Give a restaurant then discuss supply chain management Phyllis young only

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Level Two
Supply Chain Management

Supply Chain Management II

Learning Objectives

  • To understand supply chain management beyond the traditional model.
  • To appreciate the complexity of meeting customers requirements.

Definition

  • The management of activities that produce materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system.

Heizer and Render (2010)

SCM Activities

  • Purchasing
  • Distribution
  • Production
  • Materials management
  • Supplier management
  • Customer management

The Supply Chain

Taken from Slack (2010)

Purchasing

  • The function responsible for buying all the materials needed by an organisation.

Waters (2008)

  • Procurement is a wider term. Rental, contracting, legalities etc

Purchasing

  • The link between the suppliers and the operation.
  • Need to understand the requirements of processes
  • And, the capability of potential suppliers.
  • Large number of suppliers used and available
  • Managing
  • Decisions
  • Implications of e-procurement

Purchasing - Example

  • Total Sales - £10,000,000
  • Purchased services and materials - £7,000,000
  • Salaries - £2,000,000
  • Overheads - £500,000
  • Profit = £500,000

Purchasing - Example continued

  • Profits could be doubled to £1 million if any of the following occur:
  • Sales revenues increase by up to 100%
  • Salaries decrease by 25%
  • Overheads decrease by 100%
  • Purchase costs decrease by 7.1%

Selecting Supplier

  • Difficult decisions
  • Trade offs
  • Scoring and supplier assessment
  • One supplier or multiple suppliers?
  • Change and risk

Supplier Management

Factors for rating alternative suppliers
Short-term ability to supply Long-term ability to supply
Range of products or services provided Potential for innovation
Quality of products or services Ease of doing business
Responsiveness Willingness to share risk
Dependability of supply Long-term commitment to supply
Delivery and volume flexibility Ability to transfer knowledge as well as products and services
Total cost of being supplied Technical capability
Ability to supply in the required quantity Operations capability Financial capability Managerial capability

Supplier Management

  • Suppliers selected based upon trade offs.
  • Supplier scoring / assessment.
  • One or multiple suppliers.
  • Meeting business needs.
  • Need to audit.
  • Long term suppliers and improvements.

Distribution

  • Physical distribution management, logistics or distribution.
  • Logistics is the function responsible for all aspects of of the movement and storage of materials on their journey from original suppliers through to final customers. (Waters 2008)
  • Aims to obtain efficiency through the integration of all material acquisition, movement and storage activities. (Heizer and Render 2010)

Distribution

  • Distribution methods
  • Road
  • Rail
  • Sea
  • Air
  • Pipe
  • Third party logistics providers
  • Information and customer service implications/expectations e.g. order tracking.

Materials Management

  • Limited term - controls the movement of materials within an organisation. Waters 2008
  • Concerned with the flow of materials and information through the immediately supply chain
  • First tier supplier
  • Manufacturer
  • First tier customer

Material Management

  • Specialist software sometimes used
  • What materials are required?
  • When and where do you need the materials?
  • How will you use the materials? What do they have to be combined with?
  • What is done with the materials after use?

Customer Relationship Management

  • A method of learning more about customers' needs and behaviours in order to develop stronger relationships with them. Slack et al 2013
  • Data collected from loyalty cards

Customer Relationship Management

  • Helps to sell products and services more effectively and increase revenues by:
  • Providing services and products that are exactly what your customers want.
  • Retaining existing customers and discovering new ones.
  • Offering better customer service.
  • Cross-selling products more effectively.

Slack 2010

Customer Relationship Management

  • Why is CRM important to SCM?
  • SCM is about meeting the needs of customers.
  • Allows us to plan production and demand levels.
  • However,
  • Consider the effectiveness of meeting customer needs.
  • A tool for increasing profit and exploiting customers?

Tiers and Integration

  • Common in more complex supply chains in automotive or aerospace industries.
  • OEMs
  • Tiers - how many stages to or from the OEM

Supply Chain Integration

  • Horizontal Integration - expansion of the business at the same point in the supply chain.
  • Vertical Integration - expansion along the supply chain. Can be on the supply or demand side (up or downstream).
  • Examples of vertical integration:
  • BP / Shell
  • Dell Computers

Vertical (Supply Chain) Integration

  • Benefits
  • Greater levels of control
  • Cost benefits
  • Competitive advantage
  • Drawbacks
  • Expensive
  • Difficult to reverse

To Do

  • Reading
  • Refer to the weekly reading list
  • Online activity
  • Details on moodle

Today.....

  • We now:
  • Understand supply chain management beyond the traditional model.
  • Appreciate the complexity of meeting customers requirements.

References

Heizer, J., and Render, B. (2010) Operations Management. 10th edn. Harrow: Pearson

Slack, N., Brandon-Jones, A., and Johnston, R. (2010) Operations Management. 6th edn. Harrow: Pearson

Slack, N., Brandon-Jones, A., and Johnston, R. (2013) Operations Management. 7th edn. Harrow: Pearson

Waters, D. (2008). Supply Chain Management: An Introduction to Logistics. 2nd edn. London: Palgrave