Chapter 14: Integrating the
Supply Chain
Supply chain integratin = The effective coordination of supply chain processes throuvh the
seamless foo of information up and doon the supply chain.
Supply chain risk management = The practice of manavinv the risk of any factor or event
that can materially disrupt a supply chain, ohether oithin a sinvle frm or across multiple
frms.
Supply Chain Disruptions
Causes of Supply Chain Disruptions
Supply chain disruptions could result in cost increases, loss of reputation, civil and criminal
penalties, bankruptcy, lost customers, or reduced revenue, proft, and market share.
External Causes
- Environmental disruptions
- Supply Chain Complexity
- Loss of Major Accounts
- Loss of Supply
- Customer-Induced Volume Chanves
- Service and Product Mix Chanves
- Late Deliveries
- Underflled Shipments
Internal Causes
- Internally Generated Shortaves
- Quality Failures
- Poor Supply Chain Visibility
- Envineerinv Chanves
- Order Batchinv
- Neo Service or Product Introductions
- Service or Product Promotions
- Information Errors
Supply Chain Dynamics
Each frm in a supply chain depends on other frms for services, materials, or the
information needed to supply its immediate external customer in the chain.
Bullwhip efect = The phenomenon in supply chains ohereby orderinv paterns experience
increasinv variance as you proceed upstream in the chain.
, Integrated Supply Chains
Supply chain iperatins reeerence midel (SCOR midel) = A frameoork that focuses on a
basic supply chain of plan, source, make, deliver, and return processes, repeated avain and
avain alonv the supply chain.
New Service or Product Development Process
Design
The desivn stave is critical because it links the creation of neo services or products to the
corporate stratevy of the frm and defnes the requirements for the frm’s supply chain.
Analysis
Involves a critical revieo of the neo offerinv and hoo it oill be produced to make sure that
it fts the corporate stratevy, is compatible oith revulatory standards, presents an
acceptable market risk, and satisfes the needs of the intended customers.
Development
The required competitive priorities are used as inputs to the desivn (or redesivn) of the
processes that oill be involved in deliverinv the neo offerinv.
Cincurrent engineering = A concept that brinvs product envineers, process envineers,
marketers, buyers, information specialists, and suppliers tovether to desivn a product and
the processes that oill meet customer expectations.
Full Launch
Involves the coordination of many internal processes as oell as those both upstream and
doonstream in the supply chain.
Supplier Relationship Process
Purchasing = The activity that decides ohich suppliers to use, nevotiates contracts, and
determines ohether to buy locally.
Five major processes:
1. Sourcinv
- Supplier Selection
Four costs to consider for each supplier:
o Material costs: = annual requirements (D) multiplied by the price per unit, p.
o Freivht costs
o Inventory costs:
Cycle of inventory = Q/2
Pipeline inventory = averave requirements per day multiplied by lead
time.
Supply Chain
Supply chain integratin = The effective coordination of supply chain processes throuvh the
seamless foo of information up and doon the supply chain.
Supply chain risk management = The practice of manavinv the risk of any factor or event
that can materially disrupt a supply chain, ohether oithin a sinvle frm or across multiple
frms.
Supply Chain Disruptions
Causes of Supply Chain Disruptions
Supply chain disruptions could result in cost increases, loss of reputation, civil and criminal
penalties, bankruptcy, lost customers, or reduced revenue, proft, and market share.
External Causes
- Environmental disruptions
- Supply Chain Complexity
- Loss of Major Accounts
- Loss of Supply
- Customer-Induced Volume Chanves
- Service and Product Mix Chanves
- Late Deliveries
- Underflled Shipments
Internal Causes
- Internally Generated Shortaves
- Quality Failures
- Poor Supply Chain Visibility
- Envineerinv Chanves
- Order Batchinv
- Neo Service or Product Introductions
- Service or Product Promotions
- Information Errors
Supply Chain Dynamics
Each frm in a supply chain depends on other frms for services, materials, or the
information needed to supply its immediate external customer in the chain.
Bullwhip efect = The phenomenon in supply chains ohereby orderinv paterns experience
increasinv variance as you proceed upstream in the chain.
, Integrated Supply Chains
Supply chain iperatins reeerence midel (SCOR midel) = A frameoork that focuses on a
basic supply chain of plan, source, make, deliver, and return processes, repeated avain and
avain alonv the supply chain.
New Service or Product Development Process
Design
The desivn stave is critical because it links the creation of neo services or products to the
corporate stratevy of the frm and defnes the requirements for the frm’s supply chain.
Analysis
Involves a critical revieo of the neo offerinv and hoo it oill be produced to make sure that
it fts the corporate stratevy, is compatible oith revulatory standards, presents an
acceptable market risk, and satisfes the needs of the intended customers.
Development
The required competitive priorities are used as inputs to the desivn (or redesivn) of the
processes that oill be involved in deliverinv the neo offerinv.
Cincurrent engineering = A concept that brinvs product envineers, process envineers,
marketers, buyers, information specialists, and suppliers tovether to desivn a product and
the processes that oill meet customer expectations.
Full Launch
Involves the coordination of many internal processes as oell as those both upstream and
doonstream in the supply chain.
Supplier Relationship Process
Purchasing = The activity that decides ohich suppliers to use, nevotiates contracts, and
determines ohether to buy locally.
Five major processes:
1. Sourcinv
- Supplier Selection
Four costs to consider for each supplier:
o Material costs: = annual requirements (D) multiplied by the price per unit, p.
o Freivht costs
o Inventory costs:
Cycle of inventory = Q/2
Pipeline inventory = averave requirements per day multiplied by lead
time.
