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Optimizing Supply Chain Management: Benefits, Elements, and Strategies

This comprehensive guide covers the definition, benefits, and management of supply chains, including the bullwhip effect, logistics, global considerations, and e-business integration. Learn about supply chain elements, such as facilities and functions, and discover how effective supply chain management can lead to lower inventories, higher profits, and improved customer loyalty. Explore key concepts like SCOR metrics, CPFR, and supply chain performance drivers, and gain insights into strategies for creating a successful and efficient supply chain.

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Optimizing Supply Chain Management: Benefits, Elements, and Strategies

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  1. Stevenson11 Supply Chain Management

  2. Learning Objectives • Explain what a supply chain is. • Explain the need to manage a supply chain and the potential benefits of doing so. • State the objective of supply chain management. • List the elements of supply chain management. • Describe the bullwhip effect and the reasons why it occurs.

  3. Supply Chain Management • 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

  4. Facilities • Warehouses • Factories • Processing centers • Distribution centers • Retail outlets • Offices

  5. Functions and Activities • Forecasting • Purchasing • Inventory management • Information management • Quality assurance • Scheduling • Production and delivery • Customer service

  6. Typical Supply Chains } Supplier Production Distribution Purchasing Supplier } Receiving Storage Operations Storage Storage Service Customer Supplier Storage Mfg. Storage Dist. Retailer Customer Supplier Supplier

  7. Bullwhip Effect

  8. Bullwhip Effect Demand InitialSupplier Final Customer Inventory oscillations become progressivelylarger looking backward through the supply chain

  9. Elements of Supply Chain Management Element Typical Issues Customers Determining what customers want Forecasting Predicting quantity and timing of demand Design Incorporating customer wants, mfg., and time Processing Controlling quality, scheduling work Inventory Meeting demand while managing inventory costs Purchasing Evaluating suppliers and supporting operations Suppliers Monitoring supplier quality, delivery, and relations Location Determining location of facilities Logistics Deciding how to best move and store materials

  10. Benefits of Supply Chain Management • Lower inventories • Higher productivity • Greater agility • Shorter lead times • Higher profits • Greater customer loyalty • Integrates separate organizations into a cohesive operating system

  11. Global Supply Chains • Increasingly more complex • Language • Culture • Currency fluctuations • Political • Transportation costs • Local capabilities • Finance and economics • Environmental

  12. Logistics • Logistics • Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain

  13. Logistics 0 214800 232087768 • Movement within the facility • Incoming and outgoing shipments • Bar coding • EDI • Distribution • JIT Deliveries

  14. 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

  15. Advantages of E-Business • Companies can: • Have a global presence • Improve competitiveness and quality • Analyze customer interests • Collect detailed information • Shorten supply chain response times • Realize substantial cost savings • Create virtual companies • Level the playing field for small companies

  16. Effective Supply Chain • Requires linking the market, distribution channels processes, and suppliers • Supply chain should enable members to: • Share forecasts • Determine the status of orders in real time • Access inventory data of partners

  17. Successful Supply Chain • Trust among trading partners • Effective communications • Supply chain visibility • Event-management capability • The ability to detect and respond to unplanned events • Performance metrics

  18. SCOR Metrics

  19. CPFR • Collaborative Planning, Forecasting, and Replenishment • Focuses on information sharing among trading partners • Forecasts can be frozen and then converted into a shipping plan • Eliminates typical order processing

  20. Supply Chain Performance Drivers • Quality • Cost • Flexibility • Velocity • Customer service

  21. Creating an Effective Supply Chain • Develop strategic objectives and tactics • Integrate and coordinate activities in the internal supply chain • Coordinate activities with suppliers with customers • Coordinate planning and execution across the supply chain • Form strategic partnerships

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