SUPPLY CHAIN MANAGEMENTBrian GillespieMay 19, 2010

Value Chain

Series of steps involved in designing, producing, marketing and selling a product Steps are categorized as primary and

secondary activities Each step can add or remove value

All activities in the value chain take place inside the firm

Primary Value Chain Activities Inbound logistics

Receiving of materials needed to manufacture its products Operations

The activities that transform the materials into the final product

Outbound logistics The activities that get the product to the customers

Marketing and sales Handle the 4 P’s

Service The activities that enhance or maintain the value of the

product, like installation or repair

Support Value Chain Activities Firm Infrastructure

Organizational structure, control systems, company culture

Human resources management Recruiting, hiring and training of employees

Technology development Technologies to support value-creating activities

Procurement The purchasing of inputs like materials, supplies

and equipment

Value Chain

Margin (or profit) depends on the effectiveness in performing these activities efficiently

Supply Chain

All activities needed to convert raw materials into product/service and get it to the consumer

Unlike the value chain, the supply chain takes place across multiple firms

Supply Chain

http://www.youtube.com/watch?v=ql-N3F1FhW4

Supply Chain Management

Managing and coordinating the flow of goods, and information between partners in the supply chain in an effort to maximize profitability Transportation of goods from supply chain

members to other members Synchronization of information between supply

chain members Procurement information Advertising information Logistics (advanced shipping notices)

Hewlett-Packard’s Supply Chain

Hundreds of suppliers

Thousands of retail locations Millions

Dozens of factories

Insourcing vs. Outsourcing

Insourcing The contracting of specialist firms to handle

all or part of the supply chain operations UPS is responsible for ordering, scheduling and

delivering raw pizza materials for Papa John’s to individual Papa John’s stores

Outsourcing The delegation of non-essential tasks to

subcontractors Computer call services in India

SCM Example

In small groups, create a supply chain for the product and describe the specific primary and support activities in the value chain for the following product

www.cb.wsu.edu/~bgillespie/mktg360/supplychainexamples.htm

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