Supply-Chain Management - Supply-Chain Management ● 2...

Supply-Chain Management
● 2 Planning, organizing, directing, & controlling flows of materials Begins with raw materials
Continues through internal operations Ends with distribution of finished goods Involves everyone
in supply-chain Example: Your supplier’s supplier Objective: Maximize value & lower waste
Supply-Chain Management
● 3 Consumer Retailer Manufacturing Material Flow VISA ® Credit Flow Supplier Wholesaler
Retailer Cash Flow Order Flow Schedules The Supply-Chain
● 4 The Supply Chain Supplier Inventory Distributor Inventory Manufacturer Customer Market
research data Scheduling information Engineering and design data Order flow and cash flow
Ideas and design to satisfy end customer Material flow Credit flow
● 5 11% 31% 58% Material Dir Wages Other 71% 16% 13% COGS Payroll Other 83% 9% 8%
COGS Payroll Other Manufacturing Wholesale Retail Material Costs in Supply-Chain
● 6 Supply-Chain Strategy Support Supplier’s goal Primary Selection Criteria Supply demand at
lowest possible cost Select primarily for cost Low Cost Respond quickly to changing
requirements and demand to minimize stock outs Select primarily for capacity, speed, and
flexibility Response Share market research; jointly develop products and options Select primarily
for product development skills Differentiation
● 7 Supply-Chain Strategy Support Process Characteristics Maintain high average utilization Low
Cost Invest in excess capacity and flexible processes Response Modular processes that lend
themselves to mass customization Inventory Characteristics Minimize inventory throughout the
chain to hold down costs Develop responsive system, with buffer stocks positioned to ensure
supply Minimize inventory in the chain to avoid obsolescence Differentiation
● 8 Supply-Chain Strategy Support Lead-time Characteristics Shorten lead- time as long as it does
not increase costs Low Cost Invest aggressively to reduce production lead-time Response Invest
aggressively to reduce development lead-time Differentiation Product-design Characteristics

Maximize performance and minimize cost Use product designs that lead to low set- up time and
rapid production ramp-up Use modular design to postpone product differentiation for as long as
possible
● 9 Global Supply-Chain Issues Supply chains in a global environment must be: Flexible enough to
react to sudden changes in parts availability, distribution, or shipping channels, import duties, and
currency rates Able to use the latest computer and transmission technologies to schedule and
manage the shipment of parts in and finished products out Staffed with local specialists to handle
duties, trade, freight, customs and political issues
● 10 Major cost center Affects quality of final product Aids strategy of low cost, response, and
differentiation Importance of Purchasing
● 11 Supply-Chain Costs as a Percent of Sales All industry Automobile Food Lumbar Paper
Petroleum Transportation 52% 67% 60% 61% 55% 79% 62% Industry Percent of Sales
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