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Arne Janssen, Melanie Engelhardt, Hendrik Walter | 20/01/2014!
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AGENDA
2
1. OVERVIEW
2. PRODUCT
SUPPLY CHAIN MGMT.
3. SERVICE
SUPPLY CHAIN MGMT.
5. CONCLUSIONS
4. RELEVANCE
FOR MARKETERS
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1. OVERVIEW
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THE EVOLUTION OF SCM
Source: Metcalfe (2004); Camerinelli (2009); Christopher (2011)!
“Supply chains” already existed in
prehistoric !times!
“Logistics” used for building pyramids!
“Logistics” used for trade (Silk
Road)!
Logistics used in
military (war)!
Until 1970s:!Manufacturer driven supply
chain!
In 1970s: supply chain becomes demand driven!
SC considerations in business:!
In 1990s: SCM developed!
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DEFINITIONS
“Supply chain management is the active management of supply chain!activities and relationships in order to maximize customer value!
and achieve a sustainable competitive advantage.”!
– Bozarth & Handfield (2013, p. 25)!
Supply Chain Management
Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and
storage of goods, services, and related information [...]” !!
Logis4cs
– Farahani, R. et al. (2009, p. 2)!
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WHY IS SCM IMPORTANT?
Video
Source: MIT CTL (2011)!
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Competitive advantage!
Cost advantage!(economies of scale;
experience curve)!
Value advantage!(differentiation; image
& service)!
Sources: Christopher (2011); Porter (1985)!
Companies recognize vital impact of logistics and supply chain management in achieving competitive advantage!
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
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SERVICE KNOWLEDGE PRODUCT SUPPLY CHAIN MANAGEMENT
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2. PRODUCT
SUPPLY CHAIN MANAGEMENT
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10 Source: cf. Supply Chain Council (2013)!
Plan | Source | Make | Deliver | Return | Enable!
M1 Make-to-Stock | M2 Make-to-Order | M3 Engineer-to-Stock!
LEVEL 1!(SCOPE)!
LEVEL 2!(CONFIGURATIONS)!
LEVEL 3!(BUSINESS ACTIVITIES)!
M2.01 Schedule Production | M2.02 Issue Product | M2.03 ...!
SCOR-MODEL
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SCOR-MODEL
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YOUR COMPANY!
PLAN!
Source: cf. Supply Chain Council (2013)!
SOURCE! MAKE! DELIVER!
RETURN!RETURN!
CUSTOMER!
PLAN!
SOURCE!
RETURN!
SOURCE! MAKE! DELIVER!
RETURN!RETURN!
SUPPLIER!
PLAN!
DELIVER!
RETURN!
ENABLE!ENABLE!ENABLE!
ENABLE!ENABLE!
SOURCE! MAKE! DELIVER!
RETURN!RETURN!
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PORTER‘S VALUE-CHAIN
12 Source: Porter (1985)!
Firm Infrastructure!
Human Ressource Management!
Technological Development!
Procurement!
Inbo
und!
Logi
stic
s!
Ope
ratio
ns!
Out
boun
d!Lo
gist
ics!
Mar
ketin
g !
& S
ales!
Serv
ice!
Primary Activities!
Supp
ort A
ctiv
ities!
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PRODUCT SUPPLY CHAIN
13 Sources: cf. Waissi (2011); cf. Christopher (2011)!
OEM!
CUSTOMER!
TIER 1 TIER 2 TIER 3
Materials flow!Information & cash flow!
*Original equipment manufacturer!
*
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ERP SYSTEM!
HR! Controlling!Logistics! Production!
OEM
Inter-divisional functions!
ENTERPRISE RESOURCE PLANNING
14 Source: Author design; cf. Hesseler & Görtz (2007)!
SUPPLIER! CUSTOMER!
*Original equipment manufacturer!
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APPLIED PRODUCT SUPPLY CHAIN MANAGEMENT
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SUPPLY CHAIN OF COCA COLA CAN
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CUSTOMER!
Sugar beet field
Corn field
Bauxite mine
So@wood Forest
Beet wareh.
Corn wareh.
Paper factory
Sugar factory
Card-‐board factory
Card-‐board wareh.
Chemical reacLon mill
Smelter Hot
rolling mill
Cold roling mill
Can maker
Central UK
wareh.
Tesco regional wareh.
Tesco store
Caramel producer
Caramel wareh.
Concen-‐trate
producer
Sugar wareh.
BOTTLER!
½ producLon cost
Source: Womack (2013)!
Water
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BOTTOM LINE Total process time! 319 days!
Actual processing time! 3h!Av. Consumption time! 5min!Transported + stored! 30 times!
Scrap! 24%!
Muda (jap.) = waste, non-value-adding tasks!!Muda 1: Tasks that are essential under current conditions!Muda 2: Tasks which can be eliminated immediately!
TYPES OF WASTE - Womack (2013)!
- Ohno (1988) !
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18 Source: Womack (2013)!
BEST PRACTICE
Success Factors! Benefit!
Barcode Scanners! Exact inventory & automatic reorders!
Regional Distribution Centers! Bigger order batches!Daily JIT delivery! Decreased inventory!
Small can size, short use !
Economies of scale: big batches !
Conflict!
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3. SERVICE
SUPPLY CHAIN MANAGEMENT
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PLAN! SOURCE! MAKE! DELIVER! RETURN!
ASSESSM.! ALIGNMENT! CAPTURE! DELIVERY! MAINTEN.!
SALES!INBOUND!LOGISTICS! PRODUCT.! OUTBOUND!
LOGISTICS! SERVICE!
SC
OR!
VA
LU
E!
CH
AIN
!V
AL
UE!
SY
ST
EM!
Source: cf. Banach (2013)!
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Value Assess-
ment!
Value Delivery!
Value!Capture!
Value Align-ment!
Value Mainte-nance!
VALUE SYSTEM
21 Source: cf. Banach (2013)!
LEGEND!
Brand Infrastructure! Values!
Knowledge! Leadership!
Information Technology!
Marketing Strategy!
Human Resources!Controlling!
Resource Management!
Communication Infrastruct.!
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VALUE CONSTELLATION
22 Source: cf. Banach (2013)!
Restaurant!
Online Order Platform!
Delivery Service Provider!Inventory Management
Provider!
Value Assessment
Value Alignment
Value Capture
Value Delivery
Value Maintenance
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4. RELEVANCE FOR
MARKETERS
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THE CONNECTION BETWEEN SCM & MARKETING
Source: cf. Christopher (2011); Esper et al. (2010); Kortus-Schulte & Ferfer (2005) !
Marketing effectiveness !
Consumer franchise!
Customer franchise!
Supply chain efficiency!x! x!=!
Supply chain
design!
Marketing data!
Sales data! Market research
data!
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THE RELEVANCE OF THE 4 Ps
Source: cf. Kotler & Keller (2012); Kreutzer (2010)!
Product!
Product variety!
Quality!
Design!
Features!
Brand name!
Packaging!
Sizes!
Services!
Warranties!
Returns!
Price!
List price!
Discounts!
Allowances!
Payment period!
Credit terms!
Promotion!
Sales promotion!
Advertising!
Sales force!
Public relations!
Direct marketing!
Place!
Channels!
Coverage!
Assortment!
Locations!
Inventory!
Transport!
+ People!
Supply Chain Management!
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THE RELEVANCE OF THE 4 Ps
Source: cf. Corsten & Gruen (2004)!
Buy item in another store
31%!
Substitute different brand
26%!
Substitute same brand 19%!
Delay purchase 15%!
Do not purchase item 9%!
What do customers do if product is out of stock?!
n = 71.000 (in 29 countries)!
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5. CONCLUSIONS
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CONCLUSIONS Define the value
proposition!
Detect and get rid of non-value-
adding processes!
Identify demand and design
supply chain accordingly!
Improve value generation in
each step of the value chain or value system!
Promote constant
knowledge exchange within
supply chain!
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Arne Janssen, Melanie Engelhardt, Hendrik Walter | 20/01/2014!
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SOURCES Banach, C.N. (2013) Value constellation: Making models work for you! in: Kreutzer, R.T. & Land, K-H. (2013): Digitaler
!Darwinismus – Der stille Angriff auf Ihr Geschäftsmodell und Ihre Marke. Wiesbaden: Springer Gabler!Bozarth, C.C. & Handfield, R.B. (2013): Introduction to Operations and Supply Chain Mangement, 3rd edition, Harlow:
!Pearson Education!Camerinelli, E. (2009): Measuring the Value of the Supply Chain – Linking Financial Performance and Supply Chain
!Decisions. Farnham: Gower.!Christopher, M. (2011): Logistics & Supply Chain Management, 4th edition, Harlow: Pearson Education!Corsten, D., & Gruen, T. (2004): Stock-outs cause walkouts. Harvard Business Review, 82(5), 26-28.!Esper, T. L., Ellinger, A. E., Stank, T. P., Flint, D. J., & Moon, M. (2010): Demand and supply integration: a conceptual
!framework of value creation through knowledge management. Journal of the Academy of Marketing Science, 38(1), !5-18.!
Farahani, R. Z., Asgari, N., & Davarzani, H. (2009): Supply Chain and Logistics in National, International and !Governmental Environment. Contributions to Management Science!
Ford, H. (1923): My life and work. New York: Doubleday, Page & Company!Hesseler, M., Görtz, M. (2007): Basiswissen ERP-Systeme: Auswahl, Einführung & Einsatz betriebswirtschaftlicher
!Standardsoftware; W3l GmbH!Kortus-Schulte, D., & Ferfer, U. (2005): Logistik und Marketing in der Supply Chain. Wiesbaden: Gabler!Kotler, P., Keller, K.L. (2012): Strategic Marketing Management, 14th edition. Upper Saddle River: Pearson Education!Kreutzer, R. (2010): Praxisorientiertes Marketing, 3rd edition. Wiesbaden: Gabler!Mentzer, J. T., & Gundlach, G. (2010): Exploring the relationship between marketing and supply chain management:
!introduction to the special issue. Journal of the Academy of Marketing Science, 38(1), 1-4.!!!
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SOURCES Metcalfe, L. (2004): Supply chains - an introduction. Chartered Accountants Journal, 83 (4), 55-57!MIT CTL (2011): MIT Supply Chain Management Program – Lemonade Video. Retrieved from: ! ! ! !
!http://www.youtube.com/watch?v=gBRrG0-SA1I [Accessed 17.01.2014]!Ohno, T. (1988): The Toyota Production System: Beyond Large-Scale Production, Portland, Oregon: Productivity Press.!Porter, M. E. (1985): Competitive Advantage: Creating and Sustaining Superior Performance, New York; London: Free
!Press; Collier Macmillan!Supply Chain Council (2013): SCOR-Overview, Retrieved from: https://supply-chain.org/f/SCOR-Overview-Web.pdf
![Accessed: 17.01.2014]!Waissi, G. (2014): Arizona A&D Supply Chain, Retrieved from: http://129.219.40.44/adsr/Supplychain/SCDefault.aspx
![Accessed: 17.01.2014]!Weigelt, T. (2014): Mehr Platz für Coca Cola, FR-Online, Retrieved from: ! ! ! ! ! ! ! !
!http://www.fr-online.de/main-taunus/liederbach-mehr-platz-fuer-coca-cola,1472862,25813234.html [Accessed: !17.01.2014]!
Womack, J. P. & Jones, D. T. (2013): Lean Thinking, 3rd edition, Frankfurt am Main: Campus.!!!