MKTG5 IE Ch14 PPT

Lamb, Hair, McDaniel 2011-2012
CHAPTER 14
Supply Chain Management
iStockphoto.com/Robert Byron
Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 1
Learning Outcomes
LO 1 Define the terms supply chain and supply chain

management, and discuss the benefits of supply chain
management
LO 2 Discuss the concept of supply chain integration and explain

why each of the six types of integration is important
LO 3 Identify the eight key processes of excellent supply chain

management and discuss how each of these processes
impacts the end customer

Learning Outcomes
LO 4 Discuss the key strategic decisions supply

chain managers must make when
designing their companies supply chains
LO 5 Discuss new technology and emerging

trends in supply chain management

Supply Chains and
Define the terms supply chain

and supply chain management,
and discuss the benefits
of supply chain management
LO1
Supply Chains
The connected chain of

Supply
SupplyChain
Chain all of the business
entities, both internal
and external to the
company, that perform or
support the logistics
function
LO1
Supply Chains
A management system that

coordinates and integrates
all of the activities
Supply
SupplyChain
Chain performed by supply chain
Management
Management members into a seamless
process, from the source to
the point of consumption,
resulting in enhanced
customer and economic
value
LO1
LO1
Supply Chain Managers
The philosophy behind supply chain

management is that by visualizing the entire
supply chain, supply chain managers can
maximize strengths and efficiencies at each
level of the process to create a highly
competitive, customer-driven supply system
that is able to respond immediately to
changes in supply and demand.

Communicator
Communicator of of customer
customer demand
demand
from
from point
point of
of sale
sale to
to supplier
supplier
Physical
Physical flow
flow process
process that
that engineers
engineers the
the
movement
movement ofof goods
goods
LO1
LO1 Benefits of Supply
Chain Management
Supply chain oriented companies
commonly report:
Lower inventory, transportation,
warehousing, and packaging costs
Greater supply chain flexibility
Improved customer service
Higher revenues
Increased performance and profitability

Supply Chain Integration
Discuss the concept of

supply chain integration
and explain why each
of the six types of
integration is important
LO2
LO2
Relationship Firm-to-Firm
Firm-to-Firm Social
Social
RelationshipIntegration
Integration
Interactions
Interactions
Measurement
Measurement
Integration Operational
Operational
Integration
Planning
Planningand
and
Technology
Technologyandand Control
Control
Planning
PlanningIntegration
Integration
Material
Material and
and Service
Service
Supplier
SupplierIntegration
Integration
Internal
InternalOperations
Operations Customer
Customer
Integration
Integration Integration
Integration
Customer
CustomerIntegration
Integration
The
The ability
ability of
of two
two or
or more
more
companies
companies to to develop
develop social
social
Relationship
Relationship connections
connections thatthat serve
serve to
to guide
guide
Integration
Integration their
their interactions
interactions when
when working
working
together.
together.
The performance assessment of

Measurement the supply chain as a whole that
Integration also holds each individual firm or
business unit accountable for
meeting its own goals
LO2
The creation and maintenance of
Technology information technology systems
and planning that connect managers across
integration and through the firms in the
supply chain
Requires firms to link seamlessly

Material and to those outsiders that provide
service goods and services to them so
supplier that they can streamline
integration processes and provide quality
customer experiences.
LO2
Internal Links internally performed work
Operations into a seamless process that
Integration stretches across departmental
and/or functional boundaries,
with the goal of satisfying
customer requirements
A competency that enables firms to

Customer offer long-lasting, distinctive, value-
Integration added offerings to those customers
who represent the greatest value to
the firm or supply chain
LO2
Key Processes of
Identify the eight key processes

of excellent supply chain
management and discuss
how each of these processes
impacts the end customer
LO3
Key Business Processes
1. Customer relationship management
2. Customer service management
3. Demand management
4. Order fulfillment
5. Manufacturing flow management
6. Supplier relationship management
7. Product development and
commercialization
8. Returns management
LO3
Customer Relationship
Management
Customer Allows companies to prioritize
Customer
Relationship their marketing focus on
Relationship
Management different customer groups
Management
(CRM) according to each groups
(CRM) Process
Process
long-term value to the
company or supply chain
LO3
Customer
Service Management
Customer
Customer Presents a multi-company,
Service
Service unified response system to
Management
Management the customer whenever
Process complaints, concerns,
Process questions, or comments
are voiced
LO3
Demand Management
Seeks to align supply and

Demand
Demand demand throughout the supply
Management
Management chain by anticipating customer
Process
Process requirements at each level and
create demand-related plans of
action prior to actual customer
purchasing behavior
LO3
Order Fulfillment
a highly integrated process,

Order
Order
Fulfillment often requiring persons from
Fulfillment
Process
Process multiple companies and
multiple functions to come
together and coordinate to
create customer satisfaction at
a given place and time
LO3
Manufacturing Flow
Management
Manufacturing Concerned with ensuring
Manufacturing
Flow
Flow that firms in the supply
Management
Management chain have the needed
Process
Process resources to manufacture
with flexibility and to
move products through a
multi-stage production
process
LO3
Supplier Relationship
Management
Supplier Closely related to the
Supplier
Relationship
Relationship manufacturing flow
Management
Management management process and
Process
Process contains several
characteristics that
parallel the customer
relationship management
process
LO3
Product Development and
Commercialization
Product Includes the group
Product
Development
Developmentand
and activities that facilitates
Commercialization
Commercialization
Process
the joint development and
Process
marketing of new
offerings among a group
of supply chain partner
firms
LO3
Returns Management
Enables firms to manage

Returns
Returns volumes of returned product
Management
Management efficiently, while minimizing
Process
Process returns-related costs and
maximizing the value of the
returned assets to the firms in
the supply chain
LO3
Managing the Logistical
Components of the Supply Chain
Discuss the key strategic

decisions supply chain
managers must make when
designing their companies
supply chains
LO4
Logistics
Logistics is
the process of strategically managing
the efficient flow and storage of raw
materials, in-process inventory, and
finished goods from point of origin to
point of consumption.
LO4
Logistical Components
of the Supply Chain
Sourcing
Sourcing&&Procurement
Procurement
System
InformationSystem Production
ProductionScheduling
Scheduling
LogisticsInformation
Supply Order
OrderProcessing
Processing
Chain
Team Inventory
InventoryControl
Control
Logistics
Warehouse
Warehouse&&Materials
MaterialsHandling
Handling
Transportation
Transportation
LO4
Sourcing and Procurement
The
The Role
Role of
of Purchasing:
Purchasing:
Plan purchasing strategies
Develop specifications
Select suppliers
iStockphoto.com/Maria Toutoudaki
Negotiate price and service levels
LO4 Reduce costs

Production Scheduling
Traditional Focus Customer Focus
Push / Pull
Push Pull
Strategy
Start of Inventory- Customer-Order
Production Based Based
Manufacturing Mass Production Mass Customization
LO4
Just-in-Time Manufacturing
JIT
JIT
A process that redefines and
simplifies manufacturing by
reducing inventory levels and
delivering raw materials at the
precise time they are needed
on the production line.
LO4
Benefits of JIT
For manufacturers: reduces raw

material inventories; immediate
shipping of products
For suppliers: daily or hourly deliveries
rather than weekly
For customers: lower costs; shorter
lead times; products tailored to
customer needs
LO4
Order Processing
An Order Processing
System is
a system whereby orders are
entered into the supply chain
and filled.
Order processing is becoming more automated

through the use of computer technology known
as ELECTRONIC DATA INTERCHANGE (EDI).
LO4
Inventory Control
A method of developing and

Inventory
Inventory maintaining an adequate
Control
Control assortment of materials or
System
System products to meet a
manufacturers or a
customers demand
LO4
Inventory Control
Tools for managing inventory include:
materials requirement planning (MRP) or
materials management supplier to
manufacturer
distribution resource planning (DRP)
manufacturer to end user
automatic replenishment programs
minimal forecasting
LO4
Warehousing and
Materials Handling
A Materials-Handling
System is
a method of moving inventory into, within,
and out of the warehouse.
Most manufacturers today have moved to

AUTOMATED materials-handling systems to
minimize the amount of handling.
LO4
Transportation
Airways
Water
Pipelines
Motor Carriers
Railroads
LO4
Transportation Mode Choice
Cost
Transit time
Reliability
Capability
Accessibility
Traceability
LO4
Exhibit 14.1
Criteria for Ranking Modes
of Transportation
LO4
Trends in Supply Chain
Management
Discuss new technology

and emerging trends in
supply chain management
LO5
Trends in Supply Chain
Management
Advanced
Advanced computer
computer technology
technology
Outsourcing
Outsourcing of
of logistics
logistics functions
functions
Electronic
Electronic distribution
distribution
LO5
Advanced Computer
Technology
Automatic identification systems
- Bar coding
- Radio frequency technology
Communications technology
Supply chain software systems
LO5
Outsourcing Logistics
Functions
Outsourcing
Outsourcing Benefits
Benefits
Reduce inventories
Locate stock at fewer plants and distribution

centers
Provide same or better levels of service
LO5
Electronic Distribution
Electronic Distribution is
a distribution technique that includes
any kind of product or service that
can be distributed electronically,
whether over traditional forms such
as fiber-optic cable or through
satellite transmission of electronic
signals.
LO5
Green Supply Chain
Management
Requires integrating green thinking into all
phases of the supply chain
Green materials sourcing
Environmental impact of packaging,
shipment, use
Incorporate end-of-life management
Recycling
Clean disposal
LO5
Global Logistics and Supply
Chain Management
Logistical challenges of global

markets:
Understanding and coping with the
legalities of trade in other countries
Uncertainty regarding shipping
LO5
Chapter 14 Videos
Sephora Supply Chain

Management
Beyond the
How does Sephora manage its supply chain?

What information goes into deciding which
suppliers become incorporated?
Book
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Lamb, Hair, McDaniel 2011-2012

Supply Chain Management

LO 1 Define the terms supply chain and supply chain

LO 2 Discuss the concept of supply chain integration and explain

LO 3 Identify the eight key processes of excellent supply chain

Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 2

LO 4 Discuss the key strategic decisions supply

LO 5 Discuss new technology and emerging

Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 3

Define the terms supply chain

The connected chain of

A management system that

The philosophy behind supply chain

Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 7

Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 9

Discuss the concept of

The performance assessment of

Requires firms to link seamlessly

A competency that enables firms to

Identify the eight key processes

Seeks to align supply and

a highly integrated process,

Enables firms to manage

Discuss the key strategic

Plan purchasing strategies

LO4 Reduce costs

Manufacturing Mass Production Mass Customization

For manufacturers: reduces raw

Order processing is becoming more automated

A method of developing and

Most manufacturers today have moved to

Discuss new technology

Supply chain software systems

Locate stock at fewer plants and distribution

Provide same or better levels of service

Logistical challenges of global

Sephora Supply Chain

How does Sephora manage its supply chain?

Chapter 14 Copyright 2012 by Cengage Learning Inc. All rights reserved 46

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