CHAPTER 10: EXTENDING THE ORGANIZATION – SUPPLY CHAIN MANAGEMENT

Supply Chain Management

• Supply chain are all parties involved directly or indirectly
•  The average company spends nearly half of every dollar that it earns on production
• Involves the management of such an exchange of information from one party to the other party
• Ensure the profit and production increased
•  In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains
• Before this, buy the product with supplies then sell. But now, the transfer of information in the supplier chain.
• Example : supplier, manufacture, retailer, distributor, and customer

Basic of Supply Chain.

• The supply chain has three main links :
• 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

•  plan
•   to make customer demand
• source
• build relationship with the supplier
• easy to negotiate
• get discount
• the price of product is cheapest
• before sent the product, must pay first
• make
• make a product, get the materials, start with manufacturing
• deliver
• deliver to customers using fast and safe transportation
• return
• If the product are damage, how to solve.

Information Technology’s Role In The Supply Chain

• Visibility
• Supply chain visibility
• The ability to view all areas up and down the supply chain. When we do the SCM system, we can see the visibility
• Bullwhip effect
• Occurs when distorted product demand information passes from one entity to the next throughout the supply chain. Example, the sugar. In the shop, we want buy the sugar. When the dealers see the sugar already is out of stock, the dealer call suppliers. When the suppliers also already are out of stock, he continues to call the retailer.

• Consumer Behavior
• Companies can respond faster and more effectively to consumer demands through supply chain enhances. Companies also can do forecasting customers behaviors. The SCM can do easy to consumer behavior system.
• Demand planning software – generates demand forecasts using statistical 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 the supply chain

• Implementation
• Focus on what is happening in the supply chain.
• Payment involved can know with SCE.

• Speed
• three factors fostering speed

Supply Chain Management Success Factors

•  SCM industry best practices include :

W      Make the sale to suppliers. (easy to suppliers)

W      Wean employees off traditional business practices. (no need to call the suppliers. Direct use the SCM)

W      Ensure the SCM system support the organizational goals. (must parallel)

W      Deploy in incremental phases and measure and communicate success. (with the SCM system, to success, must do progressively)

W      Be future oriented. (use SCM to do forecasting. Anticipated profit increased by using the SCM system)

SCM Success Stories

• Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains
• DSSs allow managers to examine performance and relationships over the supply chain and among:
• Suppliers
• Manufacturers
• Distributors
• Other factors that optimize supply chain performance