1/15/2015

21st

Chapter 1:
Century Supply Chains
Management

Course
Overview

Process
Power
Concepts

Ch 1: Supply Chains
Ch 2: Logistics
Ch 3: CRM
Ch 4: Procurement
Ch 6: Integrated Ops
Ch 8: Transportation
Ch 9: Warehousing

Ch 10: Packaging
Ch 11: Global SCM
Ch 12: Network Design
Ch 13: Ops Analysis
Ch 14: Collaboration
Ch 15: Perf Measurement
Ch 16: Risk/Sustainability

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Process
Power
Concepts

SCM Concepts &

Strategy

Process
Power
Concepts

Working
Definitions

Supply chain management

(SCM): firms collaborate to
leverage strategy & boost
efficiency
Supply chain strategy:
based on acknowledged
dependency & collaboration
Logistics: work required to
move and geographically
position inventory
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Process
Power
Concepts

Forces Driving Supply

Chain Strategy

Integration
Information Technology
Responsiveness
Financial Sophistication
Globalization

Process
Power
Concepts

Presentation
Game Plan

SCM: Integration Creates Value

SCM Tools & Technology
Supply Chain Responsiveness
Financial & Global Sophistication

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Process
Power
Concepts

SCM: Integration
Creates Value

Processes can be linked to form a supply chain: interrelated processes across

different firms that produce products and services to meet customer needs.

Source: APICS Supply Chain Council. 2008. SCOR Version 9.0 Overview

Process
Power
Concepts

Integration
Creates Value

Table 1.1: Integrative Management Value Proposition

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Process
Power
Concepts

Integration:
8 SCM Processes

Process
Power
Concepts

Ingredients for SCM

Integration

Focus on lowest total process cost

Collaboration: supported by U.S. laws
Enterprise extension: management
influence beyond enterprise boundaries
Integrated service providers offer a range of
logistics services (3PLs or 4PLs)

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Enterprise
Extension

Process
Power
Concepts

Information sharing paradigm: supply chain

partners share operating info for
collaboration and better strategic planning
Process specialization paradigm: plan joint
operations; eliminate nonproductive or nonvalue adding tasks across the supply chain

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Process
Power
Concepts

Integrated Service
Providers (ISPs)

Outsourcing non-core
processes
Transportation modes
Public warehouses
Value-added services
Third- and Fourth-party service providers
(3PLs or 4PLs)
Asset-based or non-asset based providers
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Process
Power
Concepts

Supply Chain
Tools & Technology

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Process
Power
Concepts

Logistics: Decisions
at Multiple Levels

Figure 1.2: Information Functionality

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Decision Analysis:
Software Tools

Process
Power
Concepts

Decision support systems

Compare alternatives:
effectiveness & efficiency
Analysis focus:

Supply chain design

Inventory management

Resource allocation

Routing

Segment profitability
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Process
Power
Concepts

Real Time
Management Control

Feedback and reaction to supply chain

performance and resource use
Common performance dimensions:

Customer service

Cost

Productivity

Quality

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Process
Power
Concepts

Transaction System:
Rules & Processes

Standardized platform for communication,

execution, and tracking daily transactions
ERP and extensions (WMS, TMS, etc.)
Transaction types include:

Order entry

Order fulfillment

Invoicing

Inventory adjustments

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Process
Power
Concepts

SCM Information
System Elements

Enterprise resource planning (ERP)

Supply chain modules and extensions
(WMS, TMS)
Performance monitoring & measurement
(business intelligence, analytics, alerts)
Network infrastructure & communications
technology
Customer and vendor interface (portals)
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Process
Power
Concepts

Core ERP Modules:

Not SCM-Specific

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Process
Power
Concepts

Enterprise Ops
Modules (Concept)

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Process
Power
Concepts

Supply Chain
Responsiveness

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Process
Power
Concepts

Responsiveness:
A Competitive +

Figure 1.8 Anticipatory Business Model

Figure 1.9 Responsive Business Model

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Process
Power
Concepts

Postponement for
Responsiveness

Types of Postponement

Manufacturing (or Form)

Geographic (or Logistics)

Combined

Manufacturing & geographic are exact

opposites in practice but have same goals

Meet customer demand quickly while minimizing

inventories

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Process
Power
Concepts

Manufacturing
Postponement

Objective: keep products in uncommitted

configuration as long as possible
Based on modular design: forethought!
Manufacture one order or unit at a time
No customization until the exact customer
specs and financial commitment is received
Economy of scale vs. responsiveness

Can build a sufficient quantity of ready to

customize basic or modular units
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Process
Power
Concepts

Example: Mfg
Postponement

Keep all car panels in a base color (white or grey)

until an order is received, then paint to order.
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Process
Power
Concepts

Geographic
Postponement

Build or stock a full-line inventory at one or

a few strategic locations
Forward inventory deployment is
postponed until customer order is received
Once orders received, specific item is
expedited to the local distributor
Advantages: manufacturing economies of
scale plus responsiveness to customer
Often used for critical, high cost parts &
assemblies (e.g. engines)
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Process
Power
Concepts

Example: Geographic
Postponement

Keep inventory in a central warehouse. Release

orders to local distributor, or ship direct to cust.

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Process
Power
Concepts

Combined
Postponement

Keep the basic products centralized;

perform customization at the destination
(distributor)
Historical example - Autos

Installing dealer options like sound systems,

GPS, sun roofs on new cars purchased

Contemporary example - Computers

Dell Computers, doing final assembly or

packaging additional system options like
printers, digital cameras at a distribution center
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Process
Power
Concepts

Barriers to
Responsiveness

Need for publicly held corporations to

maintain planned quarterly profits

Promotion and pricing strategies load the

channel with inventory

Need to develop collaborative relationships

Most business managers lack training and

experience in developing collaboration

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Process
Power
Concepts

Financial & Global

Sophistication

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Process
Power
Concepts

Financial
Sophistication

Enables performance measurement in timebased supply chains

Cash-to-Cash Conversion: time required to
convert raw material or purchased
inventory into cash through sales
Dwell Time Minimization: ratio of time that
an asset sits idle to time required to satisfy
its supply chain mission
Cash Spin: reducing assets in the supply
chain frees cash for other projects
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Process
Power
Concepts

Globalization
Opportunities

Demand exceeds supply

90% of global demand is

not fully satisfied by
local supply

Strategic sourcing

Identify & match sources of raw materials &

components to manufacturers & distributors

Offshoring

Moving manufacturing and distribution

operations to countries with favorable labor
costs and tax laws
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Process
Power
Concepts

Global Logistics:
New Levels

Distance of typical order-to-delivery is

significantly longer vs. domestic business
Documentation requirements are much
more complex
Diversity in work practices & local operating
environments must be addressed
Demand for variations in products &
services to accommodate local culture
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Process
Power
Concepts

Presentation
Recap

SCM: Integration Creates Value

SCM Tools & Technology
Supply Chain Responsiveness
Financial & Global Sophistication

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21st

Chapter 1:
Century Supply Chains
Management

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