CHAPTER 10 - EXTENDING THE ORGANIZATION - SUPPLY CHAIN MANAGEMENT

Basics of Supply Chain

·  Supply Chain - Consists of all parties involved,directly or indirectly, in the procurement of a product or raw material.

· Supply Chain management ( SCM ) - involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

The supply chain has three main links : -

·   Materials flows from suppliers and their upstream suppliers at all levels.

·   Transformation of material into semi-finished and finished products, or the organization's own production processes.

·   Distribution of products to customers and their downstream customers at all levels.

Typical Supply Chain

The Five Basic Supply Chain Management Activities

Information Technology's Role in the Supply Chain

- Information technology's primary role in SCM is creating the integrations or tight process and information linkages between functions within a firm.

The Integrated Supply Chain

 Factors Driving Supply Chain Management

• VISIBILITY - The ability to view all areas up and down the supply chain Changing supply chains requires a comprehensive strategy buoyed by information technology.

•  CUSTOMER BEHAVIOR - The behavior of customers has changed the way businesses compete. Customers will leave if a company does not continually meet their expectations.

•   COMPETITION - Supply chain management software can be broken down into (1) supply chain planning software and (2) supply chain execution software.

•   SPEED - New forms of servers, telecommunications, wireless applications and software are enabling companies to perform activities that were once never thought possible.

 Supply Chain Planning And Supply Chain Execution

Supply Chain Management Success Factors

KEYS TO SCM SUCCESS

1) 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.

2) Wean Employees Off 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.

3) Ensure The SCM System Supports The Organizational Goals - Gives organizations an advantages in the areas most crucial to their business success.

4) Deploy In Incremental Phases and Measure and Communicate Success - Design the deployment of the SCM system in incremental phases.

5) Be Future Oriented - The supply chain design must anticipate the future state of the business.