Supply supply chain chain figure 95 figure 95 tier 1

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Supply Supply Chain Chain Figure 9.5 Figure 9.5 Tier 1 Tier 2 Supplier of materials Supplier of services Tier 3 Legend Customer Customer Customer Customer Distribution center Distribution center Manufacturer
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Managing the Customer Interface The internet has dramatically changed the way companies serve their customers. Order-Placement Process: Involves the activities required to register the need for a product or service and to confirm the acceptance of the order The internet has enabled firms to reengineer their order- placement process to benefit both the customer and the firm. Advantages include: cost reduction/ revenue flow increase/ global access/ pricing flexibility Order-Fulfillment Process: Involves the activities required to deliver a product or service to a customer. Key elements include Information sharing- facilitated by the Internet and ERP systems Finished goods inventory placement Forward placement puts the inventory close to the customer. Vendor-managed inventories (VMI) Continuous replenishment Postponement is used by assemble-to-order and mass customization firms. Customization is delayed until last possible Channel assembly is postponement extended to the distribution channel. Distribution may perform the final, customized assembly of a product for a customer
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Supplier Selection and Certification * Supplier selection - based on three basic criteria: price, quality, and delivery performance. * Supplier certification - typically involves visits by cross-functional teams to do an in-depth evaluation of the supplier's processes. * Supplier relations - can be directed with two different directions: - A competitive orientation (a zero-sum game): to drive costs down while maintain desired quality. - A Cooperative orientation - a partnership between buyers and sellers - based on a long-term commitments. * Outsourcing - Managers must choose the appropriate contract relationship with suppliers.
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Centralized Buying and Value Analysis Centralized vs. Localized buying: Centralized buying will increases purchasing clout (e.g., discount, bargaining power) while localized buying often reduces lead times and enables closer coordination with local production schedules. Value analysis- an intensive examination of the materials, processes, information systems, and material flows in the production of a good or service with the purposes of reducing costs, increasing profits and customer satisfaction, and improving employee morale. Value analysis can improve the internal supply chain, but its greatest potential lies in applying it to the external supply chain.
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Measures of Supply- Chain Performance Inventory measures: Average Aggregate Inventory Value : the total value of all items held in inventory for a firm. The value is expressed at a cost (as opposed to price) to avoid the differences that occur in prices over time. This measurement is used in two other important measures.
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