© AMD Publishing/ T. Hill 2005 T. Hill, Operations Management 2e. Palgrave Macmillan ISBN:...

© AMD Publishing/ T. Hill 2005

T. Hill, Operations Management 2e. Palgrave Macmillan ISBN: 1403934665/ 140399112X

Chapter 13

MANAGING THE SUPPLY CHAIN

Terry Hill



OVERVIEW

WHAT is a supply chain? Supply chain MANAGEMENT The MAKE-OR-BUY decision The REALITY of make-or-buy decisions ADVANTAGES and DISADVANTAGES of

making and buying Domestic vs offshore SOURCING options

and strategic fit ALTERNATIVES to the make-or-buy option



OVERVIEW

Supply chain management ISSUESDEVELOPING the supply chainAspects of CHANGEE-PROCUREMENTProcess TOOLS within supply chain managementDistribution and transportation SYSTEMSE-COMMERCE



WHAT IS A SUPPLY CHAIN?

Exhibit 13.1 from page 480

(Examples)



WHAT IS A SUPPLY CHAIN?

(Examples)



SUPPLY CHAIN MANAGEMENT


(Managing the supply chain)



THE MAKE-OR-BUY DECISION

Retaining CORE TECHNOLOGIESSTRATEGY considerations - reflecting order-winners and qualifiersImpact on SPAN of processService and product VOLUMESGLOBALISATION of world trade



THE REALITY OF MAKE-OR-BUY DECISIONS

HISTORY Once made, make-or-buy decision

often remain unchallengedDominance of COST and TECHNOLOGY arguments Initial check is whether have technical

capability in-house Then comes the issue of cost Other order-winners and qualifiers are

not part of the review



ADVANTAGES AND DISADVANTAGES OF MAKING AND BUYING

Benefits of VERTICAL INTEGRATION or providing more in-house

BENEFITS of outsourcing DISADVANTAGES of outsourcing




Improved MARKET INTELLIGENCE Able to forecast trends more accurately

More readily available technological INNOVATIONS and OPTIONS

Increased CONTROL over firm’s competitive environment Reduce dependency on suppliers Forward integration and market penetration

Low cost OPPORTUNITIES

(Benefits of vertical integration)




Freed RESOURCES Reduced COSTS Easier to control costs - SIMPLER Superior DESIGN - suppliers as specialists Market PENETRATION of sound design Access to CAPACITY Up-to-date TECHNOLOGY Access to WORLD-CLASS capabilities Increased focus on own CORE TASKS

(Benefits of outsourcing)




Loss of CONTROL - order-winners and qualifiers

Increased VULNERABILITY Intellectual property - EXPOSED to outside Reversibility - difficult to CHANGE decision

in the future Needs new management SKILLS

(Disadvantages of outsourcing)



DOMESTIC VS OFFSHORE SOURCING OPTIONS AND STRATEGIC FIT


(Sourcing location and discounts)



DOMESTIC VS OFFSHORE SOURCING OPTIONS AND STRATEGIC FIT


(Sourcing location and flexibility)



ALTERNATIVES TOTHE MAKE-OR-BUY OPTION

JOINT ventures CO-SOURCING Non-equity-based COLLABORATION




(Joint ventures as a viable alternative)





(Reasons for joint ventures)



SUPPLY CHAIN MANAGEMENT ISSUES

TRENDS GLOBALISATION Incorporating UNCERTAINTY Types of supplier RELATIONSHIPS




(Trends)





(Types of supplier relationships)





(Types of supplier relationships)

TRAWLING the market Ongoing RELATIONSHIPS PARTNERSHIPS Strategic ALLIANCES Backward INTEGRATION




(Strategic alliances)




DEVELOPING THE SUPPLY CHAIN

1. ORIGIN2. INTEGRATING activities within a

business3. CO-ORDINATING activities

between businesses4. SYNCHRONISING across the

supply chain

PHASES




(Origin)





(Integrating activities)





(Co-ordinating activities)





(Synchronising across the supply chain)





(Key issues)

Overcoming the BARRIERS to integration Helps RESPOND to shorter lead-times Eliminates COST - inventory and duplication Moving INFORMATION, not inventory



ASPECTS OF CHANGE

Effective CONSUMER response Changes in ATTITUDE Increasing use of IT Strategic PARTNERING



ASPECTS OF CHANGE

(Phases in changing attitudes to suppliers)



ASPECTS OF CHANGE

(Increasing use of IT)

1. MAINFRAMES2. Personal Computers (PCs)3. NETWORK computing4. E-COMMERCE - issues

Fraud Vulnerability Focusing on non-value-added activities

PHASES



ASPECTS OF CHANGE

(Evolving role of IT)




ASPECTS OF CHANGE

(Fraud)



ASPECTS OF CHANGE

(Vulnerability)




E-PROCUREMENT

Changing CULTURE more than technology Electronic CATALOGUES at heart of

development BENEFITS

Increased contract compliance Leveraging the purchasing spend Lower processing costs Increased involvement of people Optimising corporate tax savings Provides early e-business success



E-PROCUREMENT

(System overview)




PROCESSING TOOLS WITHINSUPPLY CHAIN MANAGEMENT

SOURCING DEVELOPING supplier base Supplier SELECTION

Internal review Evaluation Process

MAINTAINING supplier base




(Sourcing)

Good suppliers MORE THAN providers of goods and services

INVALUABLE resource to an organisation’s success

Suppliers are part of SUPPLY CHAIN




(Developing the supplier base)

IN-HOUSE supplier information files Supplier CATALOGUES TRADE registers, directories and journals Trade EXHIBITIONS Professional COLLEAGUES




(Supplier selection)

INTERNAL REVIEW Make-up of team

EVALUATION Viability of supplier organisation Technical know-how of supplier Assess managerial capabilities Assess operations capabilities Check how well meets relevant

order-winners and qualifiers




(Supplier selection)

PROCESS Site visits Checking specific capabilities - e.g. ISO 9000

and future growth potential Selecting the supplier




(Weighed-factor approach)




(Maintaining the supplier base)

Agree performance MEASURES Both customer and supplier keep

RECORDS of performance Regular MEETINGS



DISTRIBUTION ANDTRANSPORTATION SYSTEMS

(Comparison of systems)



E-COMMERCE

B2C and B2B opportunities Changing GOALS


© AMD Publishing/ T. Hill 2005 T. Hill, Operations Management 2e. Palgrave Macmillan ISBN:...

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