Chapter 11 Supply Chain Managementppt1226

7/29/2019 Chapter 11 Supply Chain Managementppt1226

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Rev. 09/25/06 SJSU Bus 140 - David Bentley 1

Chapter 11 Supply ChainManagement

Definition, issues, logistics, EDI,

E-commerce, purchasing, make orbuy, DRP


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Definition of SCM Definition: chain consisting of multiple

organizations and organization units

operating as customer/supplier links Includes external suppliers and

subcontractors

Involves internal manufacturing plants,warehouses, and distribution centers Extends to final (external) customers


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04/07/06 SJSU Bus 140 - David Bentley 3

Supply Chain Example

Contract manufacturer

Ingram Micro

CompUSA

You or me


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Factors Leading to SCM Globalization

Competitive pressure

Move to e-commerce

Cost reduction opportunities

Ability to share information Greater use of contract manufacturers

Desire to manage vertical markets


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Key Elements of SCM Determine customer needs Forecast demand

Design products to meet customer needs andminimize costs

Control operations processes Minimize inventory Strengthen supplier relationships Optimize facility location Improve handling and storage of material


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SCM Issues Strategic

Building the chain (suppliers, manufacturingfacilities, distribution centers, customers)

Establishing partnerships

Tactical Inventory, procurement, logistics, quality policies

Operational Production and inventory planning and control Outsourcing Quality control


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Integration Horizontal Integration

Acquisition of complementary product lines

Example: HP and Compaq Vertical Integration

Backward integration (upstream) Control of supply Example: Ford

Forward integration (downstream) Control of customers Example: Apple



Focused Factories Focused factories

Emphasis on niche, distinctive competency

Limited products and functions Example: HP casting plant

HP: Carly Fiorina comments in contrast to IBM, HP is not going to be a

vertically integrated company Focus less and less on component-level innovation Work with key partners (e.g., Intel and Canon) Position itself as broad-based technology company



Logistics Managing movement of materials within

the supply chain

Traffic management Scheduling, carrier selection, rate and tariff

management

Electronic Data Interchange (EDI) Internet (B2B, exchanges) Distribution Requirements Planning (DRP) JIT deliveries



Communications Traditional

Mail, Phone, Fax

EDI Transmission of forecasts, orders, etc. Individual supplier/customer agreements

Internet (E-Commerce) Buying and selling using the Internet Business-to-business, business-to-consumer Exchanges



Creating an Effective Supply Chain Key is external and internal partnerships

Steps Strategic objectives and tactics Integrate internal part first Extend to suppliers and customers Optimize data management across chain Develop strategic partnerships



SCM Software Vendors Supply Chain Management (SCM)

SAP Oracle I2 Technologies Manugistics


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Internet Applications (B2B)Ariba (Sunnyvale)

BEA(San Jose)

Siebel (San Mateo) (acquired by Oracle 06/01/06) (Redwood

Shores)

BroadVision (Redwood City)

Many others


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Internet Applications (B2C) Oracle (Redwood Shores)

Including Siebel (San Mateo)Acquired by Oracle 06/01/06)

BroadVision (Redwood City)

Many others


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Purchasing - 1 Purchasing activities and interfaces Purchasing cycle

Requisition from user or inventory control Supplier selection Order placement Order monitoring and follow-up Order receipt

Outsourcing Contract manufacturers


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Purchasing - 2JIT purchasing

Fewer suppliers More contracts

vs. relationships

Supplier selection

Supplier audits and certification


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Supplier Relationships 1Source: Schonberger & Knod, Operations Management, Fourth Edition, 1991

Factor Traditional Partnership

1. Tenure Short Long term

2. Agreement P.O. Contract

3. Sources Many Few

4. Volume Low High

5. Price (total) High Low

6. Quality Uncertain High


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Supplier Relationships 2Source: Schonberger & Knod, Operations Management, Fourth Edition, 1991

Factor Traditional Partnership

7. Design Customer Joint

8. Delivery Infrequent Frequent

9. Order Mail Kanban

10. Receipt Dock Prodn line

11. Paperwork Lots Little or none

12. Openness Arms length Arm-in-arm


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Purchasing - 3 Supply Chain Tools Bar coding

EDI (Electronic Data Interchange) RFID (Radio Frequency Identification) E-commerce


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Purchasing - 4 Make or buy (breakeven analysis)

Distribution requirements planning (DRP)Aggregate requirements from storesAssign through warehouses to factories


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E-Commerce Areas CRM - Oracle (including Seibel),

BroadVision

B2B - SAP, Oracle B2C - BroadVision

SCM - SAP, i2

E-Procurement - SAP, Ariba

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Chapter 11 Supply Chain Managementppt1226