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CHAPTER 10

CHAPTER 10. Supply Chain Management. LEARNING OBJECTIVES. Define the term supply chain, and discuss the three components of a supply chain. Define supply chain management, and understand its goals. Identify various problems that can occur along supply chains.

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CHAPTER 10

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  1. CHAPTER 10 Supply Chain Management

  2. LEARNING OBJECTIVES • Define the term supply chain, and discuss the three components of a supply chain. • Define supply chain management, and understand its goals. • Identify various problems that can occur along supply chains. • Explain how information technology supports supply chain management.

  3. A Supply Chain • Supply chain • –the flow of materials, data, information, money, and services from raw material suppliers, through factories and warehouses, to the end consumers.

  4. Generic Supply Chain Components • Upstream – sourcing, procurement • Internal – packaging, assembly, manufacturing • Downstream – distribution

  5. The Flows of the Supply Chain • Materials • Information • Financial

  6. Supply Chain Management • Supply chain management (SCM) • Interorganizational information system (IOS) • – the function of planning, organizing and optimizing the supply chain’s activities. • – involves information flows among two or more organizations. • Benefits?

  7. Push Model Mass production Forecast Salesperson Happy customer

  8. Pull Model Factory Customer order Customer

  9. Problems Along the Supply Chain • Poor customer service • Poor quality product • High inventory costs • Loss of revenues • New technologies

  10. Solutions to Supply Chain Problems • Vertical Integration • Inventories • Just-in-time inventory • Information Sharing • Vendor-managed inventory

  11. Information Technology Support for Supply Chain Management • Electronic data interchange (EDI) • Extranets • Electronic data interchange (EDI) – a communication standard that enables business partners to exchange routine documents, such as purchase orders, electronically. • Extranets – link business partners to one another over the Internet by providing access to certain areas of each other’s corporate intranets.

  12. Order Fulfillment Without EDI

  13. Order Fulfillment With EDI

  14. EDI Benefits • Minimize data entry errors • Length of messages are shorter • Messages are secured • Reduces cycle time • Increases productivity • Enhances customer service • Minimizes paper usage and storage

  15. EDI Limitations • Significant initial investment to implement • Ongoing operating costs are high due to the use of expensive, private VANs • Traditional EDI system is inflexible • Long startup period • Multiple EDI standards exist

  16. Extranets • Required for SCM system or IOS. • The main goal of extranets is to foster collaboration between business partners. • An extranet is open to selected B2B suppliers, customers and other business partners.

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