Supply Chain Management

1
Supply Chain Management

• EMBA/BUSN 653

2
Dont let me steal your joy!

• He has shown kindness by giving you rain from
  heaven and crops in their seasons he provides
  you with plenty of food and fills your hearts
  with joy.
• Acts 1417

3
OM Notes

• Read the discussion forums

4
Learning Objectives

• Apply Scriptural wisdom to organizational
  management issues.
• Introduce the concept of supply chain management
  and describe how it has changed the supplier
  relationship.
• Explain the requirements for the establishment of
  a successful supply chain.

5
Supply Chain Management

• Supply chain management has taken on increased
  importance in the recent years. One major reason
  for this growing recognition is that purchased
  materials and components represent an increasing
  percentage of the manufacturing cost of each
  item.

6
What is Supply Chain Management?

• Supply chain management is a relatively new
  concept in business. The supply chain can be
  defined as a group of firms that provide all the
  various processes required to make a finished
  product. The chain begins with raw material and
  ends with a finished product that is delivered to
  the final customer.

7
EXHIBIT 11.2 The Evolution of Supply Chain
Management
A) Isolating the Technical Core
Manufacturing facility
Core
Suppliers
Customer
Raw Material
Finished Goods
11-5
8
Problems with the old model

• Less responsive to changes in the market place
• Large inventories
• Adversarial relationships with suppliers
• Multiple suppliers
• Low cost was the bottom line

9
EXHIBIT 11.2 The Evolution of Supply Chain
Management continued
B) Introduction of JIT Concepts
Manufacturing facility
Suppliers (few)
Core
Customer
11-6
10
Benefits of the JIT concept

• More responsive to changing needs of customer
• Reduced inventories
• More dependent on suppliers
• Single logistics supplier
• Supplier has employees in the facility

11
EXHIBIT 11.2 The Evolution of Supply Chain
Management continued
C) The Use of a Single Logistics Partner
Manufacturing facility
Suppliers (few)
Logistics (inbound)
Logistics (outbound)
Core
Customer
11-7
12
EXHIBIT 11.2 The Evolution of Supply Chain
Management continued
D) The Use of a Single Logistics Partner
Manufacturing facility
Logistics (outbound)
Suppliers (few)
Core
Customer
11-8
13
Factors Impacting the Supply Chain

• Reduced Number of Suppliers
• Increased Competition
• Shorter Product Life Cycles
• Technology
• Shared or Reduced Risk

11-9
14
EXHIBIT 11.3 The Trend Toward Reducing the
Number of Suppliers
11-10
15
Requirements for a Successful Supply Chain

• Trust
• Long-Term Relationships
• Information Sharing
• Individual Strengths of Organizations

11-11
16
EXHIBIT 11.4 The Trade-off between
Transportation Costs and
the Cost of Capital
11-12
17
Total Cost

• TC Transportation Cost In-transit inventory
  carrying cost purchase cost
• TC DM (X/365) DC DC

18
Problem 1 -- Who wins?

• TC (OhiO) DC 100,000 40 4 million
• TC (Asia) DM (X/365)iDC DC
• 100,000 4.50 (42/365).2100,00035
• 100,00035 450,000322,1903,500,000
• 4.27 million

19
Questions

• The final exam! The final exam will be posted on
  November 16th. The exam is open book. However,
  it should be an individual effort.
• The completed exam should be submitted via the
  digital drop box no later than 2359 on December
  2, 2000.