Chapter Extension 13 Supply Chain Management. Q1: What are typical interorganizational processes?...
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Transcript of Chapter Extension 13 Supply Chain Management. Q1: What are typical interorganizational processes?...
Q1: What are typical interorganizational processes?
Q2: What is a supply chain?
Q3: What factors affect supply chain performance?
Q4: How does supply chain profitability differ from organizational profitability?
Q5: What is the bullwhip effect?
Q6: How do information systems affect supply chain performance?
Study Questions
CE13-2Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
• Process activities occur in two or more independent organizations
• Cooperation governed by negotiation and contract; conflict resolution by negotiation, arbitration, litigation
Interorganizational
process
Q1: What Are Typical Interorganizational Processes?
CE13-3Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Simple Moderately complex
Highly complex
Small retailer credit card sales transaction process
Standardized interorganizational processing of checks among banks using Automated Clearing House (ACH) system
Customized interorganizational processes among large companies
Supply Chain (Network) Relationships
Q2: What Is a Supply Chain?
CE13-4Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Because of disintermediation, not every supply chain has all of these organizations
Supply Chain Example: REI
CE13-5Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Customer
$$
• Figure CE13-3
Q3: What Factors Affect Supply Chain Performance?
CE13-6Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Purpose: Can be transactionalAvailability: Ways to share information; with whom, what and when Means: Methods for transmitting information
• Difference between sum of revenue generated minus sum of costs incurred
Supply Chain
Profitability
• Not achieved if each organization maximizes its own profits in isolation
• Profitability increases when one or more operate at less than maximum profitability (e.g., carrying inventory larger than optimal)
Maximum profit from
chain
• When one supplier loses sale due to out-of-stock, others in supply chain lose revenue
Why?
Q4: How Does Supply Chain Profitability Differ from Organizational Profitability?
CE13-7Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Variability in size and timing of orders increases at each stage up supply chain, from customer to supplier
•Unrelated to erratic customer demand
•Large fluctuations force distributors, manufacturers, and suppliers to carry larger inventories
•Reduces overall profitability of supply chain
Natural dynamic of multistage
nature of supply chain
Eliminate bullwhip by giving supply chain participants access to consumer-demand information
Q5: What Is the Bullwhip Effect?
CE13-8Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Bullwhips & Beer
Bullwhip Effect
CE13-9Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Small changes in demand amplify through supply chain
Q6: How Do Information Systems AffectSupply Chain Performance?
CE13-10Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Exceedingly positive impact
CRM and less-integrated functional systems, such as e-commerce sales systems, dramatically reduced costs of buying and selling
Sourcing, buying, and selling have become faster, easier, more effective and less costly
Benefits of Information Systems on Supply Chain Performance
CE13-11Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Play “Near Beer Game”
Distributor has developed information system that reads data up and down supply chainA. Store inventories of all retailers are low. You know
retailers will be sending rush orders. You have overstocked on supply. You query manufacturers’ database and find finished goods are low. You increase your price claiming extra transportation costs, but really it was to increase your profit instead.
Ethics Guide: The Ethics of Supply Chain Information Sharing
CE13-12Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
• Legal? Ethical? Smart? What’s the risk to you and your business?
B. Competitor has large supply as well, and does not increase price, so you sell no product. You want to track competitor’s inventories, which can be estimated by watching on manufacturer side and comparing to decrease sales on retail side. You know what was made, sold, and left in your competitor’s inventory.
Ethics Guide: The Ethics of Supply Chain Information Sharing (cont’d)
CE13-13Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
• Legal? Ethical? Smart? What’s the risk to you and your business?
Ethics Guide: The Ethics of Supply Chain Information Sharing (cont’d)
CE13-14Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
C. Your agreement with customers permits you to query their inventory levels, but only for orders they have with you. You are not to query orders they have with your competitors. But, system has a flaw and allows you to query all orders.
• Legal? Ethical? Smart? What’s the risk to you and your business?
• Legal? Ethical? Smart? What’s the risk to you and your business?
• How do you protect your systems and data in a supply chain?
Ethics Guide : The Ethics of Supply Chain Information Sharing (cont’d)
CE13-15Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
D. Assume same agreement as situation C. One of your developers writes a program allowing you to exploit a hole in retailer’s security system. This gives you access to all of retailer’s sales, inventory, and order data.
Active Review
CE13-16Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Q1: What are typical interorganizational processes?
Q2: What is a supply chain?
Q3: What factors affect supply chain performance?
Q4: How does supply chain profitability differ from organizational profitability?
Q5: What is the bullwhip effect?
Q6: How do information systems affect supply chain performance?
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mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall