Chapter 12 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 14

Supply Chain Management

2012-2013

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Supply Chains

Supply ChainSupply Chain

The connected chain of all

of the business entities,

both internal and external

to the company, that

perform or support the

logistics function

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Supply Chains

Supply Chain Management

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 Management

Physical flow process that engineers the movement of goods

Physical flow process that engineers the movement of goods

Communicator of customer demand from point of sale to supplier

Communicator of customer demand from point of sale to supplier

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Benefits of Supply Chain Management

Supply chain oriented companies commonly report:

• Lower inventory, transportation, warehousing, and packaging costs

• Greater supply chain flexibility

• Improved customer service

• Higher revenues

• Increased performance and profitability

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Supply Chain Integration

Material and Service Supplier Integration

Material and Service Supplier Integration

Internal Operations Integration

Internal Operations Integration

Customer IntegrationCustomer Integration

Relationship IntegrationRelationship Integration

Measurement Integration

Measurement Integration

Technology and Planning Integration

Technology and Planning Integration

Firm-to-Firm Social Interactions

Firm-to-Firm Social Interactions

Operational Planning and

Control

Operational Planning and

Control

Customer IntegrationCustomer Integration

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Key Business Processes

1. Customer relationship management2. Customer service management3. Demand management4. Order fulfillment5. Manufacturing flow management6. Supplier relationship management7. Product development and

commercialization8. Returns management

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Logistical Components of the Supply Chain

SupplySupplyChainChainTeamTeam

Sourcing & ProcurementSourcing & Procurement

Production SchedulingProduction Scheduling

Order ProcessingOrder Processing

Inventory ControlInventory Control

Warehouse & Materials HandlingWarehouse & Materials Handling

TransportationTransportationLo

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Production Scheduling

Push / Pull Strategy

Traditional Focus

Push

Start of Production

Manufacturing

Inventory-Based

Mass Production

Customer Focus

Pull

Customer-Order Based

Mass Customization

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Just-in-Time Manufacturing

A process that redefines and

simplifies manufacturing by

reducing inventory levels and

delivering raw materials at the

precise time they are needed

on the production line.

JITJIT

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Benefits of JIT

For manufacturers: reduces raw material inventories; immediate shipping of products

For suppliers: daily or hourly deliveries rather than weekly

For customers: lower costs; shorter lead times; products tailored to customer needs

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Transportation

Airways

Water

Pipelines

Motor Carriers

Railroads

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Exhibit 14.1Exhibit 14.1Criteria for Ranking Modes of Criteria for Ranking Modes of

TransportationTransportation

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Trends in Supply Chain Management

5

Electronic distributionElectronic distribution

Outsourcing of logistics functionsOutsourcing of logistics functions

Advanced computer technologyAdvanced computer technology

Green Supply Chain managementGreen Supply Chain management

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Advanced Computer Technology

• Automatic identification systems• Bar coding• Radio frequency technology

• Communications technology

• Supply chain software systems

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Outsourcing Logistics Functions

Outsourcing BenefitsOutsourcing Benefits

Reduce inventories

Locate stock at fewer plants and distribution centers

Provide same or better levels of service

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Electronic Distribution

a distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber-

optic cable or through satellite transmission of electronic signals.

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Green Supply Chain Management

• Requires integrating green thinking into all phases of the supply chain– Green materials sourcing– Environmental impact of packaging,

shipment, use– Incorporate end-of-life management

• Recycling• Clean disposal

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Global Logistics and Supply Chain Management

Logistical challenges of global markets:• Understanding and coping with the

legalities of trade in other countries• Uncertainty regarding shipping

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