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INTRODUCTION Generalized Supply Chain Model Supply Chain Management - is a set of approaches used to efficiently integrate suppliers , manufacturers,

, warehouses and stores so that merchandise is produced and distributed at the right quantities, to the right locations and at the right time in order to minimize system wide costs while satisfying service-level requirements. 20th Century Supply Chain In the early 1990s, the average time required for a company to process and deliver merchandise to a customer from warehouse inventory ranged from 15 to 30 days, sometimes even longer. Process Order to deliver allowed by telephone, fax, mail. Unpredictable time to market Preface In addition to information technology, the rapid emergence of supply chain arrangements is being driven by four related forces: 1. Integrative management 2. Responsiveness 3. Financial sophistication 4. Globalization. Across all aspects of business operations, attention is focused on achieving integrated management. The challenge to achieving integrated management results from the long-standing tradition of performing and measuring work on a functional basis. Since the industrial revolution, achieving best practice has focused managerial attention on functional specialization.

21st Century Supply Chain In the 20th century, there are business practice as well as the distribution channel structure used to complete delivery, evolved from years of experience that dated from the industrial revolution What began during the last decade of the 20th century and will continue to unfold well into the 21st century is what historians will characterize as the dawning of the information or digital age.

The distribution channel structure used to complete delivery There is no more scarcity Product diversity Information technology available SUPPLY CHAIN REVOLUTION Supply Chain Strategy Consists of firms collaborating to leverage strategic positioning and to improve operating efficiency. The process of process of analyzing, evaluating, defining supply chain strategies, including network design, manufacturing and transportation strategy and inventory policy. Logistics Management The work required to move and geographically position inventory throughout a supply chain. Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers requirements.

The Integrated Supply Chain Model INTEGRATIVE MANAGEMENT AND SUPPLY CHAIN PROCESSES The challenge to achieving integrated management results from the long-standing tradition of performing and measuring work on a functional basis. Integrative Process Management seeks to identify and achieve lowest total cost. Excellence in supply chain performance requires simultaneous achievement of Eight key processes.


Anticipatory Business Model (Push) manufacturers produce products based on market forecast.


Responsive Business Model (Pull) - seeks to reduce or eliminate forecast reliance by joint planning and rapid exchange of information between supply chain participants.

Three important facets of Supply Chain Logic resulted from increased attention to integrated Management. 1. COLLABORATION Has positioned the Supply Chain as a primary unit of Competition. ENTERPRISE EXTENSION Expanded managerial influence and control beyond the ownership boundaries of single enterprise to facilitate joint planning and operations between customers and suppliers. 3. Builds on two basic paradigms: Information sharing and Process Specialization. 1. INTEGRATED SERVICE PROVIDERS Began to market a range of logistics services that included all work necessary to service customers, from order entry to product delivery. Has two traditional logistics Warehousing Specialists. service providers: Transportation and 2. Manufacturing, or Form Postponement Products are being manufactured one order at a time with no preparatory work or component procurement until exact customer specifications are fully known and purchase confirmation is received. Geographic, or Logistics Postponement The basic notion of geographic postponement is to build and stock a full-line inventory at one or a limited number of strategic locations.


POSTPONEMENT Serve to reduce the anticipatory risk of supply chain performance. Two types of Postponement:

RESPONSIVENESS FINANCIAL SOPHISTICATION A fundamental paradigm shift in strategic thinking occurred as a direct impact of information technology. Information connectivity created the potential for developing responsive business models: Benefits of applying time-based strategies Financial benefits of timely response Faster to customers means less working capital is required to support supply chain operations.

ASPECTS OF FINANCIAL SOPHISTICATION 1. CASH-TO-CASH CONVERSION Cash conversion is generally related to inventory turn. Purchase discounts and invoicing. Dead net pricing DWELL TIME MINIMIZATION Transaction-to-transaction basis Significant measure of supply chain productivity is dwell time. To reduce dwell time, firms collaborating in a supply chain need to be willing to eliminate duplicate and non-value-added work Timely arrival and continuous inventory flow between supply chain Partners reduce dwell.

The global marketplace- offers significant opportunity to strategically source raw material and components. Significant labor advantages- can be gained by locating manufacturing and distribution facilities in developing nations. Favorable tax laws- can make the performance of value-adding operations in specific.


The logistics of internationalization involves four significant differences in comparison to national or even regional operations. 1. Distance- The extent of space between two objects or places; an intervening space. 2. Documentation - The act or an instance of the supplying of documents or supporting references or records. 3. Diversity- These can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies. 4. Demand- An economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Holding all other factors constant, the price of a good or service increases as its demand increases and vice versa. Significant differences for Global Logistics Facilitated by explosive information technology, the forces of integrative management, responsiveness, financial sophistication, and globalization have combined to clearly put the challenges of supply chain on the radar screens of most firms. Implementation Challenges The potential of supply chain management is predicated on the ability to modify traditional functional practice to focus on integrated process performance. To make integrated supply chain practice a reality, at least four operational challenges must be resolved: Leadership- has been described as "a process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task", although there are alternative definitions of leadership. Loyalty and Confidentiality- A feeling or attitude of devoted attachment and affection. a situation in which information must be kept secret and private Measurement- act as labels which make those values more useful in terms of details. The system of measurement of the accuracy at reliability of files or documents.


CASH SPIN Popular term for describing the potential benefits of reducing assets across a supply chain is cash spin or free cash spin. The concept is to reduce overall assets committed to supply chain performance. The potential to spin cash applies to all areas of a firm. The benefits flowing from fast cash-to-cash conversion, reduced dwell Time and cash spin combine to increase the financial attractiveness of effective collaboration.

GLOBALIZATION Globalization - is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. A conservative estimate is that as much as 90 percent of global demand is not currently fully satisfied by local supply. Current demand coupled with a world population projected to increase by an average over 200,000 persons per day for the next decade equate to substantial opportunity.

The operational efficiencies are attainable in three areas:

Risk reward Sharing- A ratio used by many investors to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Channel Partners: Members of a supply chain (i.e. suppliers, manufacturers, distributors, retailers, etc.) who work in conjunction with one another to manufacture, distribute, and sell a specific product. Channels of Distribution: Any series of firms or individuals that participates in the flow of goods and services from the raw material supplier and producer to the final user or consumer. Collaboration: Joint work and communication among people and systems including business partners, suppliers, and customers to achieve a common business goal. Customer-Supplier Partnership: A long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. The supplier is considered an extension of the buyers organization. The partnership is based on several commitments. The buyer provides long-term contracts and uses fewer suppliers. The supplier implements quality assurance processes so that incoming inspection can be minimized. The supplier also helps the buyer reduce costs and improve Demand: An economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Distance: The extent of space between two objects or places; an intervening space. Distributor: A business that does not manufacture its own products, but purchases and resells these products. Such a business usually maintains a finished goods inventory. Synonym: Wholesaler Diversion: The practice of selling goods to a competitor that the vendor assumes would be used to service that Customer's store. Diversity: the quality or state of having many different forms, types, ideas, etc.

III. GLOSSARY Accessibility: The ability of a carrier to provide service between an origin and a destination. Accountability: Being answerable for, but not necessarily personally charged with, doing specific work. Accountability cannot be delegated, but it can be shared. For example, managers and executives are accountable for business performance even though they may not actually perform the work. Allocation: In cost accounting, a distribution of costs using calculations that may be unrelated to physical observations or direct or repeatable cause-and-effect relationships. Because of the arbitrary nature of allocations, costs based on cost causal assignment are viewed as more relevant for management decision-making. Business Logistics: The systematic and coordinated set of activities required to provide the physical movement and storage of goods (raw materials, parts, finished goods) from vendor/supply services through company facilities to the customer (market) and the associated activitiespackaging, order processing, etc.in an efficient manner necessary to enable the organization to contribute to the explicit goals of the company. Business-to-Business (B2B): As opposed to business-to-consumer (B2C). Many companies are now focusing on this strategy, and their sites are aimed at businesses (think wholesale) and only other businesses can access or buy products on the site. Internet analysts predict this will be the biggest sector on the Web. Chain Reaction: A chain of events described by W. Edwards Deming: improve quality, decrease costs, improve productivity, increase market with better quality and lower price, stay in business, provide jobs and provide more jobs. Channel: 1) A method whereby a business dispenses its product, such as a retail or distribution channel, call center or web based electronic storefront. 2) A push technology that allows users to subscribe to a website to browse offline, automatically display updated pages on their screen savers, and download or receive notifications when pages in the website are modified. Channels are available only in browsers that support channel definitions, such as Microsoft Internet Explorer version 4.0 and above. Channel Conflict: This occurs when various sales channels within a company's supply chain compete with each other for the same business. An example is where a retail channel is in competition with a web based channel set up by the company.

Documentation: The act or an instance of the supplying of documents or supporting references or records. Electronic Data Interchange (EDI): Intercompany, computer-to-computer transmission of business information in a standard format. For EDI purists, "computerto-computer" means direct transmission from the originating application program to the receiving, or processing, application program. An EDI transmission consists only of business data, not any accompanying verbiage or free-form messages. Purists might also contend that a standard format is one that is approved by a national or international standards organization, as opposed to formats developed by industry groups or companies. Globalization: the process by which businesses or other organizations develop international influence or start operating on an international scale.

Labor: the services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits Logistics: the aspect of military science dealing with the procurement, maintenance, and transportation of military matriel, facilities, and personnel Market: an area or arena in which commercial dealings are conducted. Supplier: 1) A provider of goods or services. 2) A seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace. Supply Chain: 1) starting with unprocessed raw materials and ending with the final customer using the finished goods, the supply chain links many companies together. 2) the material and informational interchanges in the logistical process stretching from acquisition of raw materials to delivery of finished products to the end user. All vendors, service providers and customers are links in the supply chain. Supply Chain Council: A non-profit organization dedicated to improving the supply chain efficiency of its members. The Supply-Chain Council's membership consists primarily practitioners representing a broad cross section of industries, including manufacturers, services, distributors, and retailers. It is the organization responsible for the SCOR standards. Supply Chain Design: The determination of how to structure a supply chain. Design decisions include the selection of partners, the location and capacity of warehouse and production facilities, the products, the modes of transportation, and supporting information systems. Supply Chain Execution (SCE): The ability to move the product out the warehouse door. This is a critical capacity and one that only brick-and-mortar firms bring to the B2B table. Dot-coms have the technology, but that's only part of the equation. The need for SCE is what is driving the Dot-coms to offer equity partnerships to the wholesale distributors. Supply Chain Event Management (SCEM): SCEM is an application that supports control processes for managing events within and between companies. It consists of integrated software functionality that supports five business processes: monitor, notify, simulate, control and measure supply chain activities. Supply Chain Integration (SCI): Likely to become a key competitive advantage of selected marketplaces. Supply Chain Management (SCM): as defined by Management Professionals (CSCMP): Supply Chain planning and management of all activities involved conversion, and all logistics management activities. the Council of Supply Chain Management encompasses the in sourcing and procurement, Importantly, it also includes

coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.