INTEGRATING FINANCE, ACCOUNTING, MARKETING, INTERNATIONAL BUSINESS

INTO SUPPLY CHAIN MANAGEMENT

C. Christopher Lee, Ph.D. &

Bill Turnquist, CPIM, MBA,

Central Washington University, Ellensburg, Washington

June 2000

MOTIVATION FOR STUDY

• Current Focus of SCM - Purchasing, Logistics, Production

• New Focus of SCM - Accounting, Finance, Marketing, & International Business.

• Increasing optimization of different companies by incorporating other business functional areas and SCM

MOTIVATION FOR STUDY(continued)

• Right Time at Right Place:– Mr. Nick Gerde, CFO of Pacific Aerospace

Co. in Washington– Dr. Jim Bailey, Chair of Accounting Dept. at

Central Washington U. (Will be a new dean of Truman State U.)

– 2000 APICS E&R Workshop Theme

PURPOSE OF STUDY

• To develop a framework for integrating Accounting, Finance, Marketing and International Business into SCM.

• To propose a business curriculum development model.

• Feedback from industry experts & professors.

A FRAMEWORK FOR INTEGRATING ACCOUNTING INTO SCM

Shared Profits and Losses

Shared Budgets

Target Costing

Total Cost Control

Value Chain Issues

Alliance, Netw orks, andCollaboration

Perform ance M easurem ents

Target and Open-bookCosting for both Supplier

and Purchaser

Shared BalanceScorecard

Supply Chain M anagem ent& Accounting

Suppliers & TaxAgencies

AccountsPayable

Bank

Dept. Heads

Purchasing

Manufacturing

Receiving

Payroll

GeneralLedger

FinancialProjections

Employees

Fixed Assets

Invoices

PO”S

New Supplies

Production

Receiving

Items Used

Tax

Liabilities

Check

Reconciliation

Authorization To Pay

Payment

Payables

Summary

Cash

Outflow

Payments

Expense Report

Asset Cost

Accounts Payable Integration into SCM

REAL WORLD APPLICATIONS:ACCOUNTING & SCM

• Nygard International:– Clothing manufacturer– NS2000: Product Development Management

System• Accurately cost a design before going into

production

– Automatic Re-order to Sales System

REAL WORLD APPLICATIONS:ACCOUNTING & SCM

(continued)

• Cost Management Group:– Clear focus on the cost of suppliers and

supplies– Ability to work a shorter time cycle than the

annual budget– Ability to work a proactive cost management

process across organizational boundaries

REAL WORLD APPLICATIONS:ACCOUNTING & SCM

(continued)

• Alliance Co.:– Implementation of open books for both supplier

and purchaser– Target costing– Common and shared cost reduction activities– Development of the shared balance scorecard

integrating accounting with other data

REAL WORLD APPLICATIONS:ACCOUNTING & SCM

(continued)

• Morrison Construction Co.:– Absence of competitive tendering– Open books– Sharing of budgets– Multiple balanced scorecard for performance

measurement and monitoring– Shared profits and losses

Top Management

(Vision & Strategy)Shareholders

Accts

Receivable

GL

P & LAccts

Payable

Payroll Costing

Financial/

Information

CustomersSuppliers

Operations/

Materials

Sales

S & OP

Eng’g

MPS?MRP

CRP

QualityMES

Logistics

Purchasing

Warehouse

Employees

A FRAMEWORK FOR INTEGRATING FINANCE INTO SCM

Customer Service

Push-Pull Strategies

New Product Development

Shareholder Value

Marketing & SCM

Benchmarking

Forecasting

Advertising

Pricing

A FRAMEWORK FOR INTEGRATING MARKETING INTO SCM

EDI Track Purchase

Order System

ASDACustomers

Warehouse

Suppliers

Allport Freight ( Import Agent)

FOB System

FFG Hillenbrand

Global Scoring

INTEGRATING INTERNATIONAL BUSINESS INTO SCM: A CASE OF ASDA

SUMMARY & CONCLUSION

• Draft: Preliminary Results• Better Understanding of SCM: To enhance the

SCM education by gaining a better understanding of how other business functional areas such as Accounting, Finance, Marketing and International Business can be integrated into real world applications.

SUMMARY & CONCLUSION (continued)

• A Capstone Course: – A business curriculum development model in a

university• Contributions to SCM Literatures:

– Case Studies: Real Life Applications – OM– Accounting, Finance, IB, and Marketing

SUMMARY & CONCLUSION (continued)

• Future Studies:– Joint research– Empirical Research– Survey of Industry Experts, Educators, &

Students, etc.– In-depth Analysis of Real Life Apps.– Integration of E-Commerce into SCM

• Most important keys to having an effective supply chain are:– Alliance, Networks, & Collaboration

• Teaching from the SCM Perspective: – University as a Supplier – Industry Company as a Buyer– Student as a Product

SUMMARY & CONCLUSION (continued)

THANK YOUQuestion & Answer