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Week 11A – Supply Chain Management Chapter 10

Week 11A – Supply Chain Management Chapter 10 . Definition, issues, logistics, EDI, E-commerce. Definition of SCM. Definition: chain consisting of multiple organizations and organization units operating as customer/supplier links Includes external suppliers and subcontractors

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Week 11A – Supply Chain Management Chapter 10

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  1. Week 11A – Supply Chain Management Chapter 10 Definition, issues, logistics, EDI, E-commerce SJSU Bus 140 - David Bentley

  2. Definition of SCM • Definition: chain consisting of multiple organizations and organization units operating as customer/supplier links • Includes external suppliers and subcontractors • Involves internal manufacturing plants, warehouses, and distribution centers • Extends to final (external) customers SJSU Bus 140 - David Bentley

  3. Related Terms and Concepts • Includes all relevant activities of organizations and units from prior slide • Value chain essentially the same today • Focuses on added value • May cover raw material to end user • Demand chain used less frequently • May cover manufacturer to end user SJSU Bus 140 - David Bentley

  4. Supply Chain Example Intel Contract manufacturer Hewlett-Packard Ingram Micro Fry’s You or me SJSU Bus 140 - David Bentley

  5. Inventory Considerations • Inventory serves as a buffer(“decouples”) supply and demand and protects any member of the chain from variation in either • Bullwhip effect relates to magnification effect as buffer grows upstream • Can ultimately lead to collapse SJSU Bus 140 - David Bentley

  6. Recent Areas of Interest • Sustainability • Social, cultural, and environmental concerns • Takes a long-term view • May conflict with financial objectives • Information technology (see later slide) • Dramatically increases ability to plan and control • Dramatically reduces certain time elements SJSU Bus 140 - David Bentley

  7. Factors Leading to SCM • Globalization • Competitive pressure • Move to e-commerce • Cost reduction opportunities • Ability to share information • Greater use of contract manufacturers • Desire to manage vertical markets SJSU Bus 140 - David Bentley

  8. Key Elements of SCM • Determine customer needs and wants • Forecast demand • Design products to meet customer needs/wants and minimize costs • Control operations processes • Minimize inventory • Strengthen supplier relationships • Optimize facility location • Improve handling and storage of material SJSU Bus 140 - David Bentley

  9. SCM Issues • Strategic • Building the chain (suppliers, manufacturing facilities, distribution centers, customers) • Establishing partnerships • Tactical • Inventory, procurement, logistics, quality policies • Operational • Production and inventory planning and control • Outsourcing • Quality control SJSU Bus 140 - David Bentley

  10. Integration • Horizontal Integration • Acquisition of complementary product lines • Examples: HP and Compaq; PSA • Vertical Integration • Backward integration (“upstream”) • Control of supply • Example: Ford • Forward integration (“downstream”) • Control of customers • Examples: Apple; Gateway SJSU Bus 140 - David Bentley

  11. Focused Factories • Focused factories • Emphasis on niche, distinctive competency • Limited products and functions • Example: HP casting plant • HP: Carly Fiorina comments (SJMN 10/24/02): • …in contrast to IBM, HP is not going to be a “vertically integrated company” • Focus less and less on component-level innovation • Work with key partners (e.g., Intel and Canon) • Position itself as broad-based technology company SJSU Bus 140 - David Bentley

  12. Logistics • Managing movement of materials within the supply chain • Traffic management • Scheduling, carrier selection, rate and tariff management • Electronic Data Interchange (EDI) • Internet (B2B, exchanges) • Distribution Requirements Planning (DRP) • JIT deliveries SJSU Bus 140 - David Bentley

  13. Communications • Traditional • Mail, Phone, Fax • EDI • Transmission of forecasts, orders, etc. • Individual supplier/customer agreements • Internet (E-Commerce) • Buying and selling using the Internet • Business-to-business, business-to-consumer • Exchanges SJSU Bus 140 - David Bentley

  14. Creating an Effective Supply Chain • Key is external and internal partnerships • Steps • Strategic objectives and tactics • Integrate internal part first • Extend to suppliers and customers • Optimize data management across chain • Develop strategic partnerships SJSU Bus 140 - David Bentley

  15. SCM Software Vendors • Supply Chain Management (SCM) • SAP • Oracle • I2 Technologies • Manugistics SJSU Bus 140 - David Bentley

  16. Internet Applications (B2C) • Oracle (Redwood Shores) • Including Siebel (San Mateo) • Acquired by Oracle (June 2006) • BroadVision (Redwood City) • Many others SJSU Bus 140 - David Bentley

  17. E-Commerce Areas • CRM - Oracle (including Seibel), BroadVision • B2B - SAP, Oracle • B2C - BroadVision • SCM - SAP, i2 • E-Procurement • SAP • Ariba (acquired by SAP Q3 2012) SJSU Bus 140 - David Bentley

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