This chapter introduces supply chain management and discusses how changes in the business landscape necessitated a shift towards a supply chain approach. It outlines the key drivers of change, including the empowered consumer, industry deregulation, globalization, and advancing technology. The chapter also defines supply chain management and describes the development of the supply chain concept. It explains the benefits of effective supply chain practices through case studies and discusses characteristics of modern supply chain approaches, such as inventory visibility, pull systems, and collaborative relationships between partners.
2. Learning Objectives - After reading this
chapter, you should be able to do the following:
Understand the development of supply chain
management in leading corporations.
Appreciate the importance and role of supply
chain management among private and public
organizations.
Understand the contributions of a supply
chain approach to organizational efficiency
and effectiveness.
3. Learning Objectives
Analyze the benefits that can accrue from
implementing effective supply chain
practices.
Understand the major challenges and issues
facing organizations developing and
implementing supply chain strategies.
Discuss the major change drivers in our
economy and in the global marketplace.
4. Logistics Profile:
SAB Distribution
SAB, a central Pennsylvania food wholesaling
company, had grown to $180 million over the years.
Current management were dealing with flat sales and
profit profiles and had cut costs to the point where
further cuts were counterproductive.
The market had changed and SAB was unable to
respond…management had questions but no answers.
What happened?
Where does SAB fit in the supply chain?
What should SAB do?
5. Supply Chain Management:
Introduction
Supply chain management now part of the
business vocabulary.
Impact of global marketplace drastically
changed the landscape of business.
Change was rapid and continuous in the
1990s.
Doing business in the comfort zone was no
longer synonymous with success.
6. The Changing Business
Landscape: Five Driving Forces
The Empowered Consumer
Power Shift in the Supply
Chain
Deregulation
Globalization
Technology
7. The Changing Business
Landscape: Five Driving Forces
The Empowered Consumer
Impact on logistics is more direct.
Informed consumers have low tolerance for
poor quality in products and services.
Changing demographics commands 24/7
service.
Increased customer service increases the
importance of logistics and supply chains.
8. The Changing Business
Landscape: Five Driving Forces
Power Shift in the Supply Chain
Large retailers more demanding and
commanding.
Focus upon distribution costs and their
impact on “everyday low prices”.
Changing logistics and supply chain
strategies resulted from shifts in the
balance of economic power.
9. The Changing Business
Landscape: Five Driving Forces
Deregulation
Changing economic controls empowered creativity
and competition.
Changes in transportation – fewer or no economic
controls over rates and services.
Change in financial institutions blurred traditional
differences and increased competition.
Change in the communications industry also resulted
in more competition.
Changes in the utility industry allows more
competition.
10. The Changing Business
Landscape: Five Driving Forces
Globalization
Global marketplace concept
Global network sourcing, manufacturing,
marketing and distribution
Global alternatives have blossomed
No geography --- access available to the world
Supply chain challenges
Wal-Mart’s challenges
New supply sources
11. The Changing Business
Landscape: Five Driving Forces
Technology
Information Age provides new and
unrestricted access to the place aspect of
business.
My time, my place
Warehouse technology has changed
dramatically with computer devices in use
from the office space to the forklifts.
12. On the Line:
Extreme Enterprise
Integrating new enterprise and supply chain
management solutions allowed Columbia Sportswear
to keep up with sales that increased from $3 million in
1984 to $470 million in 1999.
With one store and a handful of outlets, distribution to
its customers is where the rubber meets the road.
Columbia’s president was determined not to let
distribution restrain growth, and backed it with money.
A 1 million square foot distribution center receives
more than 2 million units/month and set a record by
shipping 172,000 items in one day, and more than 2
million items in a month.
13. The Changing Business
Landscape: The Supply Chain
Concept
Development of the Concept
Business Case for Supply Chain
Management
Characteristics of Supply Chain Management
14. The Changing Business
Landscape: The Supply Chain
Concept
Development of the Concept
Total systems cost - remains an important element
of logistics analysis.
Outbound logistics - was the initial focus with
higher value finished goods.
Inbound logistics – deregulation allowed new focus
on coordination of inbound and outbound
movements.
Value chain analysis integrated logistics activities.
Terminology growing as supply chain concept
matures.
19. The Changing Business
Landscape: The Supply Chain
Concept
Business Case for Supply Chain Management: Why so
much attention on supply chain management?
ECR and Best-in-class studies (see next two slides)
Complexity of the supply chain
Extended enterprise concept
Two-way flow of:
Products
Information
Cash
Inventory visibility
20. Figure 1-5: Comparison of Average Throughput
Time of Dry Grocery Chain before and after
ECR Implementation
21. Figure 1-6: Total Supply Chain
Management Cost --- All Sectors
0
2
4
6
8
10
12
14
1996 1997
Best-in-class
Median
Revenue%
24. The Changing Business
Landscape: The Supply Chain
Concept
Characteristics of Supply Chain Management
Inventory
Visibility
Pull systems
Landed Cost
Companies must realize that their strategies
may affect the landed cost.
Coordination of supply chain activities may
lower the landed cost.
25. The Changing Business
Landscape: The Supply Chain
Concept
Characteristics of Supply Chain Management
Real-time two way information flows
Customer service
levels must be tailored to each customer
not all customers require the same service
Supply chain relationships
Collaborative planning
Share risks and rewards
27. Chapter 1:
Summary and Review Questions
Students should review their knowledge of the chapter
by checking out the Summary and Study Questions
for Chapter 1.
This is the last slide for Chapter 1