Chapter 8 - PART III Organizational Applications 7...

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PA R T I I I Organizational Applications 354 7. Transaction Processing, Functional Applications, CRM, and Integration 8. Supply Chain Management and Enterprise Resource Planning 9. IT Planning and Business Process Redesign C H A P T E R 8 Supply Chain Management and Enterprise Resource Planning ChevronTexaco 8.1 Essentials of the Supply and Value Chains 8.2 Supply Chain Problems and Solutions 8.3 Computerized Systems: MRP, MRPII, SCM and E-Integration 8.4 Enterprise Resource Planning (ERP) 8.5 E-Commerce and Supply Chains 8.6 Partner Relationship Management 8.7 Global Supply Chains Minicases: (1) Quantum Corporation / (2) Green Mountain Coffee Roasters LEARNING OBJECTIVES After studying this chapter, you will be able to: Understand the concept of the supply chain, its importance, and management. Describe the problems of managing the supply chain and some innovative solutions. Trace the evolution of software that supports activities along the supply chain and describe the need for software integration. Describe ERP and understand the relationships between ERP and SCM software. Describe order fulfillment problems and solutions in e-commerce and how EC solves other supply chain problems. Describe the process and activities of partner relationship management. Understand the process and issues of global supply chain management.
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355 CHEVRONTEXACO’S MODERNIZED SUPPLY CHAIN THE PROBLEM ChevronTexaco ( chevrontexaco.com ) is the largest U.S. oil company and is multi- national in nature. Its main business is drilling, refining, transporting, and sell- ing petroleum products (oil and gasoline). In this competitive business a saving of even a quarter of penny for each gallon totals up to millions of dollars. Two problems have plagued the industry: running out of gasoline when needed at each pump, and a delivery that is aborted because a tank at the gas station is too full (called “retain”). Run-outs and retains, known as the industry’s “twin evils,” have been a target for improvements for years, with little success. The causes of the twin evils have to do with the supply chain: Gasoline flows in the supply chain, starting with the upstream part of the chain (Chapter 2) which includes oil hunting, drilling, and extracting. Then the oil is processed, and finally it goes to the downstream, customer–facing part of the supply chain. The difficulty is to match the three parts of the chain. ChevronTexaco own oil fields and refineries, but it also buys both crude and refined oil to meet demand. Purchases are of two types: those that have long-term contracts and those that are purchased “as needed,” in the spot market, at prevailing prices (which usually are higher than contract prices). In the past ChevronTexaco acted like a mass-production manufacturing com- pany, just trying to make products and sell them (a supply-driven strategy). The problem with this strategy is that each time you make too much or too little, you are introducing extra cost into the supply chain.
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