Chapter 10: Extending the organization - supply chain management

Basics of Supply Chain

The supply chain has three main links:

1. Materials flow from suppliers and their "upstream" suppliers at all levels.
2. Transformation of materials into semi-finished and finished products through the organization's own production process.
3. Distribution of products to customers and their "downstream" customers at all levels. 

Organizations must embrace technologies that can effectively manage supply chains.

Information Technology's Role in the Supply Chain

IT's primary role is to create integration or tight process and information linkages between functions within a firm.

• Factors Driving SCM

Visibility

Supply chain visibility - the ability to view all areas up and down the supply chain.

Bullwhip effect - occurs when distorted product demand information passes from one entity to the next throughout the supply chain.

Consumer behavior

Companies can respond faster and more effectively to consumer demands through supply chain enhances.

Demand planning software - generates demand forecasts using statistical tools and forecasting techniques.

Competition

Supply chain planning (SCP) software - uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain.

Supply chain execution (SCE) software - automates the different steps and stages of the supply chain.

• SCP and SCE in the supply chain

Speed

Three factors fostering speed:

Supply Chain Management Success Factors

SCM industry best practices include:

1. Make the sale to suppliers.
2. Wean employees off traditional business practices.
3. Ensure the SCM system supports the organizational goals.
4. Deploy in incremental phases and measure and communicate success.
5. Be future oriented.

SCM Success Stories

Top reasons why more and more executives are turning to SCM to manage their extended enterprises.

Numerous decision support system (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains.

DSSs allow managers to examine performance and relationships over the supply chain and among:

• Suppliers.
• Manufactures.
• Distributors.
• Other factor that optimize supply chain performance. 

Examples companies using supply chain chain to drive operations.