decision analysis

1
Lecture
6
BSB 370 Supply Chain Management Chapter 11
2
Supply Chain Management

• Supply Chain the sequence of organizations -
  their facilities, functions, and activities -
  that are involved in producing and delivering a
  product or service.

Sometimes referred to as value chains
3
Facilities

• Warehouses
• Factories
• Processing centers
• Distribution centers
• Retail outlets
• Offices

4
Functions and Activities

• Forecasting
• Purchasing
• Inventory management
• Information management
• Quality assurance
• Scheduling
• Production and delivery
• Customer service

5
Typical Supply Chains
6
Typical Supply Chain for a Manufacturer
Figure 11.1a
7
Typical Supply Chain for a Service
Figure 11.1b
8
Need for Supply Chain Management

1. Improve operations
2. Increasing levels of outsourcing
3. Increasing transportation costs
4. Competitive pressures
5. Increasing globalization
6. Increasing importance of e-commerce
7. Complexity of supply chains
8. Manage inventories

9
Bullwhip Effect
Figure 11.3
Demand
InitialSupplier
Final Customer
Inventory oscillations become progressivelylarger
looking backward through the supply chain
10
Benefits of Supply Chain Management
Organization Benefit
Campbell Soup Doubled inventory turnover rate
Hewlett-Packard Cut supply costs 75
Sport Obermeyer Doubled profits and increased sales 60
National Bicycle Increased market share from 5 to 29
Wal-Mart Largest and most profitable retailer in the world
11
Benefits of Supply Chain Management

• Lower inventories
• Higher productivity
• Greater agility
• Shorter lead times
• Higher profits
• Greater customer loyalty
• Integrates separate organizations into a cohesive
  operating system

12
Global Supply Chains

• Increasing more complex
• Language
• Culture
• Currency fluctuations
• Political
• Transportation costs
• Local capabilities
• Finance and economics
• Environmental

13
Elements of Supply Chain Management
Table 11.1
14
Strategic or Operational

• Two types of decisions in supply chain management
• Strategic design and policy
• Operational day-today activities
• Major decisions areas
• Location
• Production
• Inventory
• Distribution

15
Supply Chain Issues
16
Supply Chain Benefits and Drawbacks
Table 11.5
Possible Drawbacks
Benefits
Potential Improvement
Problem
Traffic congestion Increased costs
Reduced holding costs
Smaller, more frequent deliveries
Large inventories
May not be feasible May need absorb functions
Quick response
Delayed differentiation Disintermediation
Long lead times
Less variety
Fewer parts Simpler ordering
Modular
Large number of parts
Loss of control
Reduced cost, higher quality
Outsourcing
Cost Quality
Less variety
Able to match supply and demand
Shorter lead times, better forecasts
Variability
17
Logistics

• Logistics
• Refers to the movement of materials and
  information within a facility and to incoming and
  outgoing shipments of goods and materials in a
  supply chain

18
Logistics

• Movement within the facility
• Incoming and outgoing shipments
• Bar coding
• EDI
• Distribution
• JIT Deliveries