CHAPTER2SupplyChainManagementCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-2SupplyChainManagementTheintegrationofkeybusinessprocessesfromenduserthroughoriginalsuppliers,thatprovidesproducts,services,andinformationthataddvalueforcustomersandotherstakeholders.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-3SupplyChainBusinessProcessesTier1SupplierTier2SupplierSUPPLYCHAINMANAGEMENTIntegratingandManagingProcessesAcrosstheSupplyChainLogisticsPurchasingMarketing&SalesR&DCustomerConsumer/End-userCUSTOMERRELATIONSHIPMANAGEMENTCUSTOMERSERVICEMANAGEMENTDEMANDMANAGEMENTORDERFULFILLMENTMANUFACTURINGFLOWMANAGEMENTPROCUREMENTPRODUCTDEVELOPMENTANDCOMMERCIALIZATIONRETURNSPRODUCTFLOWProductionFinanceManufacturerInformationFlowSource:DouglasM.Lambert,MarthaC.Cooper,JanusD.Pagh,“SupplyChainManagement:ImplementationIssuesandResearchOpportunities”,TheInternationalJournalofLogisticsManagement,Vol.9,No.2,1998,p.2.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-4SupplyChainNetworkStructureMembersoftheFocalCompany’sSupplyChainnnnnnnnConsumers/End-CustomersTier3toncustomers12112n12InitialSuppliersTier3tonsuppliers123121231FocalCompanyTier1CustomersTier2CustomersTier3toConsumers/End-CustomersTier2SuppliersTier1SuppliersTier3toInitialsuppliersn1Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-5ElementsandKeyDecisions2.Whatprocessesshouldbelinkedwitheachofthesekeysupplychainmembers?SupplychainbusinessprocessesSupplychainmanagementcomponentsSupplychainnetworkstructure1.Whoarethekeysupplychainmemberswithwhomtolinkprocesses?3.Whatlevelofintegrationandmanagementshouldbeappliedoreachprocesslink?Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-6TypesofBusinessProcessLinks•ManagedProcessLinks•MonitoredProcessLinks•Not-ManagedProcessLinks•NonmemberProcessLinksCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-7TypesofInter-companyBusinessProcessLinksMembersoftheFocalCompany’sSupplyChainManagedProcessLinksMonitorProcessLinksNot-ManagedProcessLinksNon-MemberProcessLinksNon-MembersoftheFocalCompany’sSupplyChainnnnnnnnnConsumers/End-CustomersTier3toncustomers12112nn1211InitialSuppliersTier3tonsuppliers123121231FocalCompanyTier1CustomersTier2CustomersTier3toConsumers/End-CustomersTier2SuppliersTier1SuppliersTier3toInitialsuppliersn1Source:DouglasM.Lambert,MarthaC.CooperandJanusD.Pagh,SupplyChainManagement:ImplementationIssuesandResearchOpportunities,”TheInternationalJournalofLogisticsManagement,Vol.9,No.2(1998),p.7.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-8UnderlyingProcessVisionCustomerRelationshipManagementProcurementFulfillmentCustomerServiceManagementManufacturingFlowManagementDemandManagementCustomerSource:3MSupplyChainManagementVisionThekeytoachievinganintegratedflowofproductandinformationthroughoutthesupplychainistocreateafocusedcustomerinterface,afocusedsupplierinterface,andanintegrated,process-oriented,supplychainwhichisdrivenbythecustomer.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-9FundamentalManagementComponentsWorkflow/activitystructurePlanningandcontrolmethodsOrganizationstructureCommunicationandinformationflowfacilitystructureProductflowfacilitystructurePhysicalandtechnicalmanagementcomponentsManagerialandbehavioralmanagementcomponentsCultureandattitudeRiskandrewardstructurePowerandleadershipstructureManagementmethodsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-10CustomerRelationshipManagement•Customerserviceteamsdevelopandimplementcustomerpartneringprograms.•Product/serviceagreementsareestablished.•Newcustomerinterfacesleadtoimprovedcommunicationandbetterpredictionsofcustomerdemandandimprovethewaycustomersareserviced.•Teamsidentifyandeliminatesourcesofproductionvariability.•Keyperformanceevaluationcriteria(bothlevelofserviceandcustomerprofitability)areusedtomeasureresults.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-11CustomerServiceManagement•Providesasinglesourceofcustomerinformation,apointofcontactforadministrationoftheproduct/serviceagreement.•Conveysreal-timeinformationthroughinterfacewithproductanddistributionoperations.•Requiresanon-line/real-timeproductandpricinginformationtoassistcustomerswithinquiries,orderplacement,andafter-salesservice.•Includesfrontlinetechnicalservicethatassistscustomerswithproductapplicationsandrecommendations.Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-12CustomerOrderFulfillment•“Customerneeddates”andrequirementsdrivetheprocess.•Manufacturing,distribution,andtransportationplansareintegrated.•Strategicallianceswithkeysupplychainmembersandcarriersareformedtomeetrequirementsandtoreducetotal-delivered-costtocustomersCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin2-13ManufacturingFlowManagement•Prod