2. Supply Chain ManagementThe integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders.
3. Supply Chain Business ProcessesTier 1
SupplierTier 2
SupplierSUPPLY CHAIN MANAGEMENTIntegrating and Managing Processes Across the Supply ChainLogisticsPurchasing Marketing & SalesR&DCustomerConsumer/End-userCUSTOMER RELATIONSHIP MANAGEMENTCUSTOMER SERVICE MANAGEMENTDEMAND MANAGEMENTORDER FULFILLMENTMANUFACTURING FLOW MANAGEMENTPROCUREMENTPRODUCT DEVELOPMENT AND COMMERCIALIZATIONRETURNSPRODUCT FLOWProductionFinanceManufacturerInformation FlowSource: Douglas M. Lambert, Martha C. Cooper, Janus D. Pagh, “Supply Chain Management: Implementation Issues and Research Opportunities”, The International Journal of Logistics Management, Vol. 9, No. 2, 1998, p. 2.
4. Supply Chain Network StructureMembers of the Focal Company’s Supply ChainnnnnnnnConsumers / End-CustomersTier 3 to n customers12112n12Initial SuppliersTier 3 to n suppliers123121231Focal CompanyTier 1
CustomersTier 2
CustomersTier 3 to
Consumers/
End-CustomersTier 2
SuppliersTier 1
SuppliersTier 3 to
Initial
suppliersn1
5. Elements and Key Decisions2. What processes should be linked
with each of these key
supply chain members?Supply chain
business
processesSupply chain
management
componentsSupply chain
network
structure1. Who are the key supply
chain members with whom
to link processes?3. What level of integration
and management should be
applied or each process link?
6. Types of Business Process LinksManaged Process Links
Monitored Process Links
Not-Managed Process Links
Nonmember Process Links
7. Types of Inter-company Business Process LinksMembers of the Focal Company’s Supply ChainManaged Process LinksMonitor Process LinksNot-Managed Process LinksNon-Member Process LinksNon-Members of the Focal Company’s Supply ChainnnnnnnnnConsumers / End-CustomersTier 3 to n customers12112nn1211Initial SuppliersTier 3 to n suppliers123121231Focal CompanyTier 1
CustomersTier 2
CustomersTier 3 to
Consumers/
End-CustomersTier 2
SuppliersTier 1
SuppliersTier 3 to
Initial
suppliersn1Source: Douglas M. Lambert, Martha C. Cooper and Janus D. Pagh, "Supply Chain Management: Implementation
Issues and Research Opportunities,” The International Journal of Logistics Management, Vol. 9, No. 2 (1998), p.7.
8. Underlying Process VisionCustomer Relationship
ManagementProcurementFulfillmentCustomer Service ManagementManufacturing Flow
ManagementDemand
ManagementCustomerSource: 3MSupply Chain Management VisionThe key to achieving an integrated flow of product and information throughout the supply chain is to create a focused customer interface, a focused supplier interface, and an integrated, process-oriented, supply chain which is driven by the customer.
9. Fundamental Management ComponentsWork flow/
activity structurePlanning and
control methodsOrganization
structureCommunication
and information flow
facility structureProduct flow
facility structurePhysical and technical management componentsManagerial and behavioral management componentsCulture and
attitudeRisk and
reward structurePower and
leadership structureManagement
methods
10. Customer Relationship ManagementCustomer service teams develop and implement customer partnering programs.
Product/service agreements are established.
New customer interfaces lead to improved communication and better predictions of customer demand and improve the way customers are serviced.
Teams identify and eliminate sources of production variability.
Key performance evaluation criteria (both level of service and customer profitability) are used to measure results.
11. Customer Service ManagementProvides a single source of customer information, a point of contact for administration of the product/service agreement.
Conveys real-time information through interface with product and distribution operations.
Requires an on-line/real-time product and pricing information to assist customers with inquiries, order placement, and after-sales service.
Includes front line technical service that assists customers with product applications and recommendations.
12. Customer Order Fulfillment“Customer need dates” and requirements drive the process.
Manufacturing, distribution, and transportation plans are integrated.
Strategic alliances with key supply chain members and carriers are formed to meet requirements and to reduce total-delivered-cost to customers
13. Manufacturing Flow ManagementProduct is pulled through the plant based on customer needs.
Manufacturing processes must flexibly respond to market changes with rapid changeover capabilities for mass customization.
Minimum lot sizes are planned to move toward a make to order environment.
Production priorities are driven by required delivery dates.
Managers concentrate on keeping setup/changeover costs very low.
14. ProcurementStrategic plans of suppliers and company are aligned to focus resources on holding down costs and developing new products.
Supplier categorization and management is implemented on a corporate global basis, with purchasing in a strategic contracting role.
Purchase order transactions are integrated with the supply process to improve productivity and all areas of supplier performance.
15. Cost trade-offs in Marketing and LogisticsProductOrder processing
and information
costs
Inventory
carrying costs
Place/customer
service levelsOrder processing
and information
costsPriceLot quantity costsWarehousing costsTransportation
costsLOGISTICSMARKETING
16. Reengineering SCM Process Flow ChartAssess:
Culture
Strategies
Practices
ProcessesMission statementBusiness requirementsImplement business
solution in supply chainNew enterprise design
for integrated processRevise/reengineerStrategic
partnershipsOrganization
structureHuman
resource
capabilitiesInformation
systemsAcceptableNot acceptableSource: Douglas M. Lambert, Larry C. Guinipero, and Gary J. Ridenhower, “Supply Chain Management: A Key to Achieving Business Excellence in the 21st Century,” unpublished manuscript. All Rights reserved.
17. IMPLEMENTATION OF SUPPLY CHAIN MANAGEMENTInformation Architecture, Data Base Strategy, Information VisibilityTechnicalLogisticsPurchasingFinance &AccountingSales &MarketingBusinessProcessesTypical FunctionsSilosManufac-turingCUSTOMERSDemandManagementNetworkPlanningCapabilityPlanningSourcingDemandPlanningCustomerRelationshipManagementRequirementsDefinitionManufacturingStrategySourcingStrategyCustomerProfitabilityAccountManagementRequirementsDefinitionCustomer ServiceManagementPerformanceSpecificationsCoordinatedExecutionAccountAdministrationTechnicalServiceManufacturing FlowManagementProductionPlanningIntegratedSupplyManufacturingProcessStabilityFulfillmentDistributionManagementPlantDirectSelectedSupplier(s)DistributionCostSpecialOrdersProductDevelopment andCommercializationProcessSpecificationsMaterialSpecificationsR & D CostProductDesignBusinessPlanMovementRequirementsPriorityAssessmentCostTo ServeTradeoffAnalysisProcessRequirementsEnvironmentalRequirementsPackagingSpecificationsPrioritizationCriteriaSUPPLIERSProcurementIntegratedPlanningSupplierManagementMaterialsCostMaterialSpecificationsOrderBookingInboundFlowCostNote: Process sponsorship and ownership must be established to drive the attainment of the supply chain vision and eliminate the functional barriers that artificially separate the process flows.