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Lean Six Sigma: Process Improvement Tools and TechniquesDonna C. Summers

© 2011 Pearson Higher Education,Upper Saddle River, NJ 07458. • All Rights

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Supply Chain Management

Chapter 16



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• Companies don’t compete against other companies; they compete against each others’ supply chains.



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• What is a supply chain?– A supply chain is the network of organizations

involved in the movement of materials, information, and money as raw materials flow from their source through production until they are delivered as a finished product or service to the final customer.



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• Who are the participants in supply chains?– Multiple suppliers– Wholesalers– Manufacturers– warehouses– Distribution centers– Retailers– Customers



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• What drives supply chains?– Money– Materials– Information



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• What should supply chain design consider?– The products travelling the supply chain– The services travelling through the supply

chain– The information travelling through the supply

chain– The structure of the supply chain– How each segment of the supply chain be

managed and optimized



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• What are the benefits of effective supply chains?– Effective supply chains optimize the value

creation process by improving processes, implementing lean principles, optimizing asset allocation, and monitoring quality assurance.



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• What are the critical elements of supply chain management?– Inventory management– Information sharing– E-commerce– Logistics,– Purchasing



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• Why is information sharing critical when creating an effective supply chain?– organizations need to know what is needed,

how much, and when.



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• How does e-commerce support supply chain management? – Faster purchasing cycle times– Reduced inventory– Fewer order processing people– Faster product or service search and ordering– Greater information availability– Automated validation and pre-approved spending– Less printed material like order forms or invoices– Increased flexibility– On-line communication



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• What is logistics?– Logistics is the process of determining the

best methods of procuring, maintaining, packaging, transporting, and storing materials and personnel in order to satisfy customer demand.



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• What role does purchasing play in supply chain management?– Purchases are driven by several factors,

including quality of the goods or services, timing of the deliveries of the goods or services, and the costs associated with purchasing the goods or services.



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• What challenges face the development of an effective supply chain?– Synchronization– Fluctuations in demand– Long supply chains– Great distances between supply chain

members– Lack of communication– Lack of information sharing

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