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Chapter 11

Chapter 11. Supply Chain Management. Supply Chain. All activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer

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Chapter 11

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  1. Chapter 11 Supply Chain Management

  2. Supply Chain • All activities associated with the flow and transformation of goods and services from raw materials to the end user, the customer • A sequence of business activities from suppliers through customers that provide the products, services, and information to achieve customer satisfaction

  3. Distributors Producers Suppliers Customers Finished goods, end products and services Package and delivery Materials, parts, sub-assemblies, and services Total satisfaction with quality, price, delivery, and service Products and Services Products and Services Products and Services Inventory Inventory Inventory The Supply Chain

  4. Information Distributors Producers Suppliers Customers Finished goods, end products and services Package and delivery Materials, parts, sub-assemblies, and services Total satisfaction with quality, price, delivery, and service Products and Services Products and Services Products and Services Inventory Inventory Inventory The Supply Chain

  5. Information Distributors Producers Suppliers Customers Finished goods, end products and services Package and delivery Materials, parts, sub-assemblies, and services Total satisfaction with quality, price, delivery, and service Products and Services Products and Services Products and Services Inventory Inventory Inventory Cash The Supply Chain

  6. Supply Chain Management • Synchronization of activities required to achieve maximum competitive benefits • Coordination, cooperation, and communication • Rapid flow of information • Vertical integration

  7. Supply Chain Uncertainty • Forecasting, lead times, batch ordering, price fluctuations, and inflated orders contribute to variability • Inventory is a form of insurance • Distorted information is one of the main causes of uncertainty

  8. The Bullwhip Effect Suppliers Tier II Suppliers Tier I Producers Distributor Inventory Inventory Inventory Inventory

  9. Sourcing: Vertical Integration Supplies Component Manuf. Assembly Transport/.Warehousing Retailing Owning as much as possible of this chain is calledVertical Integration. Owning the entire chain is called Vertical Monopoly(not in the text).

  10. Information in the Supply Chain • Consolidation of purchasing from all suppliers • Intercompany and intracompany information access • Data interchange • Data acquisition at the point of origin and point of sale • Instantaneous updating of inventory levels

  11. Electronic Data Interchange • Computer-to-computer exchange of business documents in a standard format • Quick access, better customer service, less paperwork, better communication, increased productivity, improved tracing and expediting, improves billing and cost efficiency

  12. Sourcing • Relationship between customers and suppliers focuses on collaboration and cooperation • Outsourcing has become a long-term strategic decision • Organizations focus on core competencies • Single-sourcing is increasingly a part of supplier relations

  13. Single Sourcing • In the past, it was common for a company to limit the percentage of supplies to come from a single supplier • Fluctuation, low quality, or failure was protected against • In single-sourcing, however, company and supplier are in a partnership, influencing each other’s performance, with greater sharing of information • The entire supply chain becomes more efficient as a result

  14. E-Procurement • Business-to-business commerce conducted on the Internet • Benefits include lower transaction costs, lower prices, reduce clerical labor costs, and faster ordering and delivery times • Currently used more for indirect goods • E-Marketplaces service industry-specific companies and suppliers

  15. B2B Procurement Auctions • One buyer many sellers • Run by CombineNet, IBM, Logistics.com, Net Exchange, and Emptoris • Users include Sears, Walmart, Compaq, Staples, The Limited, Home Depot, and Kmart • Sears reports $25 M (13%) savings in one shipping lane auction • Shipping providers were able to eliminate uncertainty and exposure to winning incompatible or incomplete sets of lanes

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