SUPPLY CHAIN MANAGEMENT
John J. Coyle
Hanze University of Applied Sciences
International Business
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
CONTENT
FACTORS INFLUENCING SUPPLY CHAIN.................................................................................................3
1. Globalization..............................................................................................................................3
2. Technology.................................................................................................................................3
3. Organizational Consolidation and power shifts..........................................................................3
4. Empowered consumer...............................................................................................................3
5. Government policy and regulation............................................................................................3
SUPPLY CHAINS: DEVELOPMENT AND SHAPING 21 st CENTURY.............................................................3
CONCEPT DEVELOPMENT.................................................................................................................3
1960: Physical distribution.............................................................................................................3
1980: Integrated logistics management.........................................................................................3
1990: Supply chain management...................................................................................................4
Major Supply Chain Issues.............................................................................................................4
GLOBAL DIMENSIONS OF SUPPLY CHAINS.........................................................................................5
1. Rationale for Global Trade and Commerce................................................................................5
2. Contributing factors for global commerce and supply chain flows............................................5
3. Global markets and strategy......................................................................................................5
ROLE OF LOGISTICS IN SUPPLY CHAINS..........................................................................................5
SUBDIVISIONS OF LOGISTICS.........................................................................................................6
ACTIVITIES: LOGISTICS MANAGER.....................................................................................................7
LOGISTICS IN THE ECONOMY: MACRO PERSPECTIVE.....................................................................7
LOGISTICS IN THE FIRM: MICRO DIMENSION.................................................................................8
LOGISTICS IN THE FIRM: FACTORS INFLUENCING THE COST..........................................................9
SOURCING MATERIALS AND SERVICES..................................................................................................9
ASPECTS OF STRATEGIC SOURCING.................................................................................................10
TYPES AND IMPORTANCE OF ITEMS AND SERVICES PURCHASED................................................10
STRATEGIC SOURCING PROCESS......................................................................................................11
SUPPLIER EVALUATION AND RELATIONSHIPS..............................................................................12
PRODUCING GOODS AND SERVICES....................................................................................................13
PRODUCTION PROCESS FUNCTIONALITY.........................................................................................13
PRODUCTION TRADEOFFS...........................................................................................................13
PRODUCTION CHALLENGES.........................................................................................................13
OPERATIONS STRATEGY AND PLANNING.........................................................................................14
2
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
PRODUCTION PLANNING.................................................................................................................15
PLANNING TIMEFRAMES.............................................................................................................15
ACTIVITIES....................................................................................................................................15
PRODUCTION EXECUTION DECISIONS.............................................................................................16
MATRIX........................................................................................................................................17
PACKAGING......................................................................................................................................17
PRODUCTION METRICS........................................................................................................................18
PRODUCTION TECHNOLOGY............................................................................................................18
ORDER MANAGEMENT AND CUSTOMER SERVICE...............................................................................19
CUSTOMER RELATIONSHIP MANAGEMENT.....................................................................................19
B2B Integration............................................................................................................................19
Activity-Based Costing.....................................................................................................................20
CUSTOMER SERVICE........................................................................................................................21
EXPECTED COST OF STOCKOUTS......................................................................................................22
ORDER MANAGEMENT INFLUENCE ON CUSTOMER SERVICE..........................................................23
SERVICE RECOVERY..........................................................................................................................25
MANAGING INVENTORY......................................................................................................................25
INVENTORY IN THE FIRM.................................................................................................................25
INVENTORY COSTS...........................................................................................................................26
INVENTORY MANAGEMENT: APPROACHES.....................................................................................27
ADDITIONAL APPROACHES..............................................................................................................28
CLASSIFYING INVENTORY.................................................................................................................29
DISTRIBUTION – MANAGING FULFILMENT OPERATIONS....................................................................30
DISTRIBUTIONS PLANNING AND STRATEGY.....................................................................................31
DISTRIBUTION EXECUTION..............................................................................................................32
DISTRIBUTION TECHNOLOGY...........................................................................................................33
2
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
“Change is
inevitable, but
growth and
FACTORS INFLUENCING SUPPLY CHAIN
Factors influencing supply chain decisions
1. Globalization
a. More competitive environment
b. Geographical placement
c. Time and distance
d. Challenges
i. Shortening product-cycle life – products are easily reproducible
ii. Organizational boundaries – business transformation
iii. Economic and political risk – various policies restructuring the business
environment
e. Outsourcing – a technique used to overflow competition
2. Technology
a. Information availability
b. Social sites
3. Organizational Consolidation and power shifts
a. Retail market
4. Empowered consumer
a. Services specialization
b. Increasing demand specifications
c. Custom made products
d. Demographic – diversity
e. Internet driven – marketing
5. Government policy and regulation
a. Transportation deregulations – economic controls, rates and areas of service
b. Financial market had become more responsive, flexible to consumer needs
c. Communication industry – the split of AT&T phone system
i. Opened a market for other companies
ii. Responsive market
SUPPLY CHAINS: DEVELOPMENT AND SHAPING 21st
CENTURY
CONCEPT DEVELOPMENT
1960: Physical distribution
1. Physical distribution
a. Focuses on the outbound side of a firm’s logistics system
i. Transportation, inventory requirements, warehousing, exterior
packaging, materials handling, cost activities
1980: Integrated logistics management
1. This concept added inbound logistics to the outbound logistics of physical distributions
2. Improved customer service, reduced the cost and increased efficiency
a. Total cost concept
2
John J. Coyle
Hanze University of Applied Sciences
International Business
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
CONTENT
FACTORS INFLUENCING SUPPLY CHAIN.................................................................................................3
1. Globalization..............................................................................................................................3
2. Technology.................................................................................................................................3
3. Organizational Consolidation and power shifts..........................................................................3
4. Empowered consumer...............................................................................................................3
5. Government policy and regulation............................................................................................3
SUPPLY CHAINS: DEVELOPMENT AND SHAPING 21 st CENTURY.............................................................3
CONCEPT DEVELOPMENT.................................................................................................................3
1960: Physical distribution.............................................................................................................3
1980: Integrated logistics management.........................................................................................3
1990: Supply chain management...................................................................................................4
Major Supply Chain Issues.............................................................................................................4
GLOBAL DIMENSIONS OF SUPPLY CHAINS.........................................................................................5
1. Rationale for Global Trade and Commerce................................................................................5
2. Contributing factors for global commerce and supply chain flows............................................5
3. Global markets and strategy......................................................................................................5
ROLE OF LOGISTICS IN SUPPLY CHAINS..........................................................................................5
SUBDIVISIONS OF LOGISTICS.........................................................................................................6
ACTIVITIES: LOGISTICS MANAGER.....................................................................................................7
LOGISTICS IN THE ECONOMY: MACRO PERSPECTIVE.....................................................................7
LOGISTICS IN THE FIRM: MICRO DIMENSION.................................................................................8
LOGISTICS IN THE FIRM: FACTORS INFLUENCING THE COST..........................................................9
SOURCING MATERIALS AND SERVICES..................................................................................................9
ASPECTS OF STRATEGIC SOURCING.................................................................................................10
TYPES AND IMPORTANCE OF ITEMS AND SERVICES PURCHASED................................................10
STRATEGIC SOURCING PROCESS......................................................................................................11
SUPPLIER EVALUATION AND RELATIONSHIPS..............................................................................12
PRODUCING GOODS AND SERVICES....................................................................................................13
PRODUCTION PROCESS FUNCTIONALITY.........................................................................................13
PRODUCTION TRADEOFFS...........................................................................................................13
PRODUCTION CHALLENGES.........................................................................................................13
OPERATIONS STRATEGY AND PLANNING.........................................................................................14
2
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
PRODUCTION PLANNING.................................................................................................................15
PLANNING TIMEFRAMES.............................................................................................................15
ACTIVITIES....................................................................................................................................15
PRODUCTION EXECUTION DECISIONS.............................................................................................16
MATRIX........................................................................................................................................17
PACKAGING......................................................................................................................................17
PRODUCTION METRICS........................................................................................................................18
PRODUCTION TECHNOLOGY............................................................................................................18
ORDER MANAGEMENT AND CUSTOMER SERVICE...............................................................................19
CUSTOMER RELATIONSHIP MANAGEMENT.....................................................................................19
B2B Integration............................................................................................................................19
Activity-Based Costing.....................................................................................................................20
CUSTOMER SERVICE........................................................................................................................21
EXPECTED COST OF STOCKOUTS......................................................................................................22
ORDER MANAGEMENT INFLUENCE ON CUSTOMER SERVICE..........................................................23
SERVICE RECOVERY..........................................................................................................................25
MANAGING INVENTORY......................................................................................................................25
INVENTORY IN THE FIRM.................................................................................................................25
INVENTORY COSTS...........................................................................................................................26
INVENTORY MANAGEMENT: APPROACHES.....................................................................................27
ADDITIONAL APPROACHES..............................................................................................................28
CLASSIFYING INVENTORY.................................................................................................................29
DISTRIBUTION – MANAGING FULFILMENT OPERATIONS....................................................................30
DISTRIBUTIONS PLANNING AND STRATEGY.....................................................................................31
DISTRIBUTION EXECUTION..............................................................................................................32
DISTRIBUTION TECHNOLOGY...........................................................................................................33
2
, PETER STRMENSKÝ
1.1.21
SUPPLY CHAIN MANAGEMENT
“Change is
inevitable, but
growth and
FACTORS INFLUENCING SUPPLY CHAIN
Factors influencing supply chain decisions
1. Globalization
a. More competitive environment
b. Geographical placement
c. Time and distance
d. Challenges
i. Shortening product-cycle life – products are easily reproducible
ii. Organizational boundaries – business transformation
iii. Economic and political risk – various policies restructuring the business
environment
e. Outsourcing – a technique used to overflow competition
2. Technology
a. Information availability
b. Social sites
3. Organizational Consolidation and power shifts
a. Retail market
4. Empowered consumer
a. Services specialization
b. Increasing demand specifications
c. Custom made products
d. Demographic – diversity
e. Internet driven – marketing
5. Government policy and regulation
a. Transportation deregulations – economic controls, rates and areas of service
b. Financial market had become more responsive, flexible to consumer needs
c. Communication industry – the split of AT&T phone system
i. Opened a market for other companies
ii. Responsive market
SUPPLY CHAINS: DEVELOPMENT AND SHAPING 21st
CENTURY
CONCEPT DEVELOPMENT
1960: Physical distribution
1. Physical distribution
a. Focuses on the outbound side of a firm’s logistics system
i. Transportation, inventory requirements, warehousing, exterior
packaging, materials handling, cost activities
1980: Integrated logistics management
1. This concept added inbound logistics to the outbound logistics of physical distributions
2. Improved customer service, reduced the cost and increased efficiency
a. Total cost concept
2
