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The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function; many companies turn to this for competitive advantage; includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers to the ultimate customer (the point of origin to the point of consumption)
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terms list
supply chain
The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function; many companies turn to this for competitive advantage; includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers to the ultimate customer (the point of origin to the point of consumption)
supply chain management
A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value; visualizing the entire supply chain allows managers to maximize strength and efficiencies at each level of the process to create a highly competitive, customer-driven supply system
supply chain managers
The philosophy behind supply chain management is that by visualizing the entire supply chain, supply chain managers can maximize strengths and efficiencies at each level of the process to create a highly competitive, customer-driven supply system that is able to respond immediately to changes in supply and demand.
communicator
communicates of customer demand from point of sale to supplier
physical flow
the process that engineers the movement of goods
benefits of supply chain management
lower inventory, transportation, and packaging costs; greater supply chain flexibility; improved customer service; higher revenues; increased performance and profitability
supply chain integration
Highly integrated supply chains (those that are successful in achieving many or all of these types of integration) have been shown to be better at satisfying customers, managing costs, delivering high-quality products, enhancing productivity, and utilizing company or business unit assets, all of which translate into greater profitability for the firms and their partners working together in the supply chain.
relationship integration
The ability of two or more companies to develop social connections that serve to guide their interactions when working together.
measurement integration
The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals
technology and planning integration
The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain
material and service supplier integration
Requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline processes and provide quality customer experiences.
internal operations integration
Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements
customer integration
A competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain
key business processes
8 critical business processes on which supply chain managers must focus on: customer relationship management, customer service management, demand management, order fulfillment, manufacturing flow management, supplier relationship management, product development and commercialization, returns management
customer relationship management (CRM) Process
Allows companies to prioritize their marketing focus on different customer groups according to each group's long-term value to the company or supply chain; provides a set of comprehensive principles for the initiation and maintenance of customer relationships and is often carried out with the assistance of specialized computer software
customer service management process
Presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; Whereas the customer relationship management process is designed to identify and build relationships with good customers, the customer service management process is designed to ensure that those customer relationships remain strong.
demand management process
Seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior; It is very difficult to predict exactly what items and quantities customers will buy prior to purchase; however, much of the uncertainty in demand planning can be mitigated by conducting collaborative planning, forecasting, and replenishment (CPFR) activities with the company's customers and suppliers; seeks to minimize the costs of serving multiple types of customers who have variable wants and needs.
order fulfillment process
a highly integrated process, often requiring persons from multiple companies and multiple functions to come together and coordinate to create customer satisfaction at a given place and time; One of the most fundamental processes in supply chain management is this process, which involves generating, filling, delivering, and providing on-the-spot service for customer orders; When this process is managed diligently, the amount of time between order placement and receipt of the customer's payment following order shipment (known as the order-to-cash cycle) is minimized as much as possible; Since many firms do not view this as a core competency, they often outsource this function to a third party logistics firm that specializes in this
manufacturing flow management process
Concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process; The goals of this are centered on leveraging the capabilities held by multiple members of the supply chain to improve overall manufacturing output in terms of quality, delivery speed, and flexibility, all of which tie to profitability
supplier relationship management process
Supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers; this provides structural support for developing and maintaining relationships with suppliers; The management of supplier relationships is a key step toward ensuring that firms' manufacturing resources are available, and thereby the supplier relationship management process has a direct impact on each supply chain member's bottom-line financial performance.
product development and commercialization
Includes the group activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms; New products and services are not the sole responsibility of a single firm who serves as inventor, engineer, builder, marketer, and sales agent; rather, they are often the product of a multi-company collaboration with multiple firms and business units playing unique roles in new product development, testing, and launch activities, among others;
returns management
Enables firms to manage volumes of returned product efficiently, while minimizing returns-related costs and maximizing the value of the returned assets to the firms in the supply chain; In addition to the value of managing returns from a pure asset-recovery perspective, many firms are discovering that returns management also creates additional marketing and customer service touch points that can be leveraged for added customer value above and beyond normal sales and promotion-driven encounters.
logistics
the process of strategically managing the efficient flow and storage of raw materials, in-process inventory, and finished goods from point of origin to point of consumption; Orchestrating the physical means through which products move it is critical to any supply chain.
logistics components of the supply chain
The supply chain consists of several interrelated and integrated logistical components; sourcing & procurement, production scheduling, order processing, inventory control, warehouse & materials handling, transportation
sourcing & procurement
the role of purchasing; plan purchasing strategies, develop specifications, select suppliers, negotiate price and service levels, reduce costs; One of the most important links in the supply chain is that between the manufacturer and the supplier. Purchasing professionals are on the front lines of supply chain management, planning purchasing strategies, developing specifications, selecting suppliers, and negotiating price and service levels; The goal of most activities is to reduce the costs of raw materials and supplies. Instead of tough negotiations to get the best possible price, purchasing helps establish and cooperative relationships with vendors.
production scheduling
In a traditional mass-marketing manufacturing, production begins when forecasts call for additional products to be made or inventory is low; In this environment of customer demand and mass customization, supply chains need to be flexible and be able to shift production based on demand.
mass customization (build-to-order)
In a customer-focused "pull" manufacturing environment, production of goods is not started until an order is placed by the customer specifying the desired configuration
just-in-time manufacturing (JIT)
A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials at the precise time they are needed on the production line; borrowed from the japanese; Manufacturers work with suppliers to get necessary items to the assembly line at the precise time they are needed for production; For the manufacturer, this means that raw materials arrive at the assembly line to be installed; For the consumer, this means lower costs, shorter lead times, and products that closely meet the consumer's needs.
benefits of JIT
For manufacturers: reduces raw material inventories, immediate shipping of products; For suppliers: daily or hourly deliveries rather than weekly;
For customers: lower costs, shorter lead times, products tailored to customer needs
order processing system
a system whereby orders are entered into the supply chain and filled; becoming more automated through the use of computer technology know as electronic data interchange (EDI); As an order enters the system, management must monitor two flows: the flow of goods and the flow of information
inventory control system
A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's demand; The goal of inventory management is to keep inventory levels as low as possible while maintaining an adequate supply of goods to meet customer demand
tools for managing inventory
materials requirement planning (MRP) or materials management - supplier to manufacturer;
distribution resource planning (DRP) - manufacturer to end user; automatic replenishment programs - minimal forecasting
materials-handling system
a method of moving inventory into, within, and out of the warehouse; most manufacturers today have moved to these to minimize the amount of handling; Although JIT manufacturing processes may eliminate the need to warehouse many raw materials, manufacturers keep some safety stock on hand in the event of an emergency. Additionally, inventory may be stored for seasonally-demand products; moves inventory into, within, and out of the warehouse, performing the functions shown on this slide; storage helps manufacturers manage supply and demand
transportation
the marketing function of moving goods; provides time and place utility, and addsto the delivered cost of products paid by customers; can be costly; government may influence by developing transportation systems or by regulating them; railroads, motor carriers, pipelines, water, airways
transportation mode choice
cost, transit time, reliability, capability, accessibility, traceability
trends in supply chain management
advanced computer technology, outsourcing of logistics functions, electronic distribution, green supply chain management
advanced computer technology
boosted the efficiency of logistics with tools such as automatic ID systems, bar coding, radio frequency technology, communications technology and supply chain software systems
outsourcing logistics functions
rapidly growing segment in which a manufacturer or supplier turns over the entire or partial function of supply chain management to an independent third party; reduce inventories, locate stock at fewer plants and distribution centers, provide same or better levels of service
electronic distribution
a distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber-optic cable or through satellite transmission of electronic signals; includes any kind of product or service that can be distributed electronically. For instance, computer software can be purchased and downloaded electronically.
green supply chain management
in response to pressure for firms to act as leaders in protecting the environment; requires integrating green thinking into all phases of the supply chain, green materials sourcing; environment impact of packaging, shipment, use; incorporate end-of-life management, recycling, clean disposal
global logistics and supply chain management
Understanding and coping with the legalities of trade in other countries; Uncertainty regarding shipping
supply chain agility
an operational strategy focused on inducing inventory velocity and operational flexibility simultaneously in the supply chain
demand-supply integration (DSI)
a supply chain operational philosophy focused on integrating the supply-management and demand-generating functions of an organization
business processes
bundles of interconnected activities that stretch across firms in the supply chain
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