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Principles of Supply Chain Management: A Balanced Approach, Joel D. Wisner (Author), Keah-Choon Tan (Author), G. Keong Leong (Author)

Aileen Judy Macanan

on 9 February 2014

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design by Dóri Sirály for Prezi
Importance of SCM
Firms with large inventories, large number of suppliers, complex products and customers with large purchasing budgets benefit the most with SCM

1.) SCM can mean lower purchasing and inventory carrying costs, better product quality
and higher levels of customer service—all leading to
more sales.

History of SCM Events in the U.S.
Foundation Elements of Supply Chain Management
Supply Elements -
Supplier alliances, supplier management,
strategic sourcing

Operations Elements-
Demand management, MRP, ERP, JIT, TQM

Distribution Elements-
Transportation management, customer relationship management, network design, service response logistics

Integration Elements-
Coordination/Integration activities, global integration problems, performance measurement

Step 3
Current Trends in Supply Chain Management
What is Supply Chain Management (SCM)?
“The planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers and customers.”
- Council of Supply Chain Management Professionals (CSCMP

“The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer."
- Institute for Supply Management (ISM)
- is the idea of coordinating or integrating a number of goods- and services-related activities among supply chain participants
to improve operating efficiencies, quality and customer service

among the collaborating organizations.
2.) Cost savings and better coordination of resources

Reduced Bullwhip Effect
- the supply chain forecasting, safety stock and production problem is known as the
Bullwhip effect.
the magnified reduction of safety stock costs based on
planning, forecasting and replenishment,a SCM concept,
will reduce or prevent this problem

Process Integration
- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, etc.

3.) Lower supply chain costs and better customer service
Lower costs resulting from reducing the bullwhip effect can also result in better quality, since potentially higher profit margins mean more investment into materials research, better production methods and use of more reliable transportation and storage facilities.

A Generic Supply Chain
Supply Chain
is the series of companies eventually making products and services available to consumers—including all of the functions enabling the production, delivery and recycling of materials, components, end products and services
What is Supply Chain?
1950s & 1960s - Traditional Mass Manufacturing

- focused on cost reduction and productivity improvement strategies
- little attention to creating supplier partnerships, improving process design
and flexibility, or improving product quality

1960s - 1970s - Inventory management, MRP, MRPII and cost containment

- Introduction of new computer technology lead to development of Materials
Requirements Planning (MRP) to coordinate inventory management
- see the importance of effective materials management
- further reduce inventory costs while improving internal communication of
the need for purchased parts and supplies

The Origins of Supply Chain Management in the U.S.
The Origins of Supply Chain Management in the U.S. (cont.)
1980s & 1990s - JIT, TQM, BPR, supplier and customer alliances

- Intense global competition led U.S. manufacturers to adopt
Supply Chain Management
along with
Just-In-Time (JIT), Total Quality Management (TQM)
, and
Business Process Reengineering (BPR) practices

- firms began to realize the potential benefits and importance of strategic and cooperative supplier-buyer-customer relationships, which are the foundation of SCM.

The Origins of Supply Chain Management in the U.S. (cont.)
2000s and Beyond - Increased supply chain capabilities

- Industrial buyers will rely more on third-party service providers to improve purchasing and supply management

- Wholesalers/retailers will focus on transportation and logistics more & refer to these as quick response, service response logistics, and integrated logistics

Foundation Elements of Supply Chain Management

Supply Management

- more strategic approach to purchasing

- development of more long-term supplier relationships to
achieve the competitive benefits

- incoming material quality, delivery timing and purchase price are impacted by the buyer–supplier relationship and the capabilities of suppliers.

Traditional purchasing strategies

- uses many suppliers, competitive bidding and short-term contracts.

- created adversarial buyer–supplier relationships

- focuses on the product’s purchase price instead of the capabilities of the suppliers and their contribution to long-term competitiveness

Supplier management
- means encouraging or helping the firm’s suppliers to perform in some desired fashion.

Improve performance through the ff:

1.) SUPPLY ELEMENTs (cont.)
Supplier evaluation
- determining supplier capabilities
Supplier certification -
third party or internal certification to assure product quality and service requirements

Strategic partnerships
- successful and trusting relationships with top-performing suppliers

Ethical and sustainable sourcing
- purchasing from suppliers that are governed by environmental sustainability and social and ethical practices
- ensures that the right amount of product is produced and that finished products meet specific quality, cost and customer service requirements.
Demand management
- match demand to available capacity

Linking buyers & suppliers via MRP and ERP systems
Material Requirements Planning (MRP
) - software system for managing their inventory.
Enterprise Resource Planning (ERP)
systems - providing real-time sales data, inventory and production information to all business units and to key supply chain participants.

Lean Production system
(also referred to as
) - this type of system takes time but usually results in faster delivery times, lower inventory levels and better quality.

Six Sigma quality or Total Quality Management strategy (TQM) -
ensures continued quality compliance among suppliers and with internal production facilities

Delivering products to customers at the right time, quality and volume requires a high level of planning and cooperation between the firm, its customers and the various logistics elements or services employed such as transportation, warehousing and break-bulk or repackaging services.
>Transportation management
- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air

>Customer relationship management-
strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements

>Network design-
distribution networks
based on tradeoff decisions between cost & sophistication of distribution system

Supply Chain Integration
- when supply chain participants work for common goals.
- Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships

Global Supply Chains
- advantages that accrue from sourcing from larger global market e.g., lower cost & higher quality suppliers.
- ay involve
operating exposure
, which is risk found in foreign settings

Supply Chain Performance Measurement
- Crucial for firms to know if procedures are working

is to coordinate and integrate the processes of supply, operations and logistics among the focal firm and its key supply chain trading partners

Processes in a supply chain are said to be integrated when members of the supply chain work together to make purchasing, inventory, production, quality and logistics decisions that impact the overall profits of the supply chain.
Expanding (and Contracting) the Supply Chain
Increasing Supply Chain Responsiveness
The Greening of Supply Chains

- Supply chains will work harder to reduce environmental degradation

- Large majority (75%) of U.S. consumers influenced by a firm’s environmental friendliness reputation

- Recycling and conservation are a growing alternative in response to high cost of natural resources

- Firms will increasingly need to be more flexible and responsive to customer needs

- Supply chains will need to benchmark industry performance and meet and improve on a continuous basis

- Responsiveness improvement will come from more effective and faster product & service delivery systems

- U.S. firms are expanding partnerships and building facilities in foreign markets

- The expansion involves:

- foreign manufacturing, office & retail sites, foreign suppliers & customers

- second and third tier suppliers & customers

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