The ultimate goal of supply chain management is to create value for end customers & firms in the supply chain.
Firms in the supply chain must: 1. Measure and improve their SC coordination efforts 2. Successfully integrate processes within and between firms
Supply Chain integration requires effort!
Supply chain strategies - must consider the potential trade-offs existing between: Cost , Quality, Quantity, Service * Firms must integrate processes internally and externally * Top Supply Chain Performers respond quickly to customer needs – responsiveness!! * Process integration requires effort: Training, Willing & competent partners, Trust, Organizational culture change
The Silo Mentality “I win, you lose”;Using the cheapest suppliers; Ignoring customers; Assigning few resources to new product & service design
Solutions: Align SC goals with firm goals & incentives; Performance reviews of managers must include their ability to integrate processes internally and externally
Lack of Supply Chain Visibility * In a recent survey, 1/3 of pharmaceutical manufacturers provided adequate information visibility.
RFID technology has promise to add real-time information visibility to supply chains.
Lack of Knowledge * Technology changes quickly enabling process integration across extended supply chains * Firms must spend significant time influencing and increasing the capabilities of themselves and their partners. * Training of supply chain partner employees is also known as collaborative education, and can result in more successful supply chains.
Managing Supply Chain Risk * Increase safety stocks also known as stockpiling and forward buying * Identify backup suppliers and logistics services * Diversify the supply base * Utilize a supply chain IT system * Develop a formal risk management program
These areas can increase Supply Chain Risk * Reduce inventory levels * Reduce the number of suppliers in your network * Use of more overseas suppliers with longer supply chain lead time
Performance measurement systems must: * Link SC trading partners to achieve breakthrough performance in satisfying the end users * Overlay the entire supply chain to assure that all contribute to supply chain strategy * Be jointly agreed on by all SC members
Demand driven supply networks are supply chains with enough flexibility to quickly respond to changes in the marketplace. * In reviewing a report detailing the supply chain performance. Here are some indications of our performance:
SC cash-to-cash cycle time: Avg. # of days between paying for materials and getting paid by SC partners * Using averages, material is purchased on day 4 of the fiscal year, they would get paid by their direct customers on day 30 of the fiscal year – what is the cash to cash cycle time??
SC delivery performance: avg. % of orders filled by requested delivery date * 87 out of every 100 customer orders were delivered to their customers by the agreed upon delivery date – what is the SC delivery performance??
SC perfect order fulfillment performance: average % of orders that arrive on time, complete, and undamaged * 75 out of every 100 orders were filled complete, on-time, and without damage – What is the perfect order performance??
Supply chain e-business performance: avg. % of electronic orders received for all SC members – is this performance or statement?? * 94 out of every 100 orders to supply chain members were electronic – what is the % of e-business??
ISO 9000 and ISO 14000 * International Organization for Standardization (ISO) located in Switzerland has > 155 member countries * ISO 14000: governs environmental management standards * ISO 9000: 5 international quality management standards of production (often minimum standard for supplier) * The ISO 9000 standards were