Supply Chain Management

Kalakota: pp 271 - 306

What is a supply chain?

The network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product

What is supply chain management?

The coordination of processes involved in producing, shipping and distributing products.

Players in a supply chain

Components of a supply chain

There are three dimensions:

Components of a supply chain (cont)

Material flows

Physical products from suppliers to customers

Components of a supply chain (cont)

Information flows

Demand forecasts Order transmissions Delivery reports

Components of a supply chain (cont)

Financial flows

Credit card information Credit terms Payment schedules

What do SCM software applications do?

Integrate demand prediction, inventory stocking and transportation decisions

Focus on managing tasks rather than costs

Ensure timely delivery of raw materials required for production and the finished product

Trends in SCM

World wide dispersion of manufacturing and distribution facilities The demand for customized products

for local markets has increased

Trends in SCM (cont)

Channel unpredictability Firms must work with multiple

suppliers to ensure reliability of raw material supply

Trends in SCM (cont)

Responsiveness over efficiency Companies have to change the way

that they manage their inventory because of customized delivery schedules

Customers Products

NOW!

Trends in SCM (cont)

Acceptance of lower margins for greater market share Companies are re-designing supply

chains to eliminate waste and inefficiencies.

SCM and Integration The ultimate aim of SCM is

integration This will involve eliminating the

middle man (The direct focus approach used by Dell computers eliminates the need for retailers)

Customers – Manufacturers – Suppliers

should be seamlessly integrated

Some e-Supply strategies

Make – to - stock (Starbucks) Based on Vertically integrated supply chain

Continuous replenishment (CVS pharmacy – Mckesson demand chain)

Based on tight integration of wholesaler and manufacturer

Build-to-Order (Intel, Solectron, Micro)

Real time matching of supply to demand.

CVS pharmacy – Mckesson

Intel, Solectron, Micro

Elements of Supply Chain Management software applications

Order commitment

Allows vendors to accurately quote delivery dates to customers

Provides customers the ability to “see” the progress of deliveries

Advanced Scheduling

These modules provide real-time updates to delivery schedules based on changing conditions

Allows players along the supply chain to view and modify delivery schedules.

Demand Planning modules

Consolidate demand forecasts from all business units in a corporation

Support the use of statistical tools and business forecasting techniques

Distribution Planning

Creates operating plans for a company’s logistic managers

Provides a complete model of the supply chain

Can address customer requirements in some cases

Transportation planning

Monitors transport operations to ensure Raw materials and finished products are delivered on time

Can analyze factors such as loading capacity of vehicles, vehicle availability and vehicle location

Customer Functions

Entering Purchase Orders

Vendor Functions

Entering Vendor Orders

Products Screen

Warehouse Functions

Shipping Processing

Reporting Functions

Creating a Sales Report

Journal Question - 5

Supply Chain Management and Customer Relations Management systems have considerable overlap. Discuss some of the challenges that businesses face in integrating these two types of applications? 3 challenges