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21st CenturySupplyChains Overviewof21st centurysupplychains ThesupplychainrevolutionWhyintegrationcreatesvalueGeneralizedsupplychainmodelResponsivenessFinancialsophisticationGlobalization Introduction QuestionP203 Comparetheconceptofamodernsupplychainwithmoretraditionaldistributionchannels Bespecificregardingsimilaritiesanddifferences Thesupplychainrevolutionhasreshapedcontemporarystrategicthinking SupplyChainManagementConsistsoffirmscollaboratingtoleveragestrategicpositioningandtoimproveoperatingefficiencySupplyChainStrategyIsachannelandbusinessorganizationalarrangementbasedonacknowledgedependencyandcollaborationLogisticsTheworkrequiredtomoveandgeographicallypositioninventory Successfulsupplychainstrategies Successfulsupplychainstrategies Source SupplyChainManagementReview March April2000 p 29 P204 Whatspecificroledoeslogisticsplayinsupplychainoperations 1 Whycanthecurrentmovementtowardestablishingsupplychainsbecharacterizedasarevolution Question OriginsofSupplyChainManagement 1950s 1960sU S manufacturersfocusedoncostreductionandproductivityimprovementstrategies1960s 1970sIntroductionofnewcomputertechnologyleadtodevelopmentofMaterialsRequirementsPlanning MRP tocoordinateinventorymanagement OriginsofSupplyChainManagement Cont 1980s 1990sIntenseglobalcompetitionledU S manufacturerstoadoptSupplyChainManagementalongwithJust In Time JIT TotalQualityManagement TQM andBusinessProcessReengineering BPR practices OriginsofSupplyChainManagement Cont 2000sandBeyondIndustrialbuyerswillrelymoreonthird partyserviceproviderstoimprovepurchasingandsupplymanagementWholesalers retailerswillfocusontransportationandlogisticsmore refertotheseasquickresponse serviceresponselogistics andintegratedlogistics Thetotalintegrationoftheoverallbusinessprocesscreatesvalue Table1 1IntegrativeManagementValueProposition P202 Compareandcontrasteconomic market andrelevancyvalue Question Theintegratedvalue creationprocessmustbemanagedacrossfirmsfromendtoend Figure1 1TheIntegratedSupplyChainFramework WhatisaSupplyChain Asupplychainconsistsoftheflowofproductsandservicesfrom RawmaterialsmanufacturersIntermediateproductsmanufacturersEndproductmanufacturersWholesalersanddistributorsandRetailersConnectedbytransportationandstorageactivities andIntegratedthroughinformation planning andintegrationactivities WhatisaSupplyChain WhatisSupplyChainManagement Herearetwodefinitions Thedesignandmanagementofseamless value addedprocessacrossorganizationalboundariestomeettherealneedsoftheendcustomerInstituteforSupplyManagementManagingsupplyanddemand sourcingrawmaterialsandparts manufacturingandassembly warehousingandinventorytracking orderentryandordermanagement distributionacrossallchannels anddeliverytothecustomerTheSupplyChainCouncil WhatisSupplyChainManagement Cont Oldparadigm Firmgainedsynergyasaverticallyintegratedfirmencompassingtheownershipandcoordinationofseveralsupplychainactivities Newparadigm Firminasupplychainfocusesactivitiesinitsareaofspecializationandentersintovoluntaryandtrust basedrelationshipswithsupplierandcustomerfirms ImportanceofSupplyChainManagement Firmshavediscoveredvalue enhancingandlongtermbenefitsWhobenefitsmost Firmswith LargeinventoriesLargenumberofsuppliersComplexproductsCustomerswithlargepurchasingbudgets ImportanceofSupplyChainManagement Cont FirmswithSupplyChainManagement StartwithkeysuppliersMoveontoothersuppliers customers andshippersIntegratesecondtiersuppliersandcustomers secondtierreferstothecustomer scustomersandthesupplier ssuppliers ImportanceofSupplyChainManagement Cont CostsavingsandbettercoordinationofresourcesarereasonstoemploySupplyChainManagementReducedBullwhipEffect themagnifiedreductionofsafetystockcostsbasedoncoordinatedplanningandsharingofinformationProcessIntegration Interdependentactivitiescanleadtoimprovedquality reducedcycletime betterproductionmethods etc Forcesdrivingsupplychainstrategies InformationtechnologyIntegrativemanagementResponsivenessFinancialsophisticationGlobalization Integrativemanagementrequiressimultaneousachievementof8processes Table1 2EightSupplyChainProcesses P205 Describe IntegrativeManagement Bespecificconcerningtherelationshipbetweenfunctionalityandprocess Question Conceptsnecessaryforachievingintegratedmanagement LowesttotalprocesscostisthefocusofintegratedmanagementDiffersfromlowestcostofeachfunctionintheprocessCollaborationofoperatinginformation technologyandriskhasbeenencouragedbynationallegislationtokeepUS basedfirmscompetitiveEnterpriseextensionincludesexpandedmanagerialinfluenceandcontrolbeyondtraditionalownershipboundariesofasingleenterpriseIntegratedserviceproviders ISP providearangeoflogisticsservicestoaccommodatecustomers rangingfromorderentrytoproductdeliveryCommonlyknownasthird orfourth partyserviceproviders P206 Intermsofenterpriseextension describetheimportanceoftheinformation sharingandprocessspecializationparadigms 7 Describeandillustrateanintegratedserviceprovider Howdoestheconceptofintegratedserviceproviderdifferfromtraditionalserviceproviders suchasfor hiretransportationandwarehousing Question Responsivenessemergesasacompetitiveadvantage Figure1 2AnticipatoryBusinessModel Figure1 3ResponsiveBusinessModel P208 Compareandcontrastanticipatoryandresponse basedbusinessmodels Whyhasresponsivenessbecomepopularinsupplychaincollaborations Question Postponementstrategieskeepsupplychainsresponsive TypesofPostponementManufacturing orForm Geographic orLogistics CombinedManufacturingandgeographictypesareexactoppositesinpracticebuthavethesamegoalMeetingcustomerdemandquicklywhileminimizinginventories Manufacturing orForm Postponement ManufacturingoneorderatatimeBasemodularconstructionofproductNocustomizationuntiltheexactcustomerspecsandfinancialcommitmentisreceivedObjectiveistomaintainproductsinanuncommittedstatusaslongaspossibleBalanceseconomyofscalewithresponsivenessCanbuildasufficientquantityof readytocustomize basicunitsRequiresalotofforethoughtduringproductdesign ExampleofManufacturingPostponement Keepingallthecarpanelsabasecolor whiteorgray untiltheorderisreceived thenpaintingtothecolorordered Geographic orLogistics Postponement Buildorstockafull lineinventoryatoneorafewstrategiclocationsForwarddeploymentofinventoryispostponeduntilcustomerordersarereceivedOnceordersreceived specificitemisexpeditedtothelocaldistributorAdvantagesaremanufacturingeconomiesofscalealongwithresponsivenesstocustomerOftenusedforcritical highcostpartsandassemblies e g engines ExampleofGeographicPostponement Keepingfullinventoryinacentralwarehouseandreleasingcustomerorderstolocaldistributorsordirectshippingtocustomer CombinedPostponement KeepingthebasicproductscentralizedandperformingthecustomizationatthedestinationdistributorHistoricalexample AutosInstallingdealeroptionslikesoundsystems GPS sunroofsonnewcarspurchasedContemporaryexample ComputersDellComputers doingfinalassemblyorpackagingadditionalsystemoptionslikeprinters digitalcamerasatadistributioncenter P209 Compareandcontrastmanufacturingandgeographicpostponement Question Barrierstoimplementingresponsivesystems NeedforpubliclyheldcorporationstomaintainplannedquarterlyprofitsExpectationsofcontinuedfinancialresultsoftendrivepromotionalandpricingstrategiesto loadthechannel withinventoryNeedtoestablishcollaborativerelationshipsMostbusinessmanagersdonothavetrainingorexperienceindevelopmentofcollaborativearrangements Financialsophisticationenablesmeasurementoftime basedsupplychain Cash to CashConversion thetimerequiredtoconvertrawmaterialorinventorypurchasesintosalesrevenueDwellTimeMinimization dwelltimeistheratiooftimethatanassetssitsidletothetimerequiredtosatisfyitssupplychainmissionCashSpin reducingassetsinthesupplychaincan spin cashforreinvestmentinotherprojects P2010 Defineandillustratecash to cashconversion dwell timeminimizationandcashspin Howdoessupplychainstrategyandstructureimpacteach Question Globalizationoffersfirmsseveralattractiveopportunities Demandexceedslocalsupply90 ofglobaldemandisnotfullysatisfiedbylocalsupplyStrategicsourcingIdentifyingandmatchingthesourcesofrawmaterialsandcomponentstomanufacturersanddistributorsOffshoringMovingmanufacturinganddistributionoperationstocountrieswithfavorablelaborcostsandtaxlaws Significantdifferencesforgloballogistics Distanceoftypicalorder to deliveryoperationsissignificantlylongercomparedtodomesticbusinessDocumentationrequirementsforbusinesstransactionsissignificantlymorecomplexOperationsmustbedealwithsignificantDiversityinworkpracticesandlocaloperatingenvironmentsHowconsumersDemandproductsandservicesmustaccommodateculturalvariations FutureTrendsinSupplyChainManagement ExpandingtheSupplyChainU S firmsareexpandingpartnershipsandbuildingfacilitiesinforeignmarketsTheexpansioninvolves breadth foreignmanufacturing office retailsites foreignsuppliers customersdepth secondandthirdtiersuppliers customers FutureTrendsinSupplyChainManagement Cont IncreasingSupplyChainResponsivenessFirmswillincreasinglyneedtobemoreflexibleandresponsivetocustom

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