Supply Chain Management

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CHAPTER 10

• Supply Chain Management

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CHAPTER OUTLINE

• 10.1 Supply Chains
• 10.2 Supply Chain Management
• 10.3 Information Technology Support for Supply
  Chain Management

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LEARNING OBJECTIVES

• Define the term supply chain, and discuss the
  three components of a supply chain.
• Define supply chain management, and understand
  its goals.
• Identify various problems that can occur along
  supply chains.
• Explain how information technology supports
  supply chain management.

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Chapter Opening Case
Film camera
Digital camera
Movies sent over fiber optic cables
Movies sent with encrypted disks
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10.1 Supply Chains
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Generic Supply Chain
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Supply Chain (recall Figure 2.2)
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The Flows of the Supply Chain
Material flows
Information flows
Financial flows
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10.2 Supply Chain Management

• Supply chain management (SCM)
• Interorganizational information system (IOS)

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Push Model
Mass production
Forecast
Salesperson
Happy customer
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Pull Model
Dell factory
Dell customer order
Dell customer
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Problems Along the Supply Chain

• Poor customer service
• Poor quality product
• High inventory costs
• Loss of revenues
• New technologies

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The Bullwhip Effect
Order Quantity
Order Quantity
Order Quantity
Order Quantity
Time
Time
Time
Time
Customer Sales
Retail Orders To Wholesaler
Wholesaler Orders to Manufacturer
Manufacturer Orders to Supplier
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Solutions to Supply Chain Problems

• Using inventories
• Just-in-time inventory
• Information sharing
• Vendor-managed inventory

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10.3 Information Technology Support for Supply
Chain Management

• Electronic data interchange (EDI)
• Extranets

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EDI Benefits

• Minimize data entry errors
• Length of messages are shorter
• Messages are secured
• Reduces cycle time
• Increases productivity
• Enhances customer service
• Minimizes paper usage and storage

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EDI Limitations

• Significant initial investment to implement
• Ongoing operating costs are high due to the use
  of expensive, private VANs
• Traditional EDI system is inflexible
• Long startup period
• Multiple EDI standards exist

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Comparing Purchase Order Fulfillment Without EDI
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Comparing Purchase Order Fulfillment With EDI
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Extranets

• The main goal of extranets is to foster
  collaboration between business partners.
• An extranet is open to selected B2B suppliers,
  customers and other business partners.

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The Structure of an Extranet
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Types of Extranets

• A company and its dealers, customers or suppliers
• An industrys extranet
• Joint ventures and other business partnerships

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Chapter Closing Case