A) What is supply chain management? B) The activities of supply chain management C) Types of relationships in supply chains D) Supply chain behavior E) Supply chain improvement

1. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.1
13.1
Chapter 13
Supply chain planning and control
Pearson Education Ltd. Arnos Design

2. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.2
13.2
‘Supply chain management is the management of
the interconnection of organizations that relate to
each other through upstream and downstream
linkages between the processes that produce
value to the ultimate consumer in the form of
products and services’.
What is supply chain management?

3. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.3
13.3
First tier
supplier
Second tier
supplier
First tier
customer
Second tier
customer
End
customer
Demand
side
Supply side
Purchasing and
supply
management
Physical distribution
management
Logistics
Materials management
Supply chain management
Information
flow
Physical
flow
Supply chain planning and control

4. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.4
13.4
The operation
Purchasing function
Suppliers
Request for
products
and services
Demand
from
customers
Supply to
customers
Request
for
quotations
Prepare
purchase
order
Prepare
quotation for
specification,
price, delivery,
etc.
Requests
Select
supplier(s)
Quotations
Produce
products
and services
Order Receive
products
and services
Deliver
Liaison
between
purchasing
and the
operation
The purchasing function brings together the operation
and its suppliers

5. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.5
13.5
Short-term ability to supply Longer-term ability to supply
•Range of products or services
provided
•Potential for innovation
•Quality of products or services •Ease of doing business
•Responsiveness •Willingness to share risk
•Dependability of supply •Long-term commitment to supply
•Delivery and volume flexibility •Ability to transfer knowledge as
well as products and services
•Total cost of being supplied •Technical capability
•Ability to supply in the required
quantity
•Operations capability
•Financial capability
•Managerial capability
Factors for rating alternative suppliers

6. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.6
13.6
Factor Weight Supplier A score Supplier B score
Cost performance 10 8 (8 x 10 = 80) 5 (5 x 10 = 50)
Quality record 10 7 (7 x 10 = 70) 9 (9 x 10 = 90)
Delivery speed
promised
7 5 (5 x 7 = 35) 5 (5 x 7 = 35)
Delivery speed
achieved
7 4 (4 x 7 = 28) 8 (8 x 7 = 56)
Dependability record 8 6 (6 x 8 = 48) 8 (8 x 8 = 64)
Range provided 5 8 (8 x 5 = 40) 5 (5 x 5 = 25)
Innovation capability 4 6 (6 x 4 = 24) 9 (9 x 4 = 36)
Total weighted score 325 356
Weighted supplier selection criteria for a hotel chain

7. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.7
13.7
Weighted Supplier Selection Criteria (Cont’d)
• ABC Electronic Repair wants to select a supplier
based on total annual cost, consistent quality, and
delivery speed. The following table shows the
weights management assigned to each criterion and
the scores assigned to each supplier.
Criterion Weight Kremer Sunrise
Total Annual Cost 30 4 5
Consistent Quality 40 3 4
Delivery Speed 30 5 3

8. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.8
13.8
Purchasing, Internet and e-procurement
• E-procurement uses the internet to facilitate
purchasing.
• Benefits:
1) It promotes efficiency improvements.
2) It improves commercial relationships with
suppliers.
3) It opens up the marketplace to increased
competition and therefore keeps prices
competitive.

9. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.9
13.9
Global Sourcing
Factors that must be included in evaluating
global sourcing opportunities are as follows:
• Purchase price
• Transportation costs
• Inventory carrying costs
• Supply performance
• Supply and operational risks
• Cross-border taxes

10. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.10
13.10
Business to business (B2B)
• Most common, all but the last
link in the supply chain
• E-commerce examples:
– EDI networks
– Business information
exchanges.
Business to consumer (B2C)
• Retail operations
• Catalogue operations, etc.
• E-commerce examples:
– Internet retailers
– Amazon.com, etc.
Consumer to consumer (C2B)
or ‘peer to peer (P2P)
• Consumers ‘offer’,
business responds
• E-commerce examples:
– Some airline ticket operators
– Priceline.com, etc.
Supply chain relationships
• Trading ‘swap’ and auction
transactions
• E-commerce examples:
– Specialist ‘collector’ sites
– Ebay.com, etc.
Consumer to business (C2B)
Business Consumer
To…
Business
Consumer
From…

11. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 2010
13.11
13.11
‘Partnership’
supply
management
The
character
of
internal
operations
activity
Do
nothing
Do
everything
important
Do
everything
Transactional –
many suppliers
Close –
few suppliers
Type of inter-firm contact
Virtual
spot
trading
Long-term
virtual
operation
Vertically
integrated
operation
Traditional supply
management
Types of supply relationship