Operations management by stevenson 9th student slides chapter 11

Chapter 11
Supply Chain Management

McGraw-Hill/Irwin

Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.


Chapter 11: Learning Objectives
• You should be able to:
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Discuss the key issues of supply chain management (SCM)
State the goal of SCM
List the components of SCM
List four recent trends in SCM
State some of the complexities of global SCM
List some of the strategic, tactical and operational responsibilities
of SMC
– List some advantages of e-business
– Explain the motivations and risks of outsourcing as a strategy

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Chapter 11: Learning Objectives (contd.)

• You should be able to:
– Explain the importance of supplier partnerships
– List some key issues relative to managing supply chain
inventories
– Explain the importance of logistics management
– Discuss the issues involved in managing returns
– List the requirements of an effective supply chain
– Explain some of the challenges in creating an effective supply
chain

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Supply Chain
• Supply Chain:
– the sequence of organizations - their facilities,
functions, and activities - that are involved in
producing and delivering a product or service
– Sometimes referred to as value chains

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Typical Supply Chains

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Supply Chain Management
• Supply Chain Management (SCM)

– The strategic coordination of business functions within
a business organization and throughout its supply
chain for the purpose of integrating supply and
demand management

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Key SCM Issues
• The goal of SCM is to match supply to demand as
effectively and efficiently as possible
• Key issues:
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Determining appropriate levels of outsourcing
Managing procurement
Managing suppliers
Managing customer relationships
Being able to quickly identify problems and respond to them
Managing risk

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Trends in SCM

• Trends affecting supply chain design and management:
– Re-evaluation of outsourcing
– Risk management
– Inventory management
– Lean supply chains
– Sustainability

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Procurement
• The purchasing department is responsible for obtaining
the materials, parts, and supplies and services needed
to produce a product or provide a service.
• The goal of procurement
– Develop and implement purchasing plans for products
and services that support operations strategies

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E-Business
• E-business
– the use of electronic technology to facilitate business transactions
– Applications include
• Internet buying and selling
• E-mail
• Order and shipment tracking
• Electronic data interchange
• Product and service promotion

• Provide information about products and services

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Contrasting Supplier Relationships

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The Bullwhip Effect

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Supply Chain Performance Metrics
• Financial
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Return on assets
Cost
Cash flow
Profits

• Suppliers
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Quality
On-time delivery
Cooperation
Flexibility

• Operations
– Productivity
– Quality

• Inventory
– Average value
– Turnover
– Weeks of supply

• Order fulfillment
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Order accuracy
Time to fill orders
% of incomplete orders shipped
% of orders delivered on time

• Customers
– Customer satisfaction

– % of customer complaints

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Challenges
• Barriers to integration of organizations
• Getting top management on board
• Dealing with trade-offs
• Small businesses
• Variability and uncertainty
• Response time

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Operations Strategy
• Effective supply chains are necessary for organizational
success
– Requires integration of all aspects of the chain
– Supplier relationships are a critical component of
supply chain strategy
– Lean operations and six sigma are being employed to
improve supply chain success

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