scm_ch05 - Class 6/3/13 Chapter1...

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Supply Chain Management: From Vision to Implementation Chapter 5: The Order Fulfillment Process: Managing the Physical Flow Infrastructure
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2 Chapter 5: Learning Objectives 1. Describe how purchasing, production, and logistics decisions work together to create customer value. 1. Identify and describe the steps in the purchasing process. 1. Identify and discuss design and control decisions in production operations management. Describe the underlying principles and practices lean manufacturing. Describe the characteristics of service operations.
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3 Chapter 5: Learning Objectives 1. Identify the key decision-making elements of the logistics process. Discuss order fulfillment, transportation, and distribution strategies. 1. Describe how physical flow decisions affect the cost and service positions of the company as well as the design of the overall supply chain.
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4 Order Fulfillment Order fulfillment is the process that actually makes and delivers a product or service Three functions are responsible: Purchasing – acquires the inputs used to support production Production – converts inputs into outputs that customers value Logistics – transports and stores goods assuring access
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5 SCOR Model When purchasing, production, and logistics work in concert directed by overall strategy, they help deliver value to the customer. The SCOR model helps to create a common vision for managing and coordinating five primary SC processes.
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6 Elements of the SCOR Model Plan : Processes that balance demand and supply to develop a course of action to meet sourcing, production, and delivery needs. This process aligns the supply chain plan with the financial plan. Source : Processes that purchase goods and services to meet planned or actual demand. Emphasis is on selecting suppliers, establishing policies, scheduling deliveries, and assessing performance. Make : Processes that transform product to a finished product to meet demand. Emphasis is on scheduling production, measuring performance, managing inventory, and configuring the network. Deliver : Processes that provide finished goods and services to customers. Emphasis is on order management, warehouse management, and transportation management. Return : Processes associated with the return of products for any reason, and includes post-delivery customer support. Emphasis is on reverse logistics and long-term customer support.
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7 SCOR Model
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8 Purchasing Management Four developments during the 80s and 90s increased the importance of purchasing: 1. Purchased inputs became a primary operating cost 2. Just-in-time emphasized cooperative, long-term buyer-supplier relationships 3. Information technology provided information needed to strategically manage relationships 4. Better trained and more competent managers entered supply arena
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9 Purchasing Costs Manufactures spend 55% of each dollar on purchased goods and services Approximately 60-80% of operating expense Direct manufacturing costs have declined to
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This note was uploaded on 01/13/2011 for the course IT 230 taught by Professor Staff during the Spring '08 term at Purdue University.

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scm_ch05 - Class 6/3/13 Chapter1...

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