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Chapter 1: . Supply Chain Management. Learning Objectives - After reading this chapter, you should be able to do the following:. Understand the development of supply chain management in leading corporations.
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Chapter 1: Supply Chain Management
Learning Objectives - After reading this chapter, you should be able to do the following: • Understand the development of supply chain management in leading corporations. • Appreciate the importance and role of supply chain management among private and public organizations. • Understand the contributions of a supply chain approach to organizational efficiency and effectiveness. Management of Business Logistics, 7th Ed.
Learning Objectives • Analyze the benefits that can accrue from implementing effective supply chain practices. • Understand the major challenges and issues facing organizations developing and implementing supply chain strategies. • Discuss the major change drivers in our economy and in the global marketplace. Management of Business Logistics, 7th Ed.
Logistics Profile: SAB Distribution • SAB, a central Pennsylvania food wholesaling company, had grown to $180 million over the years. • Current management were dealing with flat sales and profit profiles and had cut costs to the point where further cuts were counterproductive. • The market had changed and SAB was unable to respond…management had questions but no answers. • What happened? • Where does SAB fit in the supply chain? • What should SAB do? Management of Business Logistics, 7th Ed.
Supply Chain Management: Introduction • Supply chain management now part of the business vocabulary. • Impact of global marketplace drastically changed the landscape of business. • Change was rapid and continuous in the 1990s. • Doing business in the comfort zone was no longer synonymous with success. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • The Empowered Consumer • Power Shift in the Supply Chain • Deregulation • Globalization • Technology Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • The Empowered Consumer • Impact on logistics is more direct. • Informed consumers have low tolerance for poor quality in products and services. • Changing demographics commands 24/7 service. • Increased customer service increases the importance of logistics and supply chains. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • Power Shift in the Supply Chain • Large retailers more demanding and commanding. • Focus upon distribution costs and their impact on “everyday low prices”. • Changing logistics and supply chain strategies resulted from shifts in the balance of economic power. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • Deregulation • Changing economic controls empowered creativity and competition. • Changes in transportation – fewer or no economic controls over rates and services. • Change in financial institutions blurred traditional differences and increased competition. • Change in the communications industry also resulted in more competition. • Changes in the utility industry allows more competition. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • Globalization • Global marketplace concept • Global network sourcing, manufacturing, marketing and distribution • Global alternatives have blossomed • No geography --- access available to the world • Supply chain challenges • Wal-Mart’s challenges • New supply sources Management of Business Logistics, 7th Ed.
The Changing Business Landscape: Five Driving Forces • Technology • Information Age provides new and unrestricted access to the place aspect of business. • My time, my place • Warehouse technology has changed dramatically with computer devices in use from the office space to the forklifts. Management of Business Logistics, 7th Ed.
On the Line: Extreme Enterprise • Integrating new enterprise and supply chain management solutions allowed Columbia Sportswear to keep up with sales that increased from $3 million in 1984 to $470 million in 1999. • With one store and a handful of outlets, distribution to its customers is where the rubber meets the road. • Columbia’s president was determined not to let distribution restrain growth, and backed it with money. • A 1 million square foot distribution center receives more than 2 million units/month and set a record by shipping 172,000 items in one day, and more than 2 million items in a month. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: The Supply Chain Concept • Development of the Concept • Business Case for Supply Chain Management • Characteristics of Supply Chain Management Management of Business Logistics, 7th Ed.
The Changing Business Landscape: The Supply Chain Concept • Development of the Concept • Total systems cost - remains an important element of logistics analysis. • Outbound logistics - was the initial focus with higher value finished goods. • Inbound logistics – deregulation allowed new focus on coordination of inbound and outbound movements. • Value chain analysis integrated logistics activities. • Terminology growing as supply chain concept matures. Management of Business Logistics, 7th Ed.
Figure 1-1 A View of Business Logistics in a Firm Management of Business Logistics, 7th Ed.
Figure 1-2 Integrated Logistics Management Management of Business Logistics, 7th Ed.
Figure 1-3Generic Value Chain Management of Business Logistics, 7th Ed.
Figure 1-4 Logistics Supply Chain Management of Business Logistics, 7th Ed.
The Changing Business Landscape: The Supply Chain Concept • Business Case for Supply Chain Management: Why so much attention on supply chain management? • ECR and Best-in-class studies (see next two slides) • Complexity of the supply chain • Extended enterprise concept • Two-way flow of: • Products • Information • Cash • Inventory visibility Management of Business Logistics, 7th Ed.
Figure 1-5: Comparison of Average Throughput Time of Dry Grocery Chain before and after ECR Implementation Management of Business Logistics, 7th Ed.
Figure 1-6: Total Supply Chain Management Cost --- All Sectors Revenue % Management of Business Logistics, 7th Ed.
Figure 1-7: Integrated Supply Chain Management of Business Logistics, 7th Ed.
Figure 1-8: Running Lean Number of times Dell and Compaq turn inventory over in each quarter, calculated at an annual rate. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: The Supply Chain Concept • Characteristics of Supply Chain Management • Inventory • Visibility • Pull systems • Landed Cost • Companies must realize that their strategies may affect the landed cost. • Coordination of supply chain activities may lower the landed cost. Management of Business Logistics, 7th Ed.
The Changing Business Landscape: The Supply Chain Concept • Characteristics of Supply Chain Management • Real-time two way information flows • Customer service • levels must be tailored to each customer • not all customers require the same service • Supply chain relationships • Collaborative planning • Share risks and rewards Management of Business Logistics, 7th Ed.
Figure 1-9: Traditional Supply Chain/Pipeline Inventory Flow 1970s and 1980s Management of Business Logistics, 7th Ed.
Chapter 1: Summary and Review Questions Students should review their knowledge of the chapter by checking out the Summary and Study Questions for Chapter 1. This is the last slide for Chapter 1
End of Chapter 1 Slides Supply Chain Management
