…is the integration of key business processes
from end user through original suppliers, that
provides products, services, and information
that add value for customers and
other stakeholders.
[The International Center for Competitive Excellence, 1994]
[The Global Supply Chain Forum, 1998]
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-customers
n
1
1
Initial Suppliers
1
2
n
2
1
3
2
3
1
3
n
1
n
Consumers/End-customers
Tier 3 to
Initial
suppliers
n
n
n
1
2
1
1
n
n
Managed Process Links
Monitor 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: Adapted from Douglas M. Lambert, Martha C. Cooper, and Janus D. Pagh, “Supply Chain Management: Implementation Issues
and Research Opportunities,” The International Journal of Logistics Management, Vol. 9, No. 2, 1998, p. 7.
Supply Chain Management Vision
The key to achieving an integrated flow of product and information throughout the
supply chain is to create a focused customer interface, a focused supplier interface,
and an integrated, process-oriented, supply chain which is driven by the customer.
Underlying Process Vision
Customer Relationship
Management
Customer Service
Management
Fulfillment
Customer
Demand
Management
Source: 3M
Supplier Relationship
Management Process
Manufacturing Flow
Management
Supply Chain Management
Integrating and Managing Processes Across the Supply Chain
Information Flow
Tier 2
Supplier
Manufacturer
Tier 1
Supplier
Customer
Logistics
Marketing
Purchasing
Production
PRODUCT FLOW
Consumer/
End-user
Finance
Supply Chain Management Processes
R&D
CUSTOMER RELATIONSHIP MANAGEMENT
CUSTOMER SERVICE MANAGEMENT
DEMAND MANAGEMENT
ORDER FULFILLMENT
MANUFACTURING FLOW MANAGEMENT
SUPPLIER RELATIONSHIP MANAGEMENT
PRODUCT DEVELOPMENT AND COMMERCIALIZATION
RETURNS MANAGEMENT
Source: Adapted from Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, “Supply Chain Management: Implementation Issues and Research O pportunities”,
The International Journal of Logistics Management, Vol. 9, No. 2, 1998, p. 2.
Typical
Functional
Silos
Business
Processes
Customer Relationship
Management
SUPPLIERS
Customer Service
Management
Demand
Management
Order Fulfillment
Manufacturing Flow
Management
Marketing
Logistics
Production
Account Requirements Requirements Manufacturing
Definition
Strategy
Management Definition
Account
Administration
Technical
Service
Performance Coordinated
Specifications Execution
Finance
Sourcing
Strategy
Customer
Profitability
Priority
Assessment
Cost
To Serve
Sourcing
Tradeoff
Analysis
Process
Requirements Forecasting
Special
Orders
Environmental
Requirements
Network
Planning
Plant
Direct
Packaging
Specifications
Process
Stability
Prioritization
Criteria
Production
Planning
Integrated
Supply
Manufacturing
Cost
Material
Specifications
Inbound
Flow
Integrated
Planning
Supplier
Management
Materials
Cost
Order
Booking
Product Development and
Commercialization
Business
Plan
Product
Design
Capability
Planning
Purchasing
Demand
Planning
Supplier Relationship
Management
Returns Management
Research &
Development
Selected Distribution
Supplier(s)
Cost
Movement
Process
Material
Requirements Specifications Specifications
CUSTOMERS
IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENT
R & D Cost
Product
Product
Reverse
RemanuMaterial
Revenue &
Architecture,
Data Base facturing
Strategy, Information
Visibility Costs
Life CycleInformation
Design
Logistics
Specification
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: Adapted from Douglas M. Lambert, Larry C. Guinipero and Gary J. Ridenhower, “Supply Chain Management: A Key to Achieving Business Excellence in the 21st Century”, unpublished
manuscript as reported in Keely L. Croxton, Sebastián J. García-Dastugue and Douglas M. Lambert, “The Supply Chain Management Processes”, The International Journal of Logistics
Management, Vol. 12, No.2 (2001), p. 31.
Managing the Supply Chain Involves Three
Closely Inter-related Elements:
 The supply chain network structure
 The supply chain business processes
 The management components
SUPPLY CHAIN MANAGEMENT
Fundamental Management Components
Physical & Technical
Management Components
Managerial & Behavioral
Management Components
Planning and
Control Methods
Management
Methods
Work Flow/
Activity Structure
Power and
Leadership Structure
Organization
Structure
Risk and
Reward Structure
Communication
and Information Flow
Facility Structure
Culture and
Attitude
Product Flow
Facility Structure
Some of the Processes
Customer Relationship Management - provides the
structure for how relationships with customers are developed & maintained, including
the PSAs between the firm & its customers.
Order Fulfillment – includes all activities necessary to define
customer requirements, design the logistics network, and fill customer orders.
Manufacturing Flow Management - includes all
activities necessary to move products through the plants & to obtain & manage
manufacturing flexibility in the supply chain.
 Supplier Relationship Management - provides the
structure for how relationships with suppliers are
developed & maintained, including the PSAs between the
firm & its suppliers.
Supplier Relationship Management
Strategic Sub-Processes
Review Corporate,
Manufacturing
and Sourcing Strategies
Process Interfaces
Customer Relationship
Management
Differentiate Suppliers
Customer Service
Management
Prepare the
Supplier/Segment
Management Team
Demand
Management
Internally Review the
Supplier/
Supplier Segment
Order Fulfillment
Identify Opportunities
with the Suppliers
Manufacturing Flow
Management
Develop Product/Service
Agreement and
Communication Plan
Product Development
& Commercialization
Implement the
Product/Service Agreement
Returns
Management
Measure Performance and
Generate Supplier
Cost/Profitability Reports
Identify Criteria
for Categorizing Suppliers
Provide Guidelines for the
Degree of Customization in
the Product/Service
Agreement
Develop Framework of
Metrics
Develop Guidelines for
Sharing
Process Improvement
Benefits
with Suppliers
Operational Sub-Processes
Source: Keely L. Croxton, Sebastián J. García-Dastugue, Douglas M. Lambert, and Dale S. Rogers, “The Supply Chain Management Processes,” The International
Journal of Logistics Management, Vol. 12, No. 2, 2001, p. 25.
Required Behaviors
Customer relationships are managed by customer teams which negotiate
mutually beneficial product / service agreements with large, strategically
significant customers.
Customer Relationship
Management Process
Customer Relationship
Management
 Customer teams develop and implement
customer partnering programs.
 Product/service agreements are established.
 New customer interfaces are used to better
predict customer demand and improve the way
customers are serviced.
 Teams identify and eliminate sources of
production variability.
 Key performance evaluation criteria (both
company performance and customer account
profitability) are used to measure results.
Required Behaviors
In demand management, customer demand is continuously gathered, compiled
and renewed in order to match supply capability with requirements in the market.
Demand Management
Process
Demand
Management
 Demand requirements and supply capabilities
are continuously modeled using point of sale
and “key” customer data.
 Market requirements and production plans are
coordinated on an enterprise-wide basis.
 Multiple sourcing and routing options are
considered at the time of order receipt.
 Worldwide on-line/real-time inventory availability
check and promising capacity is employed.
 Demand and production rates are synchronized
and inventories are managed globally.
 Customer need dates and requirements