Supply Chain Management
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Supply Chain Management Supply Chain Management Document Transcript

  • FROM THE BOOKSHELF ■ PETER T. ITTIG, Feature Editor, College of Management, University of Massachusetts, Boston Supply Chain Management by Terry P. Harrison, Smeal College of Business, Pennsylvania State University T o a certain extent, all book reviews reflect the biases of the reviewer. When considering supply chain texts, I tion but rather take a balanced end-to- end supply chain perspective. With this introduction, I provide a review and an have a particularly strong set of biases, opinion on three texts. They are: so let me make those clear up front. I am Principles of Supply Chain Manage- in a supply chain department that was ment—A Balanced Approach by Joel formed about five years ago in the D. Wisner, G. Keong Leong, merger of a management science/op- and Keah-Choon Tan (Thomson/ erations management department and South-Western, 2005, ISBN 0-324-19187-1). a business logistics department. When we first merged, we adopted the Sup- Supply Chain Management—Strategy, ply Chain Operating Reference (SCOR) Planning & Operations (3rd ed.) by model as the primary organizing prin- Sunil Chopra and Peter Meindl ciple ( Our (Pearson/Prentice Hall, 2007, ISBN 0-13-173042-8). thinking was that if we were telling our students to take an end-to-end view of Strategic Supply Chain Management the supply chain, we at least ought to by Shoshanah Cohen and Joseph organize ourselves the same way. We Roussel (McGraw-Hill, 2005, continue to use the Plan/Source/ ISBN 0-07-143217-5). Make/Deliver/Return view of the sup- ply chain. It has been useful, difficult, Principles of Supply Chain Terry P. Harrison and instructive to do so. Almost every- Management (PSCM) is the Earl P. Strong Execu- one came to the merger from either a The fundamental premise of this text is tive Education Professor of manufacturing/operations or logistics/ to present a “balanced” approach to Business and Professor of transportation heritage. So the tendency supply chain management and the or- Supply Chain and Informa- was (and still remains) for each person tion Systems in the Supply ganization of the text reflects that focus. Chain and Information Sys- to fundamentally view supply chain The chapters are aggregated into five tems Department, Smeal Col- issues from their “roots.” I suspect that “parts”: lege of Business, Pennsylvania over time this tendency will dissipate State University. He currently serves as vice but supply chain management is still 1. Supply Chain Management: An president of publications for INFORMS and new enough as a discipline that most Overview previously completed two terms as editor-in- chief of Interfaces. His publications have ap- faculty members in supply chain de- 2. Purchasing Issues in Supply Chain peared in Decision Sciences, Management partments have their academic tradi- Management Science, Operations Research, Interfaces, tions in a related but different area. I Decision Support Systems, European Jour- view supply chain texts in a similar 3. Operations Issues in Supply Chain nal of Operations Research, among others. way. Many are either are an expanded Management He was a co-recipient of the Best Application Paper Research Award at the 2005 Decision version of a logistics text or an opera- 4. Distribution Issues in Supply Chain Sciences Institute annual meeting. His research tions management text. The text Supply Management focuses on variable aspects of supply chain man- Chain Logistics Management, by agement, including network design, supply chain Bowersox, Closs, and Cooper, is an ex- 5. Sustaining Competitive Advantage. vulnerability and risk and coordination issues in ample of the former, while the new text supply chain management. He has consulted for a number of Fortune 100 firms and is a fre- Operations and Supply Chain Manage- Supply Chain Management: An Overview quent speaker in executive management pro- ment: The Core, by Jacobs and Chase, is This section is composed of a single, grams. an example of the latter. In my view, the introductory chapter, which lays out the best supply chain texts do not have this fundamental definitions, concepts and logistics or operations primary orienta- Decision Line, March 2007 21
  • strategic view of sourcing, including Distribution Issues in Supply Chain developing sourcing plans, perfor- Management mance criteria, auctions and partner- This portion of the text has four chap- ships. ters. They are: Operations Issues in Supply Chain 1. Domestic and International Trans- Management portation Part 3 of the text has four chapters: 2. Customer Relationship Manage- ment 1. Demand Forecasting and Collabo- rative Planning, Forecasting and 3. Facility Location Decisions Replenishment 4. Service Response Logistics. 2. Aggregate Planning and Inventory The transportation chapter pro- Management vides coverage of transportation modes, 3. Enterprise Resource Planning third part providers, regulation, inter- Systems national issues and the integration of Principles of Supply Chain Management: transportation, warehousing, and ma- 4. Process Management: Just-in-Time A Balanced Approach terial handling. The Customer Relation- and Total Quality Management by Joel D. Wisner, G. Keong Leong, and ship Management (CRM) chapter Issues in Supply Chain Manage- Keah-Choon provides a high level discussion of the ment. South-Western role and components of CRM, imple- , 528 pages, 2005, $115.95 The first chapter in this section is mentation issues and popular CRM divided into two portions. The first part software. The facility location chapter covers forecasting. It is presented at a discusses the strategic issues in the use issues of supply chain management. It level appropriate for undergraduates of facilities in the supply chain. It also does a good job of creating a founda- and focuses on moving average, expo- has a curiously out of place section on tion for the remainder of the book. There nential smoothing, and linear trend simplistic facility location models. is also an appendix describing the me- time series models. It also includes a Lastly, the service response logistics chanics of performing a “Beer Game” discussion of forecasting accuracy. The chapter is the sole source of a discus- exercise. second part on CPFR gives a high level sion of services supply chains—an in- view of the process and a quick review creasingly important aspect of supply Purchasing Issues in Supply Chain of CPFR software. chain management. Management The aggregate planning discussion Three chapters form the basis of this covers the basics of master production Sustaining Competitive Advantage section. They are: scheduling, ATP, bill of materials, de- Part 5 of the text concludes with three pendent versus independent demand, chapters: 1. Purchasing Management and MRP. The coverage is high level and 2. Creating and Managing Supplier appropriate for an undergraduate SCM 1. Supply Chain Process Integration Relationships text. The remainder of the chapter 2. Performance Measurement Along briefly covers inventory management the Supply Chain 3. Strategic Sourcing for Successful with a primary focus on the EOQ model. Supply Chain Management 3. Looking to the Future of Supply The ERP chapter provides a discussion The purchasing chapter describes of the basic aspects of enterprise re- Chain Management. the fundamental processes and impact source planning, the motivation for us- The first chapter in this section pro- of purchasing activities in an easy-to- ing an ERP system and a brief review of vides a conceptual review of key inte- read fashion. It is appropriately detailed the most popular ERP software sys- gration concepts—aligning supply for a supply chain text. The next chap- tems. The final chapter in this section chain strategy with objectives, customer ter explores the motivation and impor- on process management covers the ba- relationship management, customer tance of various aspects of supplier sics of JIT and TQM, along with very service management, demand manage- relationships such as supplier evalua- brief coverage of statistical process con- ment, order fulfillment, manufacturing tion and certification, supplier awards, trol. flow management, supplier relation- strategic alliances, and supplier rela- ship management, product develop- tionship management software. The fi- ment, and returns management. The nal chapter in this section covers the next chapter discusses the importance 22 Decision Line, March 2007
  • of supply chain metrics, covers finan- cel-based examples to supplement the cial and non-financial performance concepts and models. At its most tech- measures and provides brief coverage nical level, the models in these chap- of the “Balanced Scorecard” and “Sup- ters are appropriate for a second level ply Chain Operating Reference (SCOR) MBA elective course in supply chain model.” The final chapter of this sec- management. tion and the text is a look to the future The third part, “Planning Demand with a discussion on the increasingly and Supply in a Supply Chain” has global nature of supply chains, the im- three chapters: “Demand Forecasting in portance of environmentally respon- a Supply Chain,” “Aggregate Planning sible SCM, outsourcing and cost in a Supply Chain,” and “Planning reduction. Each chapter of the text ends Supply and Demand in a Supply Chain: with a list of key terms, discussion ques- Managing Predictable Variability.” The tions and references. Frequently there forecasting chapter is divided into three are “Internet questions” which require main parts. The first section of the chap- some online use and there may be ter focuses on time series forecasting, “Spreadsheet Problems” which require including a nice Excel-based example. a spreadsheet model to solve. There are The next part of the chapter discusses also “Problems” which are more tradi- measures of forecast error. The final tional exercises to develop skills in a Supply Chain Management: Strategy, portion of the chapter is in in-depth particular concept. Some chapters also Planning & Operations (3rd ed.) Excel-based example of various expo- have brief cases, which are appropriate by Sunil Chopra, Peter Meindl nential smoothing techniques. The ag- for discussion at the undergraduate Prentice Hall gregate planning chapter is centered on level. Overall, these various aspects col- 552 pages, 2007, $140 a linear programming formulation to lectively form a strong undergraduate determine workforce levels over time. textbook that fulfills the promise of the Again, it is developed using a spread- title—”A Balanced Approach.” sheet model and invokes the “solver” In the first part, “Building a Strate- feature of Excel. The last chapter in this Supply Chain Management— gic Framework to Analyze Supply section extends the aggregate planning Strategy, Planning & Operations Chains,” the authors have three largely model to address variability in demand (SCMSPO) introductory chapters that orient the that can be forecasted. reader to particular views of supply Part 4 is titled “Planning and Man- This text, now in its third edition, pro- chain organization. These are “Under- vides an excellent integrated view of aging Inventories in a Supply Chain” standing Supply Chains,” “Supply and has three chapters titled “Manag- supply chain management. It is appro- Chain Performance: Achieving Strate- priate for use at the advanced under- ing Economies of Scale in a Supply gic Fit and Scope,” and “Supply Chain Chain: Cycle Inventory,” Managing graduate level, and is particularly well Drivers and Metrics.” Collectively, this suited for an MBA course. Uncertainty in a Supply Chain: Safety section does a good job of providing a Inventory,” and Determining the Opti- SCMSPO is organized into six parts high level, end-to-end view of supply or themes, with each part comprising mal Level of Product Availability.” The chain organization and execution and first chapter focuses on developing the multiple chapters. These are: provides a structure for the remainder base method for determining inventory 1. Building a Strategic Framework to of the text. levels using the EOQ model. The treat- Analyze Supply Chains The second part, “Designing the ment is in-depth and well written. This Supply Chain Network,” has three base model is then extended in a num- 2. Designing the Supply Chain chapters: “Designing Distribution Net- Network ber of practical ways. The chapter fin- works and Applications to e-Business,” ishes with a nice discussion of 3. Planning Demand and Supply in a “Network Design in the Supply Chain,” multi-echelon inventory consider- Supply Chain and Network Design in an Uncertain ations. The “safety inventory” chapter Environment.” All of these chapters take motivates the use of safety stock to 4. Planning and Managing Invento- a strategic view and discuss key sup- ries in a Supply Chain handle demand uncertainty and devel- ply chain performance levers and ops a series of Excel-based models to 5. Designing and Planning Transpor- metrics related to the physical arrange- address a number of issues and exten- tation Networks ment of facilities and infrastructure. The sions. This chapter is among the most chapters in this section, as is true for technical in the text and may be a 6. Managing Cross-Functional Drivers the entire text, have many excellent Ex- in a Supply Chain Decision Line, March 2007 23
  • stretch for all but the most quantitative contained in the text. The second defi- MBAs. The final chapter in this section ciency is a relatively small set of prob- integrates inventory issues and levers lems at the end of each chapter. An into a development of approaches to instructor using this text will need to determine optimal levels of product augment the material in these two ar- availability. It does a good job of outlin- eas. This is somewhat offset by a com- ing the tradeoffs and managerial im- panion instructor ’s manual that pacts of setting customer service levels. includes a sample syllabus, additional The fifth section, “Designing and readings and case suggestions, along Planning Transportation Networks,” is with PowerPoint slides, and solutions composed of a single chapter titled to exercises. “Transportation in Supply Chains.” This relatively brief chapter covers Strategic Supply Chain Management mode selection, transportation infra- (SSCM) structure and policies, and shipping SSCM is not a textbook in a traditional tradeoffs. It is the least detailed section sense. Its authors are partners at the of the text. consulting firm PRTM. They have a The last section, “Managing Cross- wealth of supply chain experience over Functional Drivers in a Supply Chain” an extended period of time and bring has four chapters: “Sourcing Decisions that experience to their book in a useful in a Supply Chain,” “Pricing and Rev- and instructive way. PRTM was one of enue Management in a Supply Chain,” the founding organizations that helped Strategic Supply Chain Management: The “Information Technology in a Supply Five Disciplines for Top Performance to develop the SCOR model, and SSCM Chain,” and “Coordination in a Sup- by Shoshanah Cohen, Joseph Roussel does an excellent job of adopting an end- ply Chain.” Each chapter is a relatively McGraw-Hill to-end view of the supply chain. 316 pages, 2005, $44.95 stand-alone unit. The sourcing chapter SSCM is a mixture of chapters on briefly covers the basics of sourcing is- core strategic principles of supply chain sues. It does, however, have excellent management, intermixed with com- comments about the company and move sections on procurement auctions and pany “profiles” focused on particular to more in-depth discussion around the supply contracts. The pricing and rev- issues. The seven company profiles are: particular issue. Collectively, they are enue management chapter is a welcome an engaging set of reports on current addition to a supply chain text. Revenue 1. Eli Lilly – Supporting product practice in the context of contemporary management falls in the area between lifecycles with supply chain supply chain issues. marketing and supply chain manage- management SSCM also contains three detailed ment. While it is a key technique for 2. Autoliv – Applying rocket science appendices. The first, “Source and matching supply and demand, it is of- to the supply chain Methodology for Benchmarking Data,” ten overlooked by both disciplines. The describes the history and development Information Technology chapter is brief 3. Avon – Calling on customers cost- of benchmarking data presented and hit the highlights of the role of IT in effectively throughout the book. Appendix B is a supply chain management. It also cov- 4. Owens Corning – Reorganizing for brief discussion of the “Supply Chain ers major classes of supply chain soft- “a bright future” Maturity Model,” which is a method ware. Lastly, the coordination chapter “used to assess the stage of capability covers an extremely important view of 5. U.S. Department of Defense – for each of the four processes defined the management of an end-to-end sup- Making the tail smaller and the by the Supply-Chain Operations Refer- ply chain. In particular, it looks at the tooth stronger ence model (SCOR).” The final appen- Bullwhip effect, the cost drivers of poor 6. General Motors – Driving customer dix is a collection of detailed tables and coordination, and the role of incentives, satisfaction figures that provide a comparison of CPFR, VMI, and supplier relationships. characteristics for levels 2 and 3 of Each successive edition of this ex- 7. Seagate – Real time response to SCOR metrics. cellent text has expanded and im- demand The bulk of SSCM is the following proved on the prior version. It is a The profiles vary from 7-15 pages collection of five forward-looking chap- relatively complete text that is well writ- in length, so they are somewhat limited ters that address core supply chain dis- ten and presented at the MBA level. in detail. However, each is a well-writ- ciplines: There are a few areas that the text lacks. ten introduction to the firm or organi- One drawback is the rather short cases zation. The profiles start with broad 24 Decision Line, March 2007
  • 1. View Your Supply Chain as a ply chain performance with various grated end-to-end supply chain view. Strategic Asset organizational concepts. There are also some other texts that are strong contenders for adoption in a sup- 2. Develop an End-to-End Process Build the Right Collaborative Model ply chain management course, depend- Architecture The first sentence in this chapter is “Col- ing on the orientation. In random order, 3. Design Your Organization for laboration is the cornerstone of effective they are: Performance supply chain management.” Building Matching Supply with Demand—An on this principle, this chapter describes Introduction to Operations Management, 4. Build the Right Collaborative Model various forms of collaboration with a by Gerard Cachon and Christian 5. Use Metrics to Drive Business Terwiesch (McGraw-Hill Irwin, 2006, focus on how to find the right collabo- Success ISBN 0-07-291899-3). rative model for a given organization. Like the other chapters, there are many Designing and Managing the Supply View Your Supply Chain as a Strategic small examples of collaboration mixed Chain, by David Simchi-Levi, Philip Asset in with the discussion. Kaminsky, and Edith Simchi-Levi (McGraw-Hill Irwin, 2002, 2nd ed., This chapter discusses the reasons for ISBN 0-07-249256-2). Use Metrics to Drive Business Success viewing an organization’s supply chain I subscribe to the view “If you can’t Modeling the Supply Chain, by Jeremy as a strategic asset and how it can serve F. Shapiro (Duxbury, 2001, ISBN 0- as a competitive weapon. It discusses measure it, you can’t manage it.” This 534-37363-1). ■ alignment of corporate strategy with chapter is a rich discussion of the many supply chain strategy and then drills kinds of metrics that can be used to as- sess supply chain performance. In ad- Members of DSI are invited to suggest books down to various kinds of finer grained dition, the authors describe where the that should be reviewed in this column and issues such as channel strategy, various metrics are useful and how to reviewers to review them. Send suggestions outsourcing strategy, customer service craft a set of performance measures that to the Feature Editor. strategy, etc. The chapter sets the stage for the chapters to follow by laying out help to shape supply chain improve- ment. Peter T. Ittig, Feature Editor a framework for viewing the big picture What audience does this book ad- College of Management issues. dress? First, it assumes a rather high University of Massachusetts Develop an End-to-End Process level of supply chain knowledge, and Boston, MA 02125-3393 Architecture further, it requires a fair amount of ex- This chapter describes the following key perience to appreciate the finer points tests for effective supply chain architec- of the discussion. So while it might be appropriate for a second course in sup- ture: ply chain management at the MBA NAMES IN THE NEWS 1. The test of strategic fit level, it is really most appropriate for 2. The test of end-to-end focus the person who is already working as a Enar Tunc has been supply chain professional. It is also a named the vice presi- 3. The simplicity test great addition for the academic who dent for academic af- 4. The integrity test. wishes to add depth to their apprecia- fairs and the dean of tion of strategic supply chain manage- faculty of economics Each of these tests is discussed in ment. and administrative detail with an emphasis on best prac- sciences at Kadir Has tices in the area. The chapter concludes Final Thoughts University, Istanbul, Turkey. Tunc with an extended description of the spent 18 years at Ball State Univer- The three texts reviewed here span the Supply Chain Operating Reference sity as the director of the Operations spectrum of supply chain education. (SCOR) Model. and Manufacturing Management Principles of Supply Chain Management Program. He also served as the di- Design Your Organization for is a strong undergraduate text. Supply rector of Technology Integration at Performance Chain Management—Strategy, Planning Miller College of Business. Past and Operation is becoming a classic This is a non-standard chapter focused president of Midwest DSI, Tunc was MBA text. Lastly, Strategic Supply Chain on a high level strategic view of how to the recipient of Delta Sigma Pi Pro- Management is rich text focused on the structure the organization to function fessor of the Year award while teach- supply chain professional. Collectively, in an integrated fashion. The chapter is ing at Ball State. the form a very complete set of instruc- a mix of key principles and short sto- tional materials with a strong, inte- ries of how companies improved sup- Decision Line, March 2007 25