1
Q
Goal of SCM
A
- Meet customer needs better than competitors.
- Building processes that can design, make, and deliver innovative, high-quality, low-cost products and services that meet customer demand.
2
Q
Adam Smith
A
1 - Wealth of a nation is the product of its labor.
2 - Greatest improvements in the product of labor result from division of labor.
3
Q
Upstream Suppliers & Downstream Customers
A
- Purchased goods and services flow from upstream suppliers through the focal firm to downstream customers.
- Information flows both ways.
4
Q
Definition of SCM
A
Supply Chain Management is the design and management of seamless value-added processes across organizational boundaries to meet the real needs of the end customer.
5
Q
Value Chain - Michael Porter
A
- Executive mgmt defines the strategy & allocates resources.
- Research and development = new product design
- SCM coordinates upstream supply base
- Operations uses supplies to make products.
- Logistics moves products.
- Marketing manages downstream relationships.
- Accounting maintains records.
- Finance acquires and controls capital.
- IT builds and maintains systems.
6
Q
The Bullwhip Effect
A
- As demand moves down the supply chain, it decreases.
- Greater uncertainty exists farther away from the final customer.
- Demand variations are likely to be exaggerated as decisions are made up the chain.
- Demand increases begin at the retailer level.
- Small changes in retail-level demand get magnified as they ripple through the chain.
7
Q
Internal Process Integration
A
Goal is to increase collaboration among the company’s functional groups.
8
Q
Backward Process Integration - 1st tier suppliers
A
Leading companies are extending this form of integration to 2nd tier suppliers.
9
Q
Forward Process Integration - 1st tier customers
A
Few companies have targeted integration with their customers’ customers.
10
Q
Complete forward and backward integrations
A
Goes from the suppliers’ suppliers to the customers’ customers.
11
Q
SCM and relay races
A
- Each company does what it does best and then passes the baton to the next company in the chain.
- Relay teams have a coach but SC coaches don’t exist. Managers focus on a pair of hand offs, one to the supplier and one to the customer.
- Each relay involves 3 hand offs, success in business requires many hand offs.
- SCM is strategic, cutting across the whole organization.
12
Q
Stratego
A
- Greek
- To plan the destruction of one’s enemies through effective use of resources.
- Strategies should do more than just beat the competition, they should help the company meet the real needs of the customer.
- The best strategy is the one that achieves key objectives w/o having to go to battle.
13
Q
Contingency Theory
A
- Conceptualized the relationship between a changing environment, managerial decision making, and performance.
- Managers need to recognize the implications of a changing environment and use company resources effectively (contingent response determines how well a company can adapt)
- K-mart vs. Walmart and Target
14
Q
Industrial Organization Theory
A
- Claims that market forces should drive decision making.
- Kimberly Clark (Kleenex)
- A company’s power to influence the market is determined by the power of:
1. Suppliers
2. Buyers
3. Existing Rivals
4. Potential Rivals
5. Providers of Substitute Products.
15
Q
Resource-based Theory
A
- Emphasizes the management of internal resources to establish a hare-to-imitate advantage.
- Building organizational skills to deliver distinctive products and services.
- Honda (developed core competence)
16
Q
Core Competence
A
When a company develops unique skills and processes that lead to competitive advantage.
17
Q
Four Decision Areas of Strategy
A
- Environment
- Resources
- Objectives
- Feedback
18
Q
Environment
A
- Great managers are aware of competition, economy, and politics.
- Culture in global operations
- Internal Environment
- Internal & external environments determine which competitive factors should be evaluated to help win.
19
Q
Resources
A
- All assets, including people, technology, infrastructure, materials, and money.
- Success now involves investments in knowledge and processes (hard-to-copy - integrate human and tech. resources)
20
Q
Objectives
A
- A goal that unifies decision making throughout the company.
- Focus on earnings, profitability, and stock price.
- Create customer value
21
Q
Feedback
A
- Helps managers adapt the organization’s strategy to meet the demands of a changing world.
22
Q
Internal Environments
A
- Corporate Culture
- Competitive Priorities
- Functional Relationships
- Reward Systems
23
Q
External Environments
A
- Competitive
- Cultural
- Economic
- Legal
- Political
24
Q
Competitive Factors
A
- Comparative Advantage Factors
- Core Competencies
- Customer Characteristics
- Industry Structure
- Source and Level of Competition
- Supply-Base Capabilities
25
SC Thinking
- Looking at the world differently
- See opportunities to build unique SC-enabled business models
- Dell (use of contract manufacturers), Honda (use of suppliers), Wal-Mart (use of cross-docking)
- Leverage the skills and resources of diverse companies in the SC to deliver exceptional value to end customers.
26
Valid Business Model
1. What is our business?
2. How can we do it better than anyone else? (resources)
- Peter Drucker - "valid definition of business power - to create a customer"
- Identitiy = ability to meet the real needs of customers.
27
SC Thinking and Environment
1. View change as a challenge and opportunity.
2. Leverage relationships and tech. to respond to changes.
3. Assess the unique needs of consumers in diverse country markets.
28
SC Thinking and Resources
1. Develop unique, boundary-spanning capabilities.
2. Develop and manage supplier capabilities.
3. Leverage customer resources when possible.
4. Build world-class SC team. Develop skills to motivate members.
29
SC Thinking and Objectives
1. Help the SC satisfy end-customer needs.
2. Help 1st tier customers be more competitive.
3. Build continuous-improvement-based advantage.
4. Achieve sustained profitability.
30
SC Thinking and Feedback
1. Measure process and SC performance.
2. Share performance data to drive learning.
3. 2 way info. and idea sharing with both customers and suppliers.
31
Road Map to SC Success
1. Who are we? (defines why a company exists)
2. How do we fit? How should we fit? (understanding how the chains operate)
3. How do we get there?
32
"As-Is" Map
- Helps managers evaluate the SWOT of their company's current position.
- See and grasp the nuances that define how the chain works.
33
"To-Be" Map
- Guides the process by creating visibility regarding the right players, the right relationships, the right roles and responsibilities, and the right organization structure and systems.
- Guides critical decisions.
34
4 decision areas to promote better collaboration:
1. Relationship Management.
2. Information Sharing
3. Performance Measurement
4. People Empowerment
Supply Chain Management 3050
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