1 lamb, hair, mcdaniel chapter 14 supply chain management 2010-2011
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Lamb, Hair, McDaniel
CHAPTER 14
Supply Chain Management
2010-2011
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LO 1 Define the terms supply chain, supply chain management, and supply chain orientation, and discuss the benefits of supply chain management
LO 2 Discuss the concept of supply chain integration and explain why each of the six types of integration is important
LO 3 Identify the eight key processes for excellent supply chain management and discuss how each of these processes impacts the end customer
Learning OutcomesLearning Outcomes
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LO 4 Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains
LO 5 Discuss new technology and emerging trends in supply chain management.
Learning OutcomesLearning Outcomes
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Supply Chains and Supply Chain Management
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Define the terms supply chain, supply chain management,
and supply chain orientation, and discuss the benefits
of supply chain management
LO1
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Supply Chains
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Supply ChainSupply ChainThe connected chain of
all of the business
entities, both internal
and external to the
company, that perform or
support the logistics
function
LO1
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Supply Chains
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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
LO1
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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
LO1
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Supply Chains
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Supply Chain Managers
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Supply chain managers are responsible for :
Making strategic decisions
Management of information through supply chain
Coordinating relationships between company and external partners
LO1
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Benefits of Supply Chain Management
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Supply chain oriented companies commonly report:
• Lower inventory, transportation, warehousing, and packaging costs
• Greater supply chain flexibility
• Improved customer service
• Higher revenues
• Increased profitability
LO1
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Supply Chain Integration
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Discuss the concept of supply chain integration
and explain why each of the six types of
integration is important
LO2
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Supply Chain Integration
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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
LO2
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Supply Chain Integration
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Relationship Integration
Relationship Integration
The ability of two or more companies to develop social connections that serve to guide their interactions when working together.
The ability of two or more companies to develop social connections that serve to guide their interactions when working together.
Role Specificity
Role Specificity
When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which
firms are the followers, and which responsibilities are assigned to
each firm.
When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which
firms are the followers, and which responsibilities are assigned to
each firm.
LO2
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Measurement Integration
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The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals
Measurement Integration
Technology and planning integration
The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain
LO2
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Internal Operations Integration
Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements
A competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain
Customer Integration
LO2
Internal Operations Integration
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Key Processes of Supply Chain Management
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Identify eight key processes of excellent supply chain
management, and discuss how each of these processes
impacts the end customer
LO3
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Key Processes
17LO3
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Customer Relationship Management
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Customer Relationship Management
Process
Customer Relationship Management
Process
The prioritization of a firm’s
marketing focus on different
customer groups according to
each group’s long-term value
to the company or supply
chain; designed to identify and
build relationships with good
customers.
LO3
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Customer Service Management
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Customer Service
Management Process
Customer Service
Management Process
A multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; designed to ensure that customer relationships remain strong.
LO3
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Demand Management
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DemandManagement
Process
DemandManagement
Process
The alignment of supply and
demand throughout the supply
chain to anticipate customer
requirements at each level and
create demand-related plans of
action prior to actual customer
purchasing behavior.
LO3
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Order Fulfillment
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Order FulfillmentProcess
Order FulfillmentProcess
A supply chain
management process that
involves generating,
filling, delivering, and
providing on-the-spot
service for customer
orders.
LO3
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Manufacturing Flow Management
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Manufacturing Flow
Management Process
Manufacturing Flow
Management Process
A process that ensures
that firms in the supply
chain have the resources
they need
LO3
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Supplier Relationship Management
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Supplier Relationship Management
Process
Supplier Relationship Management
Process
A supply chain
management process that
supports manufacturing
flow by identifying and
maintaining relationships
with highly valued
suppliers
LO3
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Product Development and Commercialization
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Product Development and Commercialization
Process
Product Development and Commercialization
Process
The group of activities
that facilitates the joint
development and
marketing of new
offerings among a group
of supply chain partner
firms.
LO3
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Returns Management
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Returns Management
Process
Returns Management
Process
A process that enables firms
to manage volumes of
returned product efficiently,
while minimizing costs and
maximizing the value of the
returned assets to the firms in
the supply chain.
LO3
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Key Processes of Supply Chain Management
26LO3
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Managing Logistical Components
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Describe the logistical components of the
supply chain
LO4
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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
gis
tics
Info
rma
tio
n S
yste
mL
og
isti
cs In
form
ati
on
Sys
tem
LO4
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Sourcing and Procurement
Plan purchasing strategies
Develop specifications
Select suppliers
Negotiate price and service levels
Reduce costs
The Role of Purchasing:The Role of Purchasing:
LO4
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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
LO4
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Just-in-Time Manufacturing
A process that redefines and simplifies
manufacturing by reducing inventory levels
and delivering raw materials just when they
are needed on the production line.
JITJIT
LO4
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Benefits of JIT
Reduces raw material inventoriesShortens lead timesCreates better supplier relationshipsReduces production and storeroom
costsReduces paperwork
LO4
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Materials Handling Functions
Receive goods into warehouse
Dispatch the goods totemporary storage
Recall, select, or pick the goods for shipment
Identify, sort, and label goods
LO4
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Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
LO4
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JIT Requirements
Receive high-quality parts Receive high-quality parts
Meet supplier delivery commitmentsMeet supplier delivery commitments
Have a crisis management planHave a crisis management plan
LO4
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Order Processing
Information technology that replaces paper
documents that accompany business transactions
with electronic transmission of the information.
ElectronicData
Interchange
ElectronicData
Interchange
http://www.walmartstores.com
Online
LO4
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Order Processing
A method of developing and maintaining
an adequate assortment of materials or
products to meet a manufacturer’s or a
customer’s demand.
InventoryControlSystem
InventoryControlSystem
LO4
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Order Processing
MaterialsRequirement
Planning(MRP)
MaterialsRequirement
Planning(MRP)
An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.
An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer.
DistributionResourcePlanning
(DRP)
DistributionResourcePlanning
(DRP)
An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
LO4
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MaterialsHandling Functions
Receive goods into warehouse
Dispatch the goods totemporary storage
Recall, select, or pick the goods for shipment
Identify, sort, and label goods
LO4
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Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
LO4
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Transportation Mode Choice
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Cost Transit time Reliability Capability Accessibility Traceability
LO4
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Criteria for RankingModes of Transportation
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Relative CostTransitTime
Reliability
Capability
Accessibility
Traceability
HighestHighest LowestLowest
Air WaterPipeRailTruck
Water Rail Pipe Truck Air
Pipe Truck Rail Air Water
Water
Truck
Rail Truck Air Pipe
Rail Air Water Pipe
Air Truck Rail Water Pipe
LO4
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Trends in Supply Chain Management
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Discuss new technology and emerging trends in
supply chain management
LO5
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Trends in Supply Chain Management
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Electronic distributionElectronic distribution
Outsourcing of logistics functionsOutsourcing of logistics functions
Advanced computer technologyAdvanced computer technology
Globalization of supply chain managementGlobalization of supply chain management
Outsourcing of logistics functionsOutsourcing of logistics functions
LO5
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Trends in Supply Chain Management
Electronic distributionElectronic distribution
Outsourcing of logistics functionsOutsourcing of logistics functions
Advanced computer technologyAdvanced computer technology
LO5
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Advanced Computer Technology
Automatic identification systems
- Bar coding
- Radio frequency technology
Communications technology
Supply chain software systems
LO5
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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
LO5
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Green Supply Chain Management
• Requires integrating green thinking into all aspects of the supply chain– Green materials sourcing– Environmental impact of packaging,
shipment, use– Incorporate end of life management
• Recycling• Clean disposal
LO5
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AMR Research Healthcare Top 25
Ranked based on building supply chain excellence and innovation to drive business results in demand-driven supply chains
1. Johnson & Johnson
2. Sisters of Mercy
3. Cardinal Health
4. Owens & Minor
5. McKesson
6. CVS Caremark
7. Abbott
8. Novartis
9. BD (Becton, Dickinson)
10. Wyeth
11. GlaxoSmithKline
12. AstraZeneca
13. AmerisourceBergen
14. Walgreens
15. Covidien
16. Cleveland Clinic
17. Merck
18. Genentech
19. Alcon Laboratories
20. Medtronic
21. Boston Scientific
22. BJC HealthCare
23. Roche
24. Amgen
25. Mayo Clinic
Source: http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-49119 LO5