CHAPTER 10 Extending the Organization – Supply Chain Management

Chapter 10

Extending the Organization – Supply Chain Management

Supply Chain Management

       The average company spends nearly half of every dollar that it earns on production

       In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains

Basics of Supply Chain

          1.          Materials flow from suppliers and their “upstream” suppliers at all levels

          2.         Transformation of materials into semifinished and finished products through the organization’s own production process

          3.          Distribution of products to customers and their “downstream” customers at all levels

Organizations must embrace technologies that can effectively manage supply 

            §         Plan

Acompany must have a plan for managing all the resources that go toward meeting customer demand for products or services.

            §         Source

Companies must carefully choose reliable suppliers that will deliver goods and services required for making products

            §         Make

This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging, and preparing for delivery.

            §         Deliver (Logistic)

Companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.

            §         Return

This is typically the most problematic step in the supply chain. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products

Visibility

                                       §         Visibility – more visible models of different ways to do things in the supply chain have emerged.  High visibility in the supply chain is changing industries, as Wal-Mart demonstrated

                                       §         Supply chain visibility – the ability to view all areas up and down the supply chain

                                       §         Bullwhip effect – occurs when distorted product demand information passes from one entity to the next throughout the supply chain

Consumer Behavior

Ø  Demand planning software – generates demand forecasts using statistical tools and forecasting techniques

Ø  Supply chain planning (SCP) software– uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain

Ø  Supply chain execution (SCE) software – automates the different steps and stages of the supply chain

Competition

Speed