SUPPLY CHAIN MANAGEMENT INTRIDUCTION TO SUPPLY CHAIN MANAGEMENT CHAPTER 1.
Supply Chain Management
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Transcript of Supply Chain Management
1Lally School of Management and Technology
Supply Chain Management
2Lally School of Management and Technology
17 Supply Chain Management
• Project Draft due April 2
• Review Items from Last Class
• Basic Supply Ideas and Terminology
• Video– UPS Supply Chain Management
• Supply Chain Strategy
• Electronics and Computer Supply Chains
• Case Discussion – Trouble in Paradise
3Lally School of Management and Technology
Supply Chain Strategy and the Course Organization
Operations As a Competitive Weapon
Operations StrategyProject Management Process Strategy
Process AnalysisProcess Performance and Quality
Constraint ManagementProcess LayoutLean Systems
Supply Chain StrategyLocation
Inventory ManagementForecasting
Sales and Operations PlanningResource Planning
Scheduling
4Lally School of Management and Technology
Supply Chain
(goods)
• The sequence of processes from raw materials through manufacturing and distribution to the ultimate consumer.
• A “process” takes place at a single site or least within the same firm
(services)
• Some analogies for services
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Supply Chain Example
Raw materialsEnd users
upstream downstream
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A Global Supply Chain
Fiber supplier in Australia
Textile Maker in Italy
Zipper Maker in China
Apparel Maker in Mauritius
Apparel Designer and Marketer in US
Carriers and Intermediaries
Carriers and Intermediaries
Retailer in US
Material flow
Information flow
Raw materialsEnd users
upstream downstream
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Definitions and Terminology I
• Supply Chain
• Supply Chain Management
• Upstream and Downstream
• Information and Material Flow
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Definitions and Terminology II
• Logistics management
• Distribution Channel
• Demand management
• Supplier Tiers
• Outsourcing
• Off-Shoring
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Logistics Management
• Broad definition = supply chain management
• Narrowly definition = transport and storage (not production, sourcing, etc.)
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Distribution Channel
The route from the producer forward (down stream) through the distributors
to the customer
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Demand Management
• Managing the demand for goods or services along the supply chain.
• Demand can be managed through such mechanisms as product availability promises, pricing, promotion, and distributor incentives.
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Supplier TiersSupplier Tiers
Figure 8.2Supplier of materialsSupplier of services
Tier 3
Legend
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Supplier TiersSupplier Tiers
Figure 8.2Supplier of materialsSupplier of services
Tier 3
Tier 2
Legend
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Supplier TiersSupplier Tiers
Figure 8.2Supplier of materialsSupplier of services
Tier 1
Tier 3
Tier 2
Legend
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Supplier TiersSupplier Tiers
Figure 8.2Supplier of materialsSupplier of services
Tier 1
Tier 3
Tier 2
Legend
Manufacturer
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Supply Chain Supply Chain Including Including DistributionDistribution
Figure 8.2Supplier of materialsSupplier of services
Tier 1
Tier 3
Tier 2
Legend
Distribution center
Distribution center
Manufacturer
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Supply Supply ChainChain
Figure 8.2Supplier of materialsSupplier of services
Tier 1
Tier 3
Tier 2
Legend
Customer Customer Customer Customer
Distribution center
Distribution center
Manufacturer
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Outsourcing
• Buying a part or service that previously was provided internally– Make-or-buy decision– Allows management to focus on firms “core
competencies” (same as “distinctive competencies” we talked about earlier)
– +other reasons
• Insourcing– Undoing an outsourcing decision
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Offshoring• Moving a process or operation that had been
done in the “home country” to another country– Comparative labor costs– Logistics costs– Tariffs and trade barriers– Better access to offshore markets– Local subsidies– …
• Offshoring can be In-house or Outsourced
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Video
• UPS Supply Chain Services
• What services are they talking about?– Package delivery– What else?– “Economy of Scope”
• Importance of Information Technology
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E-Commerce and Supply Chains
• Supply chain information movement is increasingly electronic:– Order, Invoice, Ship Notice, Payment, etc– EDI, other protocols
• e-Procurement – slow adoption – Business “E-bay”
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Types of e-procurement
• On-line catalogs listing products, prices, etc.
• Third-part auctions—reverse auctions
• Private exchanges to connect suppliers
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Supply Chain links in EnterpriseResource Planning Systems (like SAP in the this picture)
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Supply Chain Strategy
• Starts with “make or buy”
• Partner vs vendor
• Lowest cost vs highest quality vs fast vs reliable delivery vs quickest response to changing needs
• Can be a key strategic differentiator– Example: Wal-Mart
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Single Sourcing
• Purchase from very few (or one) supplier• More control of quality• Partnering for development• Partnering for production investments
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Global Supply Chain
• Look for best sources anywhere
– Provide supplier with technology if necessary
• Assess transport and import costs and supply disruption risk
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Uncertainty In Supply Chains
• Wrong forecasts
• Supplier Stock-outs
• Late deliveries
• Poor quality/wrong product
• Breakdowns and strikes
• Canceled orders
• Erroneous information
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Supply Chain Objectives
• Cost
• Quality
• Delivery
• Speed
• Flexibility
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Virtual CorporationA corporation that has:
No hard assets (contract for production, etc.)Might supply capital
No employees (contract for services, even management services and product design)
But controls the brand and supply chain for its products or services
Core competenciesStructuring and Managing a Supply Chain and BrandRaising capital (maybe)
There are no corporations that match this definition, but many businesses are moving in this direction
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Supply Chain / Industry Structure for US Electronics and Computer Companies
End Users
Brand Owner / Designers
Contract Manufacturers
Tiers of Parts Suppliers
Dell, HP, Apple, Lenovo
SCI, Flextronics, Solectron
Individuals, Bulk buyers
Retailers / DistributorsPC Warehouse, Comp USA
Intel, Kingston, Intex Tech, Seagate
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Dell’s Order Fulfillment Process
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Some Reasons for Contract Mfg. Growth
• Brand owner focus on product definition and design
• Contract manufacturer has economy of scale– Greater automation and process R&D investment
• Contract manufacturer has less vulnerability to ups and downs of brand owners
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(From T. Sturgeon)
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Trouble in Paradise• Background• What is the key issue?
a. Conflict in goals of JV partners; structure of the JV
b. Conflict between Chinese and US ways of management; hard to transplant Six Sigma, etc
c. Cut throat competition in the Chinese marketd. Mikes lack of leadership in implementing Six
Sigma, establishing outside relationships • Team group discussion:
– How can operations be improved?– What should Mike do?
• Report out