CHAPTER 10: EXTENDING THE ORGANIZATION- SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT

• The average company spends nearly half of every dollar that it earns on production.
• In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains.

Basics of Supply Chain

• Materials flow from suppliers and their 'upstream' suppliers at all levels.
• Transformation of materials into semi finished and finished products through the organization's own production  process.
• Distribution of products to customers and their 'downstream' customers at all levels.

Information Technology's Role in the Supply Chain

Visibility

• Supply chain visibility- the ability to view all areas up and down the supply chain
• Bullwhip effect- occurs when disorted product demand information passes from one entity to the next throughout the supply chain

Consumer Behavior

• Companies can respond faster and more effectively to consumer demands through supply chain enhances.
• Demand planning software- generates demand forecasts using statiscal tools and forecasting techniques.

Competition

• Supply Chain planning (SCP) software- uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain
• Supply chain execution (SCE) software- automates the different steps and stages of he supply chain.

Speed

 

Supply Chain Management Success Factors

• SCM industry best practices include:

1.  Make the sale to suppliers
2. Wean employees off traditional business practices
3. Ensure the SCM system supports the organizational goals
4. Be future oriented

SCM Success Stories

• Numerous decision support systems (DSSs) are being cuilt to assist decision makes in the design and operation of integrated supply chain.
• DSSs allow managers to examine performance and relationships over the supply chain and among suppliers, manufacturers, distributors, other factors that optimize supply chain performance