Management Information Systems _12_

							      Supply Chain Management
• Def: Supply Chain
• What is Supply Chain Management?
• Strategic Importance of SCM
   – Purchasing
   – Operations/Materials Management   Accounting and Finance
   – Marketing and Customer Service
• Uncertainty In Supply Chain & Some Solutions
• Supply Chain Design

DSCI 3123                                                   1
                Supply Chain

• Facilities, functions, activities for producing &
  delivering product or service from supplier to
  customer

• Planning, managing, acquiring, producing,
  warehousing, distribution, delivery


DSCI 3123                                         2
 What is Supply Chain Management?
                         Scheduling Information
  Supplier                     Cash Flow                       Customer
                               Order Flow
               Inv.

             Supplier

                               Manufacturer or
                        Inv.                    Inv.           Customer
                               Service Provider

                                                       Inv.
         Supplier
                                 Credit Flow
                                                               Customer
                                Material Flow
                                                         Marketing/
         Purchasing-             Operations/               Sales/
          Vendors               Materials Man.           Cust. Serv.


                          Accounting and Finance
DSCI 3123                                                              3
       Strategic Importance of SCM
• Deals w/the complete cycle of materials flows
• SCM plays key role in
   –   Product customization
   –   Quality control
   –   Cost reductions
   –   Speed-to-market
• Effective SCM is to balance the production stream
  with uncertainty (customer, supplier, economic, etc.)
DSCI 3123                                            4
                      Purchasing
• Why Important?
   – Substantial % of sales, both goods and services
   – e.g.,            Industry       % of Sales
                        All            54%
                        Lumber         60%
                        Food           63%
                        Petroleum      83%

   – Quality of goods and services produced are directly related
     to those purchased/received

DSCI 3123                                                      5
                      Purchasing
•   Selecting suppliers
•   Ordering materials
•   Shipping & delivery of raw materials
•   Information management
•   Quality management - w/regard to suppliers
•   Customer service - w/regard to suppliers and fellow workers



DSCI 3123                                                    6
Operations/Materials Management
•   Ordering materials - in conjunction w/purchasing
•   Inventory control
•   Scheduling production & capacity
•   Shipping & delivery - in conjunction w/warehouse
•   Information management - linked to 3 major business areas
•   Quality management - garbage in/garbage out principal
•   Customer service - vendors and final customer

DSCI 3123                                                  7
    Marketing and Customer Service
•   Forecasting demand
•   Selecting suppliers - in conjunction w/purchasing
•   Shipping & delivery - contract requirements
•   Information management
•   Quality management - first place customer complaints
    and/or compliments
• Customer service - make the sale next time?


DSCI 3123                                                  8
      Uncertainty In Supply Chain
•   Wrong forecasts
•   Late deliveries
•   Poor quality
•   Machine breakdowns
•   Canceled orders
•   Erroneous information

DSCI 3123                           9
                    Some Solutions
•   Vertical integration
•   Single sourcing
•   JIT - moving suppliers closer
•   Keiretsu - Japanese concept of partnering a small # of
    suppliers and vertical integration
• Information technology improvements- MRP, ERP
• Improved inventory control - goods as well as services

DSCI 3123                                                    10
             Supply Chain Design
•   Strategic issue
•   Apply quality management principles
•   Control inventory
•   Work with suppliers & customers to achieve goals
•   Major goal of distribution is speed
•   Locate close to major markets
•   Use IT to speed information flow - e.g., EDI, Internet, etc.
•   Outsource international distribution

DSCI 3123                                                      11
                      Summary
• Def: Supply Chain
• What is Supply Chain Management?
• Strategic Importance of SCM
   – Purchasing
   – Operations/Materials Management   Accounting and Finance
   – Marketing and Customer Service
• Uncertainty In Supply Chain & Some Solutions
• Supply Chain Design

DSCI 3123                                                   12