2011.2.14 marketing

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  • Chapter 14 Supply Chain Management Marketing cannot be accomplished in isolation. Even though the marketing function resides with marketers, the concept of marketing must permeate the entire organization.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes: In today’s sophisticated marketplace, many companies are focusing on their supply chain and turning to supply chain management for competitive advantage. A company’s supply chain includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers (the point of origin) to the ultimate customer (the point of consumption).
  • Chapter 14 Supply Chain Management Notes: The goal of supply chain management is to coordinate and integrate the activities performed by supply chain members into a collection of seamless end-to-end processes which gives supply chain managers “total visibility” of the supply chain both inside and outside the firm. Visualizing the entire supply chain allows managers to maximize strengths and efficiencies at each level of the process to create a highly competitive, customer-driven supply system.
  • Chapter 14 Supply Chain Management Notes: Today, supply chain management plays a dual role. Supply chain management acts as a communicator of customer demand that extends from the point of sale back to the supplier, and second, as a physical flow process that engineers the movement of goods throughout the entire supply pipeline. Supply chain managers are responsible for making channel strategy decisions, coordinating the sourcing and procurement of raw materials, scheduling production, processing orders, managing inventory, transporting and storing supplies and finished goods, and coordinating customer service activities. Additionally, supply chain managers are responsible for managing the information that flows through the supply chain.
  • Chapter 14 Supply Chain Management Notes: Exhibit 14.1 depicts a typical supply chain model that managers attempt to optimize for firm and customer benefit.
  • Chapter 14 Supply Chain Management Notes: Supply chain managers are responsible for making strategic decisions such as coordinating the sourcing and procurement of raw materials, scheduling production, processing orders, managing inventory, transporting and storing supplies and finished goods, dealing with returns, and coordinating customer service activities. Coordinating relationships between the company and its external partners, such as vendors, carriers, and third-party companies, is also a critical function of supply chain management.
  • Chapter 14 Supply Chain Management Notes: 1. Specific benefits from effective implementation of supply chain procedures include an almost 20 percent increase in cash flow, a more than 50 percent increase in flexibility of supply chain activities, and a reduction of 5 to 10 percent in supply chain costs, among other potential benefits.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes: Firms’ success in achieving each of these types of integration is very important. Highly integrated supply chains (those that are successful in achieving many or all of these types of integration) have been shown to be better at satisfying customers, managing costs, delivering high-quality products, enhancing productivity, and utilizing company or business unit assets, all of which translate into greater profitability for the firms and their partners working together in the supply chain.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes: Measurement integration reflects the idea that performance assessments should be transparent and measurable across the borders of different business units and firms, and also assess the performance of the supply chain as a whole while holding each individual firm or business unit accountable for meeting its own goals. Through the use of ABC, costs can be accurately assigned to products, services, departments, or specific customers.
  • Chapter 14 Supply Chain Management Notes: 1. A fundamental challenge being experienced by most businesses is the need for integrating various departments within the firm, such as marketing, research, sales, and logistics, all of which help in creating and delivering the value-added customer offering.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes : Exhibit 14.2 displays the eight critical business processes on which supply chain managers must focus.
  • Chapter 14 Supply Chain Management Notes: The customer relationship management process allows companies to prioritize their marketing focus on different customer groups according to each group’s long-term value to the company or supply chain. Companies that emphasize the customer relationship management process throughout their supply chains are able to deliver best-in-class customer experiences and generate enormous customer loyalty.
  • Chapter 14 Supply Chain Management Notes: Customer service management processes are increasingly being enhanced through the use of customer care software applications.
  • Chapter 14 Supply Chain Management Notes: The demand management process seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level and creating demand-related plans of action prior to actual customer purchasing behavior. Demand management seeks to minimize the costs of serving multiple types of customers who have variable wants and needs. Good demand management can increase both sales and customer satisfaction, and at the same time, it can reduce the overall cost of serving the firm or supply chain’s customer base.
  • Chapter 14 Supply Chain Management Notes: One of the most fundamental processes in supply chain management is the order fulfillment process, which involves generating, filling, delivering, and providing on-the-spot service for customer orders. When the order fulfillment process is managed diligently, the amount of time between order placement and receipt of the customer’s payment following order shipment (known as the order-to-cash cycle) is minimized as much as possible. Since many firms do not view order fulfillment as a core competency, they often outsource this function to a third party logistics firm that specializes in the order fulfillment process.
  • Chapter 14 Supply Chain Management Notes: The manufacturing flow management process is concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process. The goals of the manufacturing flow management process are centered on leveraging the capabilities held by multiple members of the supply chain to improve overall manufacturing output in terms of quality, delivery speed, and flexibility, all of which tie to profitability.
  • Chapter 14 Supply Chain Management Notes: Supplier relationship management provides structural support for developing and maintaining relationships with suppliers. The management of supplier relationships is a key step toward ensuring that firms’ manufacturing resources are available, and thereby the supplier relationship management process has a direct impact on each supply chain member’s bottom-line financial performance.
  • Chapter 14 Supply Chain Management Notes: New products and services are not the sole responsibility of a single firm who serves as inventor, engineer, builder, marketer, and sales agent, but rather, they are often the product of a multi-company collaboration with multiple firms and business units playing unique roles in new product development, testing, and launch activities, among others.
  • Chapter 14 Supply Chain Management Notes: In addition to the value of managing returns from a pure asset-recovery perspective, many firms are discovering that returns management also creates additional marketing and customer service touch points that can be leveraged for added customer value above and beyond normal sales and promotion-driven encounters.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes: The supply chain consists of several interrelated and integrated logistical components, as shown on this slide. Integrating and linking all of the components is the logistics information system. The supply chain team orchestrates the movement of goods from the source to the consumer. The team cuts across organization boundaries and communicates/coordinates/cooperates extensively. The best supply chain teams move beyond the organization to include external participants, such as suppliers, transportation carriers, and third-party logistics suppliers.
  • Chapter 14 Supply Chain Management Notes: One of the most important links in the supply chain is that between the manufacturer and the supplier. Purchasing professionals are on the front lines planning purchasing strategies, developing specifications, selecting suppliers, and negotiating price and service levels. The goal of most activities is to reduce the costs of raw materials and supplies. Instead of tough negotiations to get the best possible price, purchasing helps establish and cooperative relationships with vendors.
  • Chapter 14 Supply Chain Management Notes: In a traditional mass-marketing manufacturing, production begins when forecasts call for additional products to be made or inventory is low. In a customer-focused “pull” manufacturing environment, production of goods is not started until an order is placed by the customer specifying the desired configuration, also known as mass customization or build-to-order. In this environment of customer demand and mass customization, supply chains need to be flexible and be able to shift production based on demand.
  • Chapter 14 Supply Chain Management Notes: JIT, or lean production, was borrowed from the Japanese. Manufacturers work with suppliers to get necessary items to the assembly line at the precise time they are needed for production. For the manufacturer, JIT means that raw materials arrive at the assembly line “just in time” to be installed. For the supplier, JIT means supplying customers with products in just a few days rather than weeks. For the consumer, JIT means lower costs, shorter lead times, and products that closely meet the consumer’s needs.
  • Chapter 14 Supply Chain Management Notes: Benefits of JIT to the manufacturer are shown on this slide.
  • Chapter 14 Supply Chain Management Notes: Although build-to-order processes may eliminate the need to warehouse many materials, manufacturers keep some safety stock on hand in the event of an emergency. Additionally, inventory may be stored for seasonally-demand products. Storage helps manufacturers manage supply and demand. A materials-handling system moves inventory into, within, and out of the warehouse, performing the functions shown on this slide.
  • Chapter 14 Supply Chain Management Notes: Supply chain logisticians must decide which mode of transportation to use to move products from supplier to producer and from producer to buyer. These decisions are related to other logistics decisions.
  • Chapter 14 Supply Chain Management Notes: Because there is little safety stock and no margin for error, it is important that manufacturers receive high-quality parts from vendors, be confident that the supplier will meet all delivery commitments, and have a crisis management plan to handle any disruptions. The need for a crisis management plan became evident following the terrorist attacks of September 11 and Hurricane Katrina.
  • Chapter 14 Supply Chain Management On Line: Wal-Mart Is EDI a requirement for Wal-Mart suppliers? Go to Wal-mart’s Web site and read the “Supplier Information” pages. Does selling to Wal-Mart seem worth the effort? Why or why not? Notes: The order is often the step that sets the supply chain in motion, especially in build-to-order environments such as Dell Computer. The order processing system processes the requirements of the customer and sends the information into the supply chain. As the order enters the system, management monitors the flow of goods and the flow of information. Order processing is becoming more automated through the use of electronic data interchange computer technology. This information can be read and processed by computers.
  • Chapter 14 Supply Chain Management Notes: The inventory control system helps balance having excess inventory and having too few products on hand. The goal of inventory management is to keep inventory levels as low as possible, while maintaining an adequate supply of goods to meet customer demand. Consider, for example, negative sales forecasts during recent Christmas buying seasons that caused retailers to cut back on orders. As a result, many companies lost sales due to inventory shortages on popular items.
  • Chapter 14 Supply Chain Management Notes: Managing inventory from the supplier to the manufacturer is called materials requirement planning (MRP) or materials management. Managing finished goods inventory from manufacturer to end user is referred to as distribution resource planning (DRP). Both inventory systems use inputs such as sales forecasts and available inventory to determine what actions must be taken to replenish goods in the supply chain. Demand is collected at each level in the supply chain, and with the use of EDI, the information can be transmitted to meet the quick-response needs of competitive markets.
  • Chapter 14 Supply Chain Management Notes: Although JIT may eliminate the need to warehouse many materials, manufacturers keep some safety stock on hand in the event of an emergency. Additionally, inventory may be stored for seasonally-demand products. Storage helps manufacturers manage supply and demand. A materials-handling system moves inventory into, within, and out of the warehouse, performing the functions shown on this slide.
  • Chapter 14 Supply Chain Management Notes: Supply chain logisticians must decide which mode of transportation to use to move products from supplier to producer and from producer to buyer. These decisions are related to other logistics decisions.
  • Chapter 14 Supply Chain Management Notes: Transportation accounts for between 5 to 10 percent of the price of goods. Supply chain managers choose a mode of transportation on the basis of the criteria shown on this slide.
  • Chapter 14 Supply Chain Management Notes: Exhibit 14.6 compares the basic modes of transportation based on the six criteria.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management Notes: Several technological trends are affecting the job of the supply chain manager: Advanced computer technology has boosted the efficiency of logistics with tools such as automatic ID systems, radio frequency technology, and supply chain software systems. Outsourcing of logistics functions is a rapidly growing segment in which a manufacturer or supplier turns over the entire or partial function of supply chain management to an independent third party. Electronic distribution includes any kind of product or service that can be distributed electronically. For instance, computer software can be purchased and downloaded electronically.
  • Chapter 14 Supply Chain Management Notes: One of the major goals of technology is to bring up-to-date information to the supply chain manager’s desk. Systems, such as those shown above, are now in place that help track freight, monitor speed and location of carriers, and make routing decisions. Each package can be tracked from receipt to delivery.
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management
  • Chapter 14 Supply Chain Management
  • 2011.2.14 marketing

    1. 1. Lamb, Hair, McDaniel CHAPTER 14 Supply Chain Management 2010-2011
    2. 2. LO 1 Define the terms supply chain, supply chain management, and supply chain orientation, and discuss the benefits of supply chain management LO 2 Discuss the concept of supply chain integration and explain why each of the six types of integration is important LO 3 Identify the eight key processes of excellent supply chain management and discuss how each of these processes impacts the end customer Learning Outcomes
    3. 3. LO 4 Discuss the key strategic decisions supply chain managers must make when designing their companies’ supply chains LO 5 Discuss new technology and emerging trends in supply chain management. Learning Outcomes
    4. 4. Supply Chains and Supply Chain Management Define the terms supply chain , supply chain management , and supply chain orientation , and discuss the benefits of supply chain management LO 1
    5. 5. Supply Chains Supply Chain The connected chain of all of the business entities, both internal and external to the company, that perform or support the logistics function LO 1
    6. 6. Supply Chains Supply Chain Management A management system that coordinates and integrates all of the activities performed by supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value LO 1
    7. 7. Supply Chain Management Physical flow process that engineers the movement of goods Communicator of customer demand from point of sale to supplier LO 1
    8. 8. Supply Chains LO 1
    9. 9. Supply Chain Managers <ul><li>Supply chain managers are responsible for : </li></ul><ul><ul><li>Making strategic decisions </li></ul></ul><ul><ul><li>Management of information through supply chain </li></ul></ul><ul><ul><li>Coordinating relationships between company and external partners </li></ul></ul>LO 1
    10. 10. Benefits of Supply Chain Management 10 <ul><li>Supply chain oriented companies commonly report: </li></ul><ul><ul><li>Lower inventory, transportation, warehousing, and packaging costs </li></ul></ul><ul><ul><li>Greater supply chain flexibility </li></ul></ul><ul><ul><li>Improved customer service </li></ul></ul><ul><ul><li>Higher revenues </li></ul></ul><ul><ul><li>Increased profitability </li></ul></ul>LO 1
    11. 11. Supply Chain Integration Discuss the concept of supply chain integration and explain why each of the six types of integration is important LO 2
    12. 12. Supply Chain Integration Firm-to-Firm Social Interactions Operational Planning and Control Customer Integration LO 2 Material and service supplier Integration Internal Operations Integration Customer Integration Relationship Integration Measurement Integration Technology and planning Integration
    13. 13. Supply Chain Integration LO 2 Relationship Integration The ability of two or more companies to develop social connections that serve to guide their interactions when working together. Role Specificity When each firm in a supply chain has clarity in terms of knowing which firm is the leader, which firms are the followers, and which responsibilities are assigned to each firm.
    14. 14. Measurement Integration The performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting its own goals Measurement Integration Technology and planning integration The creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain LO 2
    15. 15. Internal Operations Integration Links internally performed work into a seamless process that stretches across departmental and/or functional boundaries, with the goal of satisfying customer requirements A competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain Customer Integration LO 2 Internal Operations Integration
    16. 16. Key Processes of Supply Chain Management Identify eight key processes of excellent supply chain management, and discuss how each of these processes impacts the end customer LO 3
    17. 17. Key Processes LO 3
    18. 18. Customer Relationship Management LO 3 Customer Relationship Management Process The prioritization of a firm’s marketing focus on different customer groups according to each group’s long-term value to the company or supply chain; designed to identify and build relationships with good customers.
    19. 19. Customer Service Management A multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced; designed to ensure that customer relationships remain strong. LO 3 Customer Service Management Process
    20. 20. Demand Management LO 3 Demand Management Process The alignment of supply and demand throughout the supply chain to anticipate customer requirements at each level and create demand-related plans of action prior to actual customer purchasing behavior.
    21. 21. Order Fulfillment LO 3 Order Fulfillment Process A supply chain management process that involves generating, filling, delivering, and providing on-the-spot service for customer orders.
    22. 22. Manufacturing Flow Management LO 3 Manufacturing Flow Management Process A process that ensures that firms in the supply chain have the resources they need
    23. 23. Supplier Relationship Management LO 3 Supplier Relationship Management Process A supply chain management process that supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers
    24. 24. Product Development and Commercialization LO 3 Product Development and Commercialization Process The group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partner firms.
    25. 25. Returns Management LO 3 Returns Management Process A process that enables firms to manage volumes of returned product efficiently, while minimizing costs and maximizing the value of the returned assets to the firms in the supply chain.
    26. 26. Key Processes of Supply Chain Management LO 3
    27. 27. Managing the Logistical Components of the Supply Chain Discuss the logistical components of the supply chain LO 4
    28. 28. Logistical Components of the Supply Chain LO 4 Supply Chain Team Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Materials Handling Transportation Logistics Information System
    29. 29. Sourcing and Procurement <ul><li>Plan purchasing strategies </li></ul><ul><li>Develop specifications </li></ul><ul><li>Select suppliers </li></ul><ul><li>Negotiate price and service levels </li></ul><ul><li>Reduce costs </li></ul>The Role of Purchasing: LO 4
    30. 30. Production Scheduling LO 4 Push / Pull Strategy Traditional Focus Push Start of Production Manufacturing Inventory- Based Mass Production Customer Focus Pull Customer-Order Based Mass Customization
    31. 31. Just-in-Time Manufacturing JIT LO 4 A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line.
    32. 32. Benefits of JIT <ul><li>Reduces raw material inventories </li></ul><ul><li>Shortens lead times </li></ul><ul><li>Creates better supplier relationships </li></ul><ul><li>Reduces production and storeroom costs </li></ul><ul><li>Reduces paperwork </li></ul>LO 4
    33. 33. Materials Handling Functions LO 4 Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods
    34. 34. Transportation LO 4 Airways Water Pipelines Motor Carriers Railroads
    35. 35. JIT Requirements LO 4 Receive high-quality parts Meet supplier delivery commitments Have a crisis management plan
    36. 36. Order Processing Electronic Data Interchange LO 4 Information technology that replaces paper documents that accompany business transactions with electronic transmission of the information. http://www.walmartstores.com Online
    37. 37. Order Processing Inventory Control System LO 4 A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer’s or a customer’s demand.
    38. 38. Order Processing LO 4 Materials Requirement Planning (MRP) An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer. Distribution Resource Planning (DRP) An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
    39. 39. Materials Handling Functions LO 4 Receive goods into warehouse Dispatch the goods to temporary storage Recall, select, or pick the goods for shipment Identify, sort, and label goods
    40. 40. Transportation LO 4 Airways Water Pipelines Motor Carriers Railroads
    41. 41. Transportation Mode Choice <ul><li>Cost </li></ul><ul><li>Transit time </li></ul><ul><li>Reliability </li></ul><ul><li>Capability </li></ul><ul><li>Accessibility </li></ul><ul><li>Traceability </li></ul>LO 4
    42. 42. Criteria for Ranking Modes of Transportation LO 4 Relative Cost Transit Time Reliability Capability Accessibility Traceability Highest Lowest Air Water Pipe Rail Truck Water Rail Pipe Truck Air Pipe Truck Rail Air Water Water Truck Rail Truck Air Pipe Rail Air Water Pipe Air Truck Rail Water Pipe
    43. 43. Trends in Supply Chain Management Discuss new technology and emerging trends in supply chain management LO 5
    44. 44. Trends in Supply Chain Management LO 5 Electronic distribution Outsourcing of logistics functions Advanced computer technology
    45. 45. Advanced Computer Technology <ul><li>Automatic identification systems </li></ul><ul><ul><li>- Bar coding </li></ul></ul><ul><ul><li>- Radio frequency technology </li></ul></ul><ul><li>Communications technology </li></ul><ul><li>Supply chain software systems </li></ul>LO 5
    46. 46. Outsourcing Logistics Functions <ul><li>Reduce inventories </li></ul><ul><li>Locate stock at fewer plants and distribution centers </li></ul><ul><li>Provide same or better levels of service </li></ul>Outsourcing Benefits LO 5
    47. 47. Green Supply Chain Management <ul><li>Requires integrating green thinking into all aspects of the supply chain </li></ul><ul><ul><li>Green materials sourcing </li></ul></ul><ul><ul><li>Environmental impact of packaging, shipment, use </li></ul></ul><ul><ul><li>Incorporate end of life management </li></ul></ul><ul><ul><ul><li>Recycling </li></ul></ul></ul><ul><ul><ul><li>Clean disposal </li></ul></ul></ul>LO 5
    48. 48. AMR Research Healthcare Top 25 <ul><li>Ranked based on building supply chain excellence and innovation to drive business results in demand-driven supply chains </li></ul><ul><li>Johnson & Johnson </li></ul><ul><li>Sisters of Mercy </li></ul><ul><li>Cardinal Health </li></ul><ul><li>Owens & Minor </li></ul><ul><li>McKesson </li></ul><ul><li>CVS Caremark </li></ul><ul><li>Abbott </li></ul><ul><li>Novartis </li></ul><ul><li>BD (Becton, Dickinson) </li></ul><ul><li>Wyeth </li></ul><ul><li>GlaxoSmithKline </li></ul><ul><li>AstraZeneca </li></ul><ul><li>AmerisourceBergen </li></ul><ul><li>Walgreens </li></ul><ul><li>Covidien </li></ul><ul><li>Cleveland Clinic </li></ul><ul><li>Merck </li></ul><ul><li>Genentech </li></ul><ul><li>Alcon Laboratories </li></ul><ul><li>Medtronic </li></ul><ul><li>Boston Scientific </li></ul><ul><li>BJC HealthCare </li></ul><ul><li>Roche </li></ul><ul><li>Amgen </li></ul><ul><li>Mayo Clinic </li></ul>Source: http://www.amrresearch.com/Content/View.aspx?compURI=tcm:7-49119 LO 5

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