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Russell and Taylor Operations and Supply Chain Management, 8th Edition
Russell and Taylor Operations and Supply Chain Management, 8th Edition
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-2
Supply Chains
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-4
The Supply Chain
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-5
Supply Chain for Denim Jeans
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-6
Supply Chain for Denim Jeans
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-7
Supply Chain Processes
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-8
Supply Chain for Service Providers
• More difficult than manufacturing
• Does not focus on the flow of physical goods
• Focuses on human resources and support
services
• More compact and less extended
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-9
Value Chains
• Value chain
• Broader than supply chain
• Customer management
• New product innovation
• Post-sales support
• Change management
• Demand-driven value chain
• Supply management
• Demand management
• Product management
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-10
Supply Chain Management (SCM)
• Managing flow of information through supply chain
in order to attain the level of synchronization that
will make it more responsive to customer needs
while lowering costs
• Keys to effective SCM
• information
• communication
• cooperation
• trust
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-11
Supply Chain
Uncertainty and Inventory
• A major objective of SCM:
• respond to uncertainty in customer demand without
creating costly excess inventory
• Negative effects of uncertainty
• lateness
• incomplete orders
• Inventory
• insurance against supply chain uncertainty
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-12
Supply Chain
Uncertainty and Inventory
• Factors that contribute to uncertainty
• inaccurate demand forecasting
• long variable lead times
• late deliveries
• incomplete shipments
• product changes
• batch ordering
• price fluctuations and discounts
• inflated orders
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-13
Bullwhip Effect
• Occurs when slight demand variability is
magnified as information moves back upstream
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-14
Risk Management
• Formal process for coping with supply chain
uncertainty
• Evaluate and anticipate likelihood of supply
chain disruptions
• Plan for possible disruptions
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-15
Risk Pooling
• Risks are aggregated to reduce the impact of
individual risks
• Combine inventories from multiple locations into one
• Reduce parts and product variability, thereby reducing
the number of product components
• Create flexible capacity
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-16
Supply Chain Sustainability
• “Going green”
• Meeting present needs without compromising the
ability of future generations to meet their needs
• Sustaining human and social resources
• It can be cost effective and profitable
• Can provide impetus for product and process
innovations
• Impetus comes from downstream in the supply
chain and moves upstream to suppliers
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-17
Sustainability and Quality Management
• Reducing waste through quality programs helps
achieve sustainability goals
• Improving fuel efficiency of vehicles
• Telecommuting
• Eco-friendly packing materials
• Energy-efficient facilities
• Changing thermostat settings
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-18
Information Technology:
A Supply Chain Enabler
• Information links all aspects of supply chain
• E-business
• replacement of physical business processes with
electronic ones
• Electronic data interchange (EDI)
• a computer-to-computer exchange of business
documents
• Bar code and point-of-sale
• data creates an instantaneous computer record of a
sale
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-19
IT: Supply Chain Enabler
• Radio frequency identification (RFID)
• technology can send product data from an item to a
reader via radio waves
• Internet
• allows companies to communicate with suppliers,
customers, shippers and other businesses around the
world instantaneously
• Build-to-order (BTO)
• direct-sell-to-customers model via the Internet;
extensive communication with suppliers and customer
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-20
Supply Chain Enablers
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-21
E-Business & Supply Chain Management
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-22
Electronic Data Interchange
• Computer-to-computer exchange of documents in
a standard format
• Purchasing, shipping and receiving
• Improve customer service
• Reduce paperwork
• Increase productivity
• Improve billing and cost efficiency
• Reduce bullwhip effect through information
sharing
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-23
Bar Codes
• Automated data collection system
• Bar code contains identifying information
• Provide instantaneous tracking information
• Checkout scanners create point-of-sale data
• Update inventory records
• Identify trends
• Order material
• Schedule orders
• Plan deliveries
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-24
Radio Frequency Identification (RFID)
• Use radio waves to transfer data from chip to a
reader
• Provides complete visibility of product location
• Continuous inventory monitoring
• Reduce labor to manage inventory
• Reduce inventory costs
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-25
RFID Capabilities
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-26
RFID Capabilities
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-27
Supply Chain Integration
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-28
Supply Chain Integration
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-29
Collaborative Planning, Forecasting,
and Replenishment (CPFR)
• Two or more companies in a supply chain to
synchronize their demand forecasts into a single
plan to meet customer demand
• Parties electronically exchange
• past sales trends
• point-of-sale data
• on-hand inventory
• scheduled promotions
• forecasts
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-30
SCM Software
• Enterprise resource planning (ERP)
• software that integrates the components of a
company by sharing and organizing
information and data
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-31
Measuring Supply Chain Performance
• Key performance indicators
– Metrics used to measure supply chain performance
•Inventory turnover
Inventory turns
Cost of goods sold
=
Average aggregate value of inventory
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-32
Measuring Supply Chain Performance
•Days of supply
Days of supply
Average aggregate value of inventory
=
(Cost of goods sold)/(365 days)
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-33
Computing Key Performance Indicators
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-34
Copyright 2014 John Wiley & Sons, Inc.
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information herein.
© 2014 John Wiley & Sons, Inc. - Russell and Taylor 8e 10-38