Supply Chain Management

1. Supply Chain Management Professor Stephen R. Lawrence Leeds School of Business University of Colorado Boulder, CO 80309-0419

2. Supply Chain Management • Supply Chain Management = SCM • SCM used to be called “logistics” • from the verb loger, “to lodge or quarter” • “Multi-echelon Production Control” • SCM is an amalgam of traditional business and operations functions: • Inventory, logistics, scheduling, aggregate planning, transportation, purchasing, …

3. SCM Definitions • The art of managing the flow of materials and products from source to user • Set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements

4. SCM Diagram Vendors Our Firm Customers adapted from Porter, Competitive Advantage, Free Press, 1985

5. SCM Information Flows

6. Why an Interest in SCM? • Productivity (cost reduction) • Timeliness • Flexibility Adapted from Professor Joe Geunes

7. Key SCM Issues • Distribution network design • Determine plant and warehouse locations, capacities, and production/storage levels • Inventory Control • The purpose of inventory is to avoid interrupting a supply process, be it production or end customer demand • How can we avoid such disruptions at the minimum total cost? • Since we don’t know the future we must rely on forecasts – how do we use these forecasts to set reorder levels and order quantities? Adapted from Professor Joe Geunes

8. Key SCM Issues • Distribution strategy • How do we decide where to hold inventory and how to efficiently transport it to customers? • Ship directly from plant to customers in full truckloads? • Maintain stocks in regional warehouses and distribute locally? • Cross-docking strategies? • Integration and strategic partnerships • How involved should a firm be with suppliers of both materials and services? • What level of information sharing is appropriate? Adapted from Professor Joe Geunes

9. Key SCM Issues • Product design issues • What is the tradeoff between design changes and logistics savings? • Can design strategies buffer against demand uncertainties? • Information technology • What are the significant data that are critical for sharing with partners? • What is the role of the Internet/e-Commerce in all of this? • Customer value • How does supply chain management contribute to customer value? • How do new trends in customer value affect supply chain management? Adapted from Professor Joe Geunes

10. Global SCM Opportunities • Trade barriers declining • Regional trans-national trading groups • NAFTA • European Community • Asia • Improved transportation systems • Improved information systems

11. New Developments in SCM • Third party logistics • “one-stop shopping” for logistics services combining warehousing, transportation, order picking, ... • Partnerships • non-adversarial cooperation between shippers, carriers, and warehouses • Cross-docking

12. SCM and Technology • Containerization • Telecommunications & the Internet • Bar-coding & RF tracking • expedites automatic product and order tracking • Electronic Data Interchange (EDI) via Internet • computer-to-computer order entry communication