Chapter 10 Extending the Organization--Supply Chain Management

Learning outcomes 10.1 List and describe the components of a typical supply chain. 10.2 Define the relationship between ecision making and supply chain management. 10.3 Describe the four changes resulting from advances in IT that are driving supply chains. 10.4 Summarize the best practices for implementing a successful supply chain management system.       Supply Chain Management - Companies that excel in supply chain operations perform better in almost every financial measure of success, according to a report from Boston-based MR Research Inc. - These companies understand that value chain performance translates to productivity and market-share leadership. Basics of Supply Chain - A supply chain consists of all parties involved, directly or indirectly, in the procedurement of a product or raw material. - Organization must embrace technologies that can effectively manage and oversee their supply chain. - supply chain management involves the management of information flow between and among stages in a supply chain to maximize total supply chain effectiveness and profitability. - SCM is becoming increasingly important in creating organizational efficiencies and competitive advantages. - It improves ways for companies to find the raw components they need to make a product or service, manufacture that product or service, and deliver it to customers. Information Technology's Role in the Supply Chain - The notion of virtually seamless information links within and between organizations is an essential element of integrated supply chain. - Information technology's primary role in SCM is creating the integration or tight process and information linkages between functions within a firm. - Information technology integrates planning, decision -making processes, business operating processes, and information sharing for business performance management. - Considerable evidence shows that this type of supply chain integration results in superior supply chain capabilities and profits. +VISIBILITY Supply chain visibility is the ability to view all areas up and down the supply chain. Bullwhip effect occurs when distorted products demand information passes from one entity to the next through the supply chain. *Information technology allows additional visibility in the supply chain. +CONSUMER BEHAVIOR Demand planning software generates demand forecasts using statistical tools and forecasting techniques. Ones an organization understand customer demand and its effect on the supply chain it can begging to estimate the impact that its supply chain will have on its customers and ultimately the organization's performance. + COMPETITION Supply chain management can be broken down in" Supply chain planning software: uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy. Supply chain executive (SCE) software automates the different stems and stages of the supply chain. +SPEED During the past decade, competition has focused on speed. New forms of severs, telecommunications enabling companies to perform activities that were once never thought possible. Another aspect of speed is the company's ability to satisfy continually changing customer requirements efficiently, accurately, and quickly. Supply Chain Management Success Factors To succeed in today's competitive markets, companies must align their supply chains with the demands of the markets key serve. To achieve success such as reducing operation costs, improving asset productivity, and compressing order cycle time, and organization should follow the seven principles of SCM outlines. One of the benefits is to know immediately what is being transacted at the customer and of the supply chain instead of waiting days or weeks for the information to flow. Organizations should study industry best practices to improve their chances of successful implementation of SCM systems. The following are keys to SCM success. + MAKE THE SALE TO SUPPLIERS The hardest part of any SCM system is its complexity because a large part of the system extends beyond the company's walls. + WEAN EMPLOYEES OF TRADITIONAL BUSINESS PRACTICES Operations people typically deal with phone calls, faxes, and orders scrawled on paper and will most likely want to keep it that way. +ENSURE THE SCM SYSTEM SUPPORTS THE ORGANIZATIONAL GOALS It is important to select SCM software that give organizations and advantage in the areas most crucial to their business success. + DEPLOY IN INCREMENTAL PHASES AND MEASURE AND MOMMUNICATE SUCCESS Design the deployment of the SCM system in incremental phases. + BE FUTURE ORIENTED The supply chain design must anticipate the future state of the business. SCM Success Stories The following picture depicts the top reasons more and more executives are turning to SCM to manage their expended enterprises. This is a list of several companies using supply chain management to drive operations. Dell: Business grows 17 percent per year with a $40 billion revenue base. Nokia: Supply chain best practices are turning ideas into profitable businesses Procter&Gamble: Consumer-driven supply chain is the defining architecture for large consumer companies. Best practice in product innovation and supply chain effectiveness are tops. IBM: Hardware supply chain product-development processes overhauled to the tune of 70 percent better, faster and cheaper. Wal-Mart Stores: Every low price defines the customers demand driving Wal-Mart's partner integrated supply chain. Toyota Motor: Lean is one of the three best practices associated with benchmarked supply chain excellence.

supply chain management