Krajewski IN Chapter 10 - Chapter 10 Supply Chain Strategy...

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Chapter 10 Supply Chain Strategy TEACHING TIP “Operations Strategy” was already discussed in Chapter 2. The focus of this chapter is on supply chain strategy, which seeks to design a firm’s supply chain to meet the competitive priorities of the firm’s operations strategy. The terms value chain and supply chain are sometimes used interchangeably. Value chains involve internal linkages between a firm’s core processes, its supporting processes, and its external linkages with the processes of its customers and suppliers. TEACHING TIP Mention how Dell Inc. is an excellent example of how a firm manages its value chain to gain a competitive advantage. A. Supply Chain Strategy Across the Organization 1. Supply chains must be managed to coordinate the inputs with the outputs in a firm to achieve the appropriate competitive priorities of the firm’s enterprise processes. 2. The Internet offers firms an alternative to traditional methods for managing supply chains. 3. A supply chain strategy is essential for service as well as manufacturing firms. B. Supply Chain for Services and Manufacturing Every firm or organization is a member of some supply chain. 1. Services a. Driven by the need to provide support for the essential elements of the various service packages it delivers. TEACHING TIP Mention florist example. b. Elements of its service package include: Supporting facilities Facilitating goods Explicit services Implicit services TEACHING TIP Mention Managerial Practice 10.1 “Supply Chain Excellence at 7-Eleven Japan,” which shows how 7-Eleven Japan redesigned its supply to gain a competitive edge in a dynamic service environment. 2. Manufacturing 10-1
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10-2 Chapter 10: Supply-Chain Strategy a. A fundamental purpose of supply chain design for manufacturers is to control inventory by managing the flow of materials. b. Inventory exists in three aggregate categories that are useful for accounting purposes. Raw materials Work-in-process Finished goods c. The finished goods of one firm may actually be the raw materials for another firm. C. Measures of Supply Chain Performance 1. Inventory measures a. Average aggregate inventory value Total value of all items held in inventory by a firm. Expressed in dollar values because the sum of individual items in raw materials, work-in-process, and finished goods values can be determined. It is an average because it usually represents the inventory investment over some period of time. This tells managers how much of a firm’s assets are tied up in inventory. b. Weeks of supply Measure obtained by dividing the average aggregate inventory value by sales by sales per week at cost. Formula expressed cost) (at sales Weekly value inventory aggregate Average supply of Weeks = In some low-inventory operations, days or even hours are a better unit of time.
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