role of supply chain management

8/20/2019 Role of Supply Chain Management

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Role of Supply ChainRole of Supply Chain

Management in the 21Management in the 21stst

CenturyCentury


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Evolutionary Perspective on

Supply Chain Management

FocusMore Attention

Supply ChainFrom Corporate ManagementManagement

Functional Orientation• Transportation• Inventory• Warehousing• Manufacturing

• Purchasing

1940 1950 1960 1970 1980 1990 2000 Beyond

“ The Future of SCM: Can We Get There From Here?”3


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Importance of Supply Chain to

Business Success

100% 91%

70%80%

60%

40% 25%

20%

0%1995-1998 1999 Beyond 2000

Note: Percent of respondents who replied critical or very important.

Source: Energizing the Supply Chain, Deloitte Consulting,



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Supply Chain ManagementSupply Chain Management

““The process for designing, developing, optimizing,The process for designing, developing, optimizing,

and managing the internal and external componentsand managing the internal and external componentsof the supply system, including material supply,of the supply system, including material supply,

transforming materials, and distributing finishedtransforming materials, and distributing finished

products or services to customers, that is consistentproducts or services to customers, that is consistent

with overall objectives and strategies.with overall objectives and strategies.””

----SpekmanSpekman,, Kaumauff Kaumauff andand Myhr Myhr (1998)(1998)


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Key FunctionsKey Functions

Customer serviceCustomer service

ProcurementProcurement

Demand forecastingDemand forecasting

Inventory managementInventory management

LogisticsLogistics

Materials handlingMaterials handling

PackagingPackaging

Parts & Service SupportParts & Service Support

Warehousing & StorageWarehousing & Storage


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Tube

Supplier

PasteSupplier

Abrasive

Supplier

Chemicals

Chemicals

Chemicals

Chemicals

Metals

Plastic

Retailer Factory

Supply ChainSupply Chain – –

Manufacturing Sector Manufacturing Sector


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The Right

products

The Right

quantity

The Right

moment

The Right

cost

FlexibilityProduct

reliability

Delivery t ime/

lead time

Inventory

level

Key GoalsKey Goals – – 4R4R’’ss


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Effective Supply Chain Management canEffective Supply Chain Management can

help an Organization tohelp an Organization to……....

Ensure continuity of operationsEnsure continuity of operations Respond quickly to market changesRespond quickly to market changes

Improve qualityImprove quality

InnovateInnovate

Reduce its total costsReduce its total costs


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Supply Chain Management:

Where Are We Now?

Value NetworkPerformance Excellence

ChannelExcellenceEffectiveIntegrationExcellence

Process

Excellence

Most Current Progress at

Functional These LevelsExcellence

Efficient

Time

Deliver Product Deliver Value



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Paradigm shift in Supply ChainManagement…Paradigm shift in Supply ChainParadigm shift in Supply Chain

ManagementManagement……

Clerical Commercial Strategic


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Profitability by Level of Supply ChainProfitability by Level of Supply Chain

MaturityMaturity

ImmatureSupplyChain

MatureSupplyChain

Immature SupplyChain with Best-in-Class Systems

VHA Research Series – Taking Control of Your Supply Chain, 2004


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But achieving this requires most

companies to…

But achieving this requires mostBut achieving this requires most

companies tocompanies to……

…change mindsets at topmanagement level

……change mindsets at topchange mindsets at topmanagement levelmanagement level

…develop new staff

knowledge & skills

……develop new staffdevelop new staff

knowledge & skillsknowledge & skills

…build new partnership-basedrelationships with suppliers

……build new partnershipbuild new partnership--basedbasedrelationships with suppliersrelationships with suppliers


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What Defines the “ Best”

Supply Chain Strategies

Customer-Driven

Focus on Efficiency as well as Effectiveness

Aggressively Pursue Innovation & Creativity

Have support & Involvement of Senior Management

Capitalize on the Skills of People throughout Supply Chain

Leverage Core Competencies

Inspire Competitors to Imitate

While Competitors are Imitating, Move on to New Initiatives



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Forces That Drive Supply ChainForces That Drive Supply Chain

ManagementManagement

Consumer DemandsConsumer Demands

Instant availability of required productsInstant availability of required products – – zerozero

tolerancetolerance

Better, Cheaper, Faster and faster and evenBetter, Cheaper, Faster and faster and even

faster faster …………..)..)

GlobalizationGlobalization

Think globally, Act locallyThink globally, Act locally


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CompetitionCompetition

Companies focus will be more on redefiningCompanies focus will be more on redefining

their competitive space.their competitive space.

SourcesSources

Technological AdvancesTechnological Advances

Information availability improvementsInformation availability improvements


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Information TechnologyInformation Technology

InternetInternet

Allows customers to shop around, examine every Allows customers to shop around, examine every

facet of each product, and buy most products fromfacet of each product, and buy most products from

onon--line catalogs.line catalogs. In the future, 50% of the business will be over theIn the future, 50% of the business will be over the

internet.internet.

Electronic Data InterfaceElectronic Data Interface

– –

EDIEDI


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Government RegulationGovernment Regulation

Trade and customs barriers.Trade and customs barriers.

EnvironmentEnvironment

New ways for recycling and making productsNew ways for recycling and making productsecoeco--efficient will need to be enforcedefficient will need to be enforced

BackBack--ends of the product life cycle will needends of the product life cycle will need

to be paid attention to more.to be paid attention to more.


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Major Paths to Help Future SupplyMajor Paths to Help Future Supply

Chains SucceedChains Succeed

Flexible, Integrated DesignFlexible, Integrated Design

New chain designs:New chain designs: agilityagility,, flexibilityflexibility andandintegrationintegration

Will be able toWill be able to adjust volumesadjust volumes as demandas demand

variesvaries

Skills of supply chain managementSkills of supply chain management --

throughout the organizationthroughout the organization


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Supply Chain ManagementSupply Chain Management

in Health Care Organizationsin Health Care Organizations


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Expenses BreakdownExpenses Breakdown – – Health CareHealth Care

OrganizationsOrganizations


* Other includes labor & logistical expenses


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Supply ChainSupply Chain – – HealthcareHealthcare


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Quality products

Lowest possible cost

Order fulfillment

Integration of supply chains

Customer service

Preferred partners

Collaboration

Supply chain communities

Group Purchasing

Supply Chain EvolutionSupply Chain Evolution


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Health Care Supply Chain ManagementHealth Care Supply Chain Management

– – Unique ChallengesUnique Challenges

Inventory levels are generally higher Inventory levels are generally higher

Rapid innovationRapid innovation Product standards, AutomationProduct standards, Automation

technologies, Etechnologies, E--commerce & GPOcommerce & GPO

underutilizedunderutilized

Product development is driven by supplier,Product development is driven by supplier,not customersnot customers

Unpredictable consumption / demandUnpredictable consumption / demandpatternspatterns



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Health Care Supply Chain ManagementHealth Care Supply Chain Management

– – Unique ChallengesUnique Challenges

Difficult to evaluate price & vendor performanceDifficult to evaluate price & vendor performance

Senior management supports clinicianSenior management supports clinician’’ss

demandsdemands

Sizeable unofficial inventoriesSizeable unofficial inventories

Relationship between clinicians and SCMRelationship between clinicians and SCM

professionalsprofessionals

Vendors influence over physiciansVendors influence over physicians Low contract complianceLow contract compliance


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