operations managnment

Operations Management MGT 320

CHAPTER 15

Supply Chain Management

(Sections 15.1 to 15.5)

(Pages: 652-660)

Chapter 15: Learning Objectives

 You should be able to: 1. Explain supply chain and logistics

2. Key aspects of supply chain management

3. List and briefly explain current trends in supply chain management

4. Outline the benefits and risks related to outsourcing

5. Explain what supply chain risks are and what businesses can do to minimize those risks

6. Describe complexities related to global supply chains

7. Describe ethical issues in supply chains

Supply Chain Management (Ref. pg: 654)

• Supply Chain: the sequence of organizations - their facilities,

functions, and activities - that are involved in producing and

delivering a product or service

Competition is no longer between companies; it is between supply chains

• Logistics: is a part of supply chain involved with the forward and

reverse flow of goods, services, cash and information.

4

Supply Chain

A sequence of activities and

organizations involved in producing

and delivering a good or service

Operations and supply chains are

intrinsically linked

Suppliers’

suppliers

Direct

suppliers Producer Distributor

Final

customers A simple supply chain

Supply Chain Management?

Typical Supply Chains (Ref. pg: 655)

• Manufacturing Supply Chain

• Service Supply Chain

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Supplier 1

Supplier 2

Supplier 3

Storage Mfg. Storage Distribution Retailer Customer

Supplier 1

Supplier 3

Storage Service Customer

Supply Chain • Supply Chain Facilities

• Warehouses

• Factories

• Processing centers

• Distribution centers

• Retail outlets

• Offices

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Supply and Demand Chain (Ref. pg: 654)

• Supply Chain

• Starts at the beginning of the chain.

• Ends at the end of the internal operations of the organization.

• Demand Chain

• Starts where the output is delivered to its immediate customer

• Ends with the final customer in chain.

• Retailers and distribution centers are parts of the demand chain

• Value Chain

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Supply Chain Management (Ref. pg: 654)

The strategic coordination of business functions

within a business organization and throughout its

supply chain for the purpose of integrating supply

and demand management

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Key Aspects of Supply Chain Management (Ref. pg: 654)

• Determining the appropriate level of outsourcing

• Managing procurement

• Managing suppliers

• Managing customer relationships

• Identify problems and quickly respond to them

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Trends in SCM (Ref. pg: 655-657)

• Measuring supply chain ROI

• “Greening” the supply chain

• Re-evaluating outsourcing

• Integrating IT

• Managing risks

• Adopting lean principles

• Being agile

Global Supply Chain(Ref. pg: 659)

 Uses inputs from around the world

 Rely on outsourcing for economic reasons

 Products are sold globally

 Complexities

 Language and cultural differences

 Currency fluctuations

 Political instability

 High transportation costs and lead times

 Need for trust amongst supply chain partners

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ERP and Supply Chain Management (Ref. pg: 659) • What is ERP?

• Enterprise software that provides the ability to coordinate, monitor and manage various aspects of the supply chain

• Key SCM activities:

• SRM

• Performance Management

• Sales and Order fulfilment

• CRM

Ethics and the Supply Chain (Ref. pg: 660)

• Ethical Issues

• Bribery

• Exporting smoke stacks

• Ignoring health, safety and environmental standards

• Basic worker rights

• Mislabeling country of origin

• Sale of banned goods

• Need for a ethical supply chain code

• Risks of unethical behavior

• Steps to take