Supply Chain
Management
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
 You should be able to:
1.
Discuss the key issues of supply chain management (SCM)
2. Name the recent trends in SCM
3. Summarize the motivations and risks of outsourcing as a
strategy
4. State some of the complexities that are involved with global
supply chains
5. List some of the strategic, tactical and operational
responsibilities of SCM
6. Give examples of some advantages of e-business
7. Explain the importance of supplier partnerships
8. Discuss the issues involved in managing returns
9. List the requirements of an effective supply chain
10. Name some of the challenges in creating an effective supply
chain
Student Slides
15-2
 Supply Chain:
 the sequence (or network) of organizations - their
facilities, functions, and activities - that are involved in
producing and delivering a product or service
 Sometimes referred to as value chains
Student Slides
15-3
 The sequence of the supply chain begins with basic
(primary materials) suppliers and extends all the way to
the final customer, involving the following business
entities
 Warehouses
 Factories
 Processing centers
 Distribution centers
 Retail outlets
 Offices
Student Slides
15-4
 Supply chain functions and activities
 Forecasting
 Purchasing
 Inventory management
 Information management
 Quality assurance
 Scheduling
 Production and delivery
 Customer service
Student Slides
15-5
 Supply Chain Management (SCM)
 The strategic coordination of business functions within
a business organization and throughout its supply
chain for the purpose of integrating supply and
demand management
Student Slides
15-6
 The goal of SCM is to match supply to demand as
effectively and efficiently as possible
 Key issues:
 Determining appropriate levels of outsourcing
 Managing procurement
 Managing suppliers
 Managing customer relationships
 Being able to quickly identify problems and respond to
them
 Managing risk
Student Slides
15-7
 Trends affecting supply chain design and
management:
 Measuring supply chain ROI
 “Greening” the supply chain
 Re-evaluating outsourcing
 Integrating IT
 Managing risks
 Adopting lean principles
Student Slides
15-8
 The purchasing department is responsible for
obtaining the materials, parts, and supplies and
services needed to produce a product or provide a
service.
 The goal of procurement
 Develop and implement purchasing plans for products
and services that support operations strategies
Student Slides
15-9
 E-business
 The use of electronic technology to facilitate business
transactions
 Applications include
 Internet buying and selling
 E-mail
 Order and shipment tracking
 Electronic data interchange
 Product and service promotion
 Provide information about products and services
Student Slides
15-10
 Choosing suppliers
 Supplier audits
 Supplier certification
 Supplier relationship management
 Supplier partnerships
 CPFR (collaborative planning, forecasting, and
replenishment)
 Strategic partnering
Student Slides
15-11
 Variations in demand cause inventory fluctuations to
fluctuate and get out of control
 Inventory fluctuation can be magnified by
 Periodic ordering
 Reactions to shortages
 Forecast inaccuracies
 Order batching
 Sales incentives and promotions
 Liberal product return policies
 Results in
 Higher costs
 Lower customer satisfaction
Student Slides
15-12
 Logistics
 Refers to the movement of materials, services,
cash, and information in a supply chain
 Movements within a facility
 Incoming shipments
 Outgoing shipments
Student Slides
15-13
 It begins with strategic sourcing
 Analyzing the procurement process to lower costs by
reducing waste and non-value-added activities,
increase profits, reduce risks, and improve supplier
performance
 There must be
 Trust
 Effective communication
 Information velocity
 Supply chain visibility
 Event management capability
 Performance metrics
Student Slides
15-14
 Effective supply chains are necessary for
organizational success
 Requires integration of all aspects of the chain
 Supplier relationships are a critical component
of supply chain strategy
 Lean operations and six sigma are being
employed to improve supply chain success
Student Slides
15-15