Week 9a supply chain management chapter 10
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Week 9A – 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 9A – Supply Chain Management Chapter 10

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Week 9a supply chain management chapter 10

SJSU Bus 140 - David Bentley

Week 9A – Supply Chain Management Chapter 10

Definition, issues, logistics, EDI, E-commerce


Definition of scm

SJSU Bus 140 - David Bentley

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


Related terms and concepts

SJSU Bus 140 - David Bentley

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


Supply chain example

SJSU Bus 140 - David Bentley

Supply Chain Example

Intel

Contract manufacturer

Hewlett-Packard

Ingram Micro

Fry’s

You or me


Inventory considerations

SJSU Bus 140 - David Bentley

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


Recent areas of interest

SJSU Bus 140 - David Bentley

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


Factors leading to scm

SJSU Bus 140 - David Bentley

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


Key elements of scm

SJSU Bus 140 - David Bentley

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


Scm issues at 3 levels

SJSU Bus 140 - David Bentley

SCM Issues at 3 Levels

  • 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


Integration

SJSU Bus 140 - David Bentley

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


Focused factories

SJSU Bus 140 - David Bentley

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


Sourcing strategies

SJSU Bus 140 - David Bentley

Sourcing Strategies

  • Many suppliers (not recommended)

  • Few suppliers (risk)

  • Vertical integration (backward)

  • Joint ventures (NUMMI)

  • Keiretsu networks (supplier support)

  • Virtual companies (specialists)


Control of the supply chain

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Control of the Supply Chain

  • Big supplier, many small customers

    • Amazon and you

  • Big customer, many small suppliers

    • GM and auto parts manufacturers

  • Equal size suppliers and customers

    • Big businesses

    • Small businesses

  • See text section, pp. 439-442


Logistics

SJSU Bus 140 - David Bentley

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


Communications

SJSU Bus 140 - David Bentley

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


Creating an effective supply chain

SJSU Bus 140 - David Bentley

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


Scm software vendors

SJSU Bus 140 - David Bentley

SCM Software Vendors

  • Supply Chain Management (SCM)

    • SAP

    • Oracle

    • JDA Software Group

      • I2 Technologies (acquired in 2010)

      • Manugistics (acquired in 2006)

    • Sage Software


Internet applications b2c

SJSU Bus 140 - David Bentley

Internet Applications (B2C)

  • Oracle (Redwood Shores)

    • Including Siebel (San Mateo)

      • Acquired by Oracle (June 2006)

  • BroadVision(Redwood City)

  • Many others


E commerce areas

SJSU Bus 140 - David Bentley

E-Commerce Areas

  • CRM - Oracle (including Seibel), BroadVision

  • B2B - SAP, Oracle

  • B2C - BroadVision

  • SCM - SAP, Oracle, JDA, Sage

  • E-Procurement

    • SAP

    • Ariba (acquired by SAP Q3 2012)


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