SUPPLY CHAIN MANAGEMENT – AN OVERVIEW

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SUPPLY CHAIN MANAGEMENT AN OVERVIEW

• Chwen Sheu
• Paul Edgerly Chair Professor
• Kansas State University
• (CSCMP Kansas City Roundtable)

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PRESENTATION OUTLINE

• SUPPLY CHAIN MANAGEMENT (SCM) INTRODUCTION
• WHY IS SCM IMPORTANT?
• GREEN SUPPLY CHAIN MANAGEMENT

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1. SUPPLY CHAIN MANAGEMENT (SCM)
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SEARCHING SUPPLY CHAIN MANAGEMENT
Yahoo?
Google
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WHAT IS SCM?

• Supply Chain
• A network of of suppliers, manufacturers,
  warehouses, 3PL, retail outlets, customers.
• Supply chain management (SCM)
• The management of flows between and among supply
  chain stages to maximize total supply chain
  profitability

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Traditional Supply Chain Systems
Supplier Manufacturer
Manufacture Wholesale Retail
Customer (1st,2nd,) Plant
Distribution Distribution
Center Center
Reverse Logistics
3rd Party Logistics Providers (3PL)
Material Flow Information Flow
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BEEF SUPPLY CHAIN
Seedstock
Cow/Calf
Stocker
Feedlot
Packer
Processor
Retailer
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IC SUPPLY CHAIN
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IC???
IC ?????
? ?
OEM
IBM
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SCM Survey 2004 IT Industry (236 firms)
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How IMPORTANT is the SC function to your
organization's business strategy ?
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Who is directly RESPONSIBLE for determining your
SC operations?
Up from 14.2 in 2003
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Compared to 2003, how is your SPENDING on SC
likely to change in 2004?
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II. SCM WHY IS IT IMPORTANT?
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SCM ITS A NEW BALL GAME

• Improves Competitiveness
• Efficiency
• Cost Lean manufacturing ? Lean supply chain
  (e.g., Boeing)
• Responsiveness
• Customization (e.g., Dell)

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Efficiency Boeing Example
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Responsiveness Dell

• Why SCM?
• A win-win partnership
• Value-added

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We focus on how we can coordinate our
activities to create the most value for
customers. - M. Dell
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(No Transcript)
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CREATING VALUES
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Implementing SCM requires a fundamental change in
the way firms operate
Gee, we've never done that before, but why not?
Let's give it a try.
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PARTNERSHIP Bullwhip Effect

• PG found that
• Demand variability (Pampers) increases for SC
  members located farther upstream (110)

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What You See Is Not What They Face
Lee, H, P. Padmanabhan and S. Wang (1997), Sloan
Management Review
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III. GREEN SUPPLY CHAIN MANAGEMENT (GSCM)
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GSCM SCM EM
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I think God's going to come down and pull
civilization over for speeding. Steven
Wright
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ENVIRONMENTAL MANAGEMENT? WHY?

• 12 tons of CO2 per capita are produced per year.
  Only 8 of this emission is managed by nature.
• The average temp of the Earth could raise up to
  5ºC by the end of 21 century ? Sea level could
  rise up to 100 meters.
• A visit to Amsterdam could be soon a submarine
  visit.

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EM? WHY?

• 60 of managers considered environmental issues
  to be highly important, 82 expected the
  importance would further increase in the years to
  come (2002).
• a new industrial revolution. It is the most
  forceful trend in my lifetime ... it will
  redefine the rules of the game. (CEO, Sony)

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RoHS
EuP
WEEE
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Waste Electrical and Electronic Equipment (WEEE)
Restriction of Hazardous Substances (RoHS)
Energy-using Products (EuP)
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EM DEVELOPMENT

• USA
• Total cost of compliance over the past 25 years
  have exceeded 1 trillion (120 billion
  annually).
• 1970s 2000 federal, state, and local
  e-regulations Today 100,000. Business in LA
  must answer up to 72 separate authorities.
• Computer Takeback Among 28 global computer
  firms, U.S. computer firms rank 9th (Apple), 11th
  (HP).
• 80 of consumer are willing to pay more for
  green.
• Dow Jones Sustainability Index
• It's a difficulty for European firms, and it's a
  huge difficulty for American firms.

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EM DEVELOPMENT

• Japan
• 63 of Japanese consumers are willing to pay 5
  more, 27 pay 15 more for green products.
• Green Products
• Toyota Hybrid Prius uses half the petrol emits
  only half the carbon dioxide.
• Sony Green Partner
• Europe
• No kidding!!!

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TOYOTA Eco-Friendly Prius 20,000
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EM TQM

• Total Quality Environmental Management (TQEM)
• Prevention is better than compliance
• Continuous improvement innovation technology,
  process, design, material
• Must involve suppliers
• Benefit outweighs cost ? EM Is Free

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EM BUSINESS IMPACTS

• Pepsi Saved 44 million by switching from
  corrugated to reusable plastic shipping
  containers for one liter 20 oz bottles,
  conserving 196 million lb of corrugated material.

• Texas Instruments Saved 8 million each year by
  reducing its transit packaging budget for its
  semi-conductor business thru source reduction,
  recycling use of reusable packaging.

• Commonwealth Edison Produced 50 million in
  financial benefits from the implementation of
  Life-Cycle Analysis approach.

• Dow Corning Saved 2.3 million by using
  reconditioned steel drum in 1995. It also
  conserved 7.8 million lb of steel.

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GSCM LIFE CYCLE ANALYSIS/ASSESSMENT
Recycle Reuse Disposal
Retailer/Customer
Design
Raw Mat.
Logistics
Manufacture
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CRISIS? OPPORTUNITY?
THE WORST TIME
THE BEST TIME
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We are convinced that being good to the
environment is also good for business and have
every intention of keeping it that way. -
1997 Xerox EHS Progress Report