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BUS 361: Chapter 7

BUS 361: Chapter 7. Supply-Chain Management. SCM Objectives. Describe process & components Identify and describe forces affecting SCM Explain how businesses can use technology Contrast traditional with internet-enabled SCM

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BUS 361: Chapter 7

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  1. BUS 361: Chapter 7 Supply-Chain Management

  2. SCM Objectives • Describe process & components • Identify and describe forces affecting SCM • Explain how businesses can use technology • Contrast traditional with internet-enabled SCM • Why is business process reengineering can be carried out and is essential in SCM • Partnership strategies & implementation concerns • Order fulfillment/delivery/reverse logistics issues

  3. What is SCM? • “coordinating & optimizing the flow of all products or services, information and finances among all players of the supply chain” • Raw materials through to product delivery • Includes: forecasting demand, ordering, logistics, warehousing, manufacturing, outbound logistics, sales & delivery • Upstream, downstream and internally • Akin to logistics …

  4. What is Logistics? Often defined as 7Rs: • Right place • Right time • Right quantity • Right quality • Right price • Right condition • Right customer

  5. Traditionally … • A Push system rather than a Pull system • Endless inventories throughout the system • Recall “Evolution of Marketing” • Trade era, production era, sales era, consumer era & relationship marketing era • Along came EDI – ordering became faster but because of legacy systems data was old and inaccurate

  6. RFID tags • Radio Frequency Identification • Initially used on livestock & pets • Used to track products (seen on CDs?) • Will eventually replace UPC’s with EPC’s • USA & e-Passports • The future … the smart fridge

  7. Factors affecting SCM • Globalization … distances magnify problems • Mass customization … efficient production • Price sensitivity … cost control • Customer focus & Time to Market • J.i.T. & Inventory reduction – cost of inventory vs. cost of stockouts • E.R.P. • Outsourcing – costs down but …

  8. Outsource Issues • Loss of control • Unable to monitor • Conflict of interest • Loss of in-house expertise • Cultural differences • Unclear accountability

  9. Internet-enabled SCM • System is now a PULL system • Much faster communication • Information flowing upstream to suppliers now • Disintermediation • Cutting out the middleman • E.g. Airlines have almost eliminated travel agents

  10. Technology • Extranets • Intra-organizational standards needed • Real-time information allows timely adjustments • Quicker replenishments/lower inventories • ERP • Synchronized data • Effective resource management • Business Intelligence Software • Cloud computing (reduced costs)

  11. More .. • Strategic SCM • Business Process Re-engineering • E.g. of Ford (500 -> 400) Mazda (5) • Not 20% but 75% • Completely changed the process • Trust & Partnerships • More ….

  12. Trust • Realignment • E.g. Vendor Managed Inventory • Service-Level Agreements • Defines the relationship • Performance Measurement • Dispute Resolution • Security

  13. Order Fulfillment/Delivery • Order fulfillment • Converts an order into a sale • Order Processing • The activities during fulfillment • Credit checks, shipping etc • Warehousing • Receiving, picking, organizing & packing • Shipping & Transportation • Cost effective: lot sizing, packaging & transportation • RFID tags • “The Moment of truth”

  14. More… • Reverse Logistics • i.e. returns • C-Commerce • Collaborative commerce • Trading exchanges …

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