PowerPoint Presentation

MANAGING QUALITY IN ORGANIZATIONSSession 9Quality in the Supply ChainSupply Chain Management (SCM)Supply Chain Management is concerned with managing the flow of materials and information between the operations which form the strands or chains of an operations network.SCMSCM is concerned with processes and techniques brought into play to manage the flow of supplies through whole chains from suppliers to end users (Saunders, 1997).

SCM is the management of a network of interconnected businesses involved in the ultimate provision of products and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.Why is SCM importantThe development of global brands, more complicated management of costs and increasing ease of cross-border trading are the main reasons for stressing the competitiveness within the supply chain (Chen, 1997).

Rise of SCM as a phenomenon could be a result of increase of uncertainty, complexity and competitiveness in the market place (Struebing, 1997).

Home

FarmRegionaldistributioncentre

PackagingfactoryRolling millIngredientssupplyPet foodfactorySupermarketCereal supply

RetailerwarehouseFactorywarehouseJohnston & Clark, Service Operations Management, 2nd edition Pearson Education Limited 2005Example of a Veg. Pet Food Supply ChainSoya BeansHotelsAirlinesRestaurantsEntertainmentactivitiesTransportation companiesCustomerTour operatorTravel agentTour operatorDirect access via websitesHow some supply chains evolved......e.g. Holiday supply chains and disintermediationSCM CONCERNS

SCM is concerned with the flow of information as well as the flow of products and services First tier supplierSecond tier supplierFirst tier customerSecond tier customerEnd customerDemand sideSupply sidePurchasing and supply managementPhysical distribution managementLogistics (deliveries / storage)Materials managementSupply chain managementInformation flowPhysical flowInformation and Physical Flows within a Supply Chain:PURCHASING & SUPPLY MANAGEMENTThe function that deals with the operations interface with its supply marketsPHYSICAL DISTRIBUTION MANAGEMENTManaging the operation that supplies immediate (first tier) customersLOGISTICSAn extension of physical distribution management. Usually refers to the management of materials through a distribution channel to the end customer SUPPLY CHAIN MANAGEMENTA concept developed to support an approach which covers the total supply chain towards satisfying the end customer.Some DefinitionsTotal and Immediate Supply NetworksSecond tier SuppliersFirst tier SuppliersSecond tier CustomersFirst tier CustomersThe OperationSupply side of the networkDemand side of the networkThe Immediate Supply NetworkThe Total Supply NetworkInternal Supply NetworksToxicology laboratoryHospitals and forensic laboratoriesVictimsSuspects (exonerated or convicted)CoronersDrugs laboratoryPolice investigatorsSuspectsFamilies and sympathisers of suspectsProsecutorsPhysical evidence laboratoryNarcotics officersCrime scenesVictimsCourtsBiology laboratoryFire investigatorsEye witnessesFamilies and sympathisers of victimsDefence lawyersDocument examination laboratoryDefence counselsOther witnessesPublicLatent prints unitPrivate clientsPress and mediaForensic pathology laboratoryHospitals and forensic laboratoriesPolice investigatorsNarcotics officersFire investigatorsDefence counselsPrivate clientsOperationsFirst tier suppliersSecond tier suppliersThird tier customersSecond tier customersFirst tier customersExample: Regional Forensic Science LaboratoryExplore the potential perception mismatches to understand supplier development needs

Explore the potential perception mismatches to understand customer development needs

Typical supply chain dynamics

Supply Chain ExerciseConsider a company which sells yoghurt to Keells or Cargills

Draw up a supply chain showing first and second tier suppliers and customers

Be prepared to present this to the rest of the group.

B2BRelationship:Most common, all but the last link in the supply chainE-commerce examples:EDI networks : between banksTesco Information Exchange

B2CRelationship:Retail operationsCatalogue operations, etc.E-commerce examples:Internet retailersAmazon.com, etc.

C2BRelationship:Consumer offer, business respondsE-commerce examples:Some airline ticket operatorsPriceline.com, etc.

C2CRelationship:Trading swap and auction transactionsE-commerce examples:Specialist collector sitesEbay.com, etc.

BusinessConsumerSupply chain relationshipsBusinessConsumerThe decision logic of outsourcing

CRITERIAQUALITYDELIVERYCOSTSTRATEGICCHOICESCAPACITY CONSTRAINTSSKILL SHORTAGEMAKEORBUYTOOLINGREQUIREMENTSPLANT ANDFACILITIESINTEGRATIONACQUISITIONDIVESTMENTOPERATIONSINTERMEDIATESTRATEGICLEVEL OFDECISIONCOMPETITIVETENDERINGLEVELS OFINVOLVEMENTOF SUPPLIERSSPECIALISTSUPPLIERSPURCHASINGSERVICESSUB - CONTRACTINGEVALUATION ANDSELECTIONREPUTATIONCAPACITYQUALITYFINANCIALSTABILITYINTEGRATIONWITHBUYERTEAM WORKINGPROVIDINGTRAININGPROVIDINGSPECIALISTTOOLS ANDEQUIPMENTQUALITYOF WORKSPECIFICATIONTHIRDPARTYRESPONSIBILITYMONITORINGPERFORMANCEMake or Buy?Improving Profitability through Supply Chain compression

Heinz Baked Beans Supply Side

Heinz Baked Beans Distribution Side

Traditional relationshipPartnership relationshipLean relationshipPriceQualityInformationRelationshipPlannedNegotiatedBidsKaizen MonitoredHistoricalTransparentSharedSecretiveIntegratedCooperativeAdversarialTimeThe nature of the interaction between players in supply networks is changingRequest for quotationsRequest for products and servicesProduce products and servicesSelect supplier(s)Prepare purchase orderPrepare quotation for specification, price, delivery, etc.Receive products and servicesDemand from customersSupply to customersRequestsQuotationsOrderLiaison between purchasing and the operationDeliverThe operationPurchasing functionSuppliersThe purchasing function brings together the operation and its suppliersPriceCostCostPriceTimeTimeFromTo From cost driving prices upTo prices driving cost downEnd