The second edition of this popular textbook presents a balanced overview of the principles of supply chain management. Going beyond the usual supply chain text, Principles of Supply Chain Management not only details the individual components of the supply chain, but also illustrates how the pieces must come together. To show the logic behind why supply chain management is essential, the text examines how supply chains are evolving, looks ahead to new developments, and provides a balanced look at supply chains with a focus on both the customer side and the supplier side of supply chains. See What's New in the Second Edition: * Expanded coverage of current topics such as e-commerce, risk management, outsourcing and reshoring, sustainability, project management, and data analytics * Increased emphasis on how customers are becoming more influential in steering product design * Additional coverage of the use of data analytics to evaluate customer preferences and buying patterns * A new chapter devoted to logistics and its increasing importance in supply chains * Company profiles of organizations with effective supply chains that illustrate the main theme of each chapter * A "Hot Topic" for each chapter, providing a description of a critical management issue to stimulate class discussion * A complete set of instructor materials for each chapter, including presentation slides, test banks, class exercises, discussion questions, and more From the point of distribution to the final customer, all the way back to the point of origin at the mine or farm, the text provides examples and case histories that illustrate a proven approach for achieving effective supply chain integration. This self-contained resource provides readers with a realistic appraisal of the state of the art in supply chain management and the understanding needed to build and manage effective supply chains in a wide range of industries. Most importantly, it emphasizes the need for building and maintaining collaboration among all members of the supply chain.
Preface to the Second Edition Preface to the First Edition Acknowledgments Introduction Authors Chapter Outline OVERVIEW OF SUPPLY CHAIN MANAGEMENT Evolution of Supply Chains Learning Outcomes Company Profile: Procter & Gamble (P&G) What Is a Supply Chain? Importance of SCM Evolution of Supply Chains Early Supply Chains Local Supply Chains Global Supply Chains Changing Government Orientation State-Controlled Governments Market-Driven Governments Current Trends that Link Supply Chain Participants More Closely Relationship Building Electronic Business Developing Economies Outsourcing Need for Quality Improvement Changing Customer Demands Current Developments in SCM Power Has Shifted from Manufacturers to Retailers Consolidation of Small, Local, or Regional Retailers into National Chains Emergence of "Killer Category" Retailers From a Make-and-Sell Mentality to a Sense-and-Respond Orientation Obstacles to Supply Chain Integration Need for Globalization Complexity of Arranging Entities with Common Interests Lack of Effective Interorganizational Systems Need for Multiple Supply Chains within Companies Lack of Trust between Participants Examples of Companies with Successful Supply Chains Summary Hot Topic: Outsourcing to Low Wage Countries Discussion Questions References Supply Chains as a System Learning Outcomes Company Profile: Zara's Introduction Supply Chain Systems Inputs Transformation Outputs Manufacturing versus Services Characteristics of Supply Chains Physical Flow Information Flow Funds Flow Relational Flow Examples of Supply Chains in Different Industries Internal and External Customers Open Systems versus Closed Systems Effect of External Influences on Supply Chains Obstacles and Enablers of Supply Chain Integration Obstacles Enablers Performance Measurement Allocation of Costs, Resources, and Benefits along the Supply Chain Value Creation as the Ultimate Objective Summary Hot Topic: How a Natural Disaster Can Cripple a Supply Chain Discussion Questions References DEMAND PERSPECTIVE Determining Customer Needs Learning Outcomes Company Profile: McDonald's Introduction Group Customers into Homogeneous Segments Determine Needs of the Ultimate Consumer Product Needs Service Needs Marketing Mix Manufacturing and Service Supply Chains Accurately Determine Customer Needs Approaches Market Research Open System Scanning Develop Reliable Demand Forecasts Quantitative Forecasting Methods Qualitative Forecasting Methods Collaborative Forecasting Determine the Attributes of a Well-Designed Product Functionality (Product Works to Satisfy Customers' Needs) Validity (Product Has Value and Functions at a Reasonable Cost) Manufacturability (Product Can Be Efficiently Produced) Reliability (Product Has a Variety of Quality Attributes) Serviceability (Product Can Be Serviced during Its Effective Life) Recyclability (Product Can Be Recycled along the Reverse Logistics Supply Chain) Consider Alternative Product Design Approaches Quality Function Deployment Concurrent Engineering Design for Manufacturability Design for Sustainability Determine the Number of Supply Chains Needed by a Company Align with Customer Segment Align with Product/Service Bundle Align with Supplier Category Align with Common Incentives Respond to Needs of Internal Customers Conclusion Hot Topic: Human Trafficking Discussion Questions References A System to Meet Customer Needs Learning Outcomes Company Profile: GE Aviation Supply Chain Models Global Supply Chain Forum Model Customer Relationship Management Origins of CRM What Can CRM Do? Benefits CRM Processes Problems CRM's Future Product Life Cycle Management What Is PLM? How Did PLM Evolve? What Does PLM Include? What Does PLM Not Include? What Are the Benefits of PLM? What Are the Obstacles? What Is the Present Status of PLM? What Does the Future Hold? Supply Chain Configuration Basic (Generic) Supply Chain Variations for Different Industries Supply Chain Mapping Determining Resource Requirements Facilities Equipment Employees Inventory Information Systems Designing Processes to Match with Products Make to Stock Assemble to Order Make to Order Engineer to Order Determining the Mix of Make and Buy Core Competency Concept Total Cost of Ownership Cost Reduction versus Revenue Increase Considerations Effect of Outsourcing Movement Aligning Entities along the Supply Chain Entities to Be Involved Allocation of Authority and Responsibility among Entities Collaboration Process Implementation Plan Evaluating the System Design Will It Accomplish Its Objectives? Is It Sustainable? Is It Flexible? Summary Hot Topic: Sweatshops Discussion Questions References Demand Management Learning Outcomes Company Profile: NextEra Introduction Definition of Demand Management Importance of Demand Management Managing Demand Accept All Demand Select the Types of Demand to Accept Solicit External Input in Forming Demand Patterns Design the Form in Which Demand Will Be Accepted Impose Constraints on Demand Submission Managing Supply Select a Demand Management Strategy Develop a Demand-Forecasting System Determine the Resource Requirements to Meet the Demand Merging Supply and Demand into a Demand Management Process Sales and Operations Planning to Match Short-Term Supply and Demand Collaboration among Supply Chain Participants Demand Management in Manufacturing Demand Management in Services Proposed Demand Management Strategies Factors That Affect Selection of a Demand Management Strategy Resources' Value Type of Demand Top Management Strategies Relationship between Factors and Strategies Model for Integrating Demand and Supply Management Programs Used to Implement Demand Management Strategies Provide Strategy Programs Match Strategy Programs Influence Strategy Programs Control Strategy Programs Demand Management along the Supply Chain Retail Wholesale Manufacturer Mining and Agriculture Summary Hot Topic: The Problem of Cheap Discussion Questions References SUPPLY PERSPECTIVE-DISTRIBUTION, PRODUCTION, PROCUREMENT, AND LOGISTICS Distribution and Retailing Learning Outcomes Company Profile: Lowe's Introduction Retail Function History of Retailing Characteristics of the Industry Customers and Markets Outputs Inputs Transformation Process Impact on Operations Management Designing the Retail Process Strategic Orientation Critical Design Points: Keys to Success Additional Factors to Consider in Retail Store Design Managing a Retail Business Determine the Expected Demand Plan Capacity to Meet Demand Implement the Operating Plan Measure Performance Replan for the Next Period Retail and Inventory Management Value Availability Variety Presentation Service Response Time Present Situation in Retailing Future in Retailing Role of Wholesalers and Distribution Centers Ordering Receiving Stocking Picking Loading the Trucks Transporting to Stores Unloading and Display at Stores Critical Success Factors for Distribution Inventory within Distribution Functions Inventory Management between Retailer and Distributor Technology in Distribution Functions At the Retail Store Movement of Goods At the Distribution Center Distribution Center Design Positioning Services within the Distribution Functions Presale Services Postsale Services Role of Third-Party Service Providers Distribution Performance Measurement Financial Performance Measures Operating Performance Measures Collaboration Performance Measures Retailer-Distributor Relationship Summary Hot Topic: Contaminated Milk Discussion Questions References Production and Service Processes Learning Outcomes Company Profile: Caterpillar Introduction Evolution of the Production Function From Craft to Mass Production From Mass Production to Mass Customization Critical Success Factors for Manufacturers Cost and Efficiency Quality Responsiveness: Timing of Delivery Responsiveness: Product/Service Mix Flexibility Agility Information Technology Manufacturing Strategies Make to Stock Locate to Order Assemble to Order Make to Order Engineer to Order Batch to Lean Operations Present Batch Flow Proposed Lean Production Flow Customer Lead Time Extra Available Space Faster Detection of Quality Problems Ease of Transferring Operators Reduced Scheduling Requirements Smaller Lot Sizes No Buildup of WIP Inventory Empowered Employees Reduced Equipment Breakdowns Reduced Late Material Deliveries Obstacles to Implementing Lean Make or Buy Strategies Vertical Integration Outsourcing Capacity Planning How Much Capacity? When? What Kind? Location and Ownership Service Production Strategies Relationships with Downstream Customers From Transactions to Processes Transactions versus Processes Basic Processes of a Business Benefits of a Process Orientation Effect of Process Orientation Organizational Structure Strategies Knowledge Management Change Management Trends in Production From Manual to Automated From Domestic to Global From Standard Products to Customized Postponement Sales and Operations Planning Additive Manufacturing Performance Measurement As Measured by Accounting As Measured by Production Measures along the Supply Chain Summary Hot Topic: Clothing Manufacturing Discussion Questions References Procurement/Purchasing Learning Outcomes Company Profile: Nestle Introduction Role of Procurement in the Supply Chain Traditional Purchasing Contemporary Purchasing Changing Role of Purchasing Critical Success Factors for Purchasing Functionality Availability Cost Quality Match Inflow with Outflow Reduce Variances in Delivery Increase Supplier Dependability Reduce the Bullwhip Effect Become an Intercompany Facilitator Find Sustainable Suppliers Purchasing Functions: Participating Product Design Product Specifications New Product Introduction Target Costing Strategic Sourcing Supplier Location Inventory Management Supplier Risk Management Purchasing Functions: Directing Purchasing Process Supplier Evaluation Supplier Relationship Management Supply Chain Coordination/Collaboration Purchasing along the Supply Chain Consumer Retail Wholesale Manufacturer Mining and Agriculture Services Offshore Outsourcing As a Strategic Concept TCO Considerations As a Project, with Project Management Needs Other Considerations: Intangible Costs and Public Acceptance Supplier Location as a Strategy for Entering an Offshore Market Performance Measurement Traditional: Positive Purchase Price Variance Contemporary: Enhanced Value for the Consumer Future of Purchasing Summary Hot Topic: Why Apple Juice Should Be Made from ... Apples Discussion Questions References Logistics: The Glue That Holds the Supply Chain Together Learning Outcomes Company Profile: Transportation Insight Scope of Logistics Evolution of Integrated Logistics Transportation Truck: Privately Owned or Third-Party Carriers Rail: For Selected Goods Waterways Air Pipeline Parcel Transmission Lines Fiber-Optic Cable Networks Materials Management Interim Storage Exchange Points Traceability Integration Outsourcing Drivers of the Outsourcing Movement Steps in the Outsourcing Decision Reshoring Initiative Rise of 3PLs Benefits of 3PL Services Obstacles to Successful Implementation Trend toward Outsourcing the Distribution Function Major Companies Role of 4PL in Building Supply Chain Relationships High-Tech Industry Issues Risk Management Status Report Hot Topic: Container Shipping and its Risk Points Discussion Questions References Reverse Supply Chains Learning Outcomes Company Profile: GENCO Introduction Description of Reverse Supply Chain Networks Benefits of Reverse Logistics Barriers to Reverse Logistics Continuation of Forward Supply Chains History of Reverse Logistics Principal Drivers of the Movement Individual Consumers Individual Businesses Society as a Group Business Sector Educational Institutions Governments: At All Levels Activities in Reverse Logistics Service: Assure Proper Use of Product Returns: Repackaging or Relocation Restoration: Minor Modification or Repair Remanufacturing: Overhaul and Major Rebuilding Recycling: Reconstitution as Part of Another Product Disposal: Return to Natural State Hazardous Waste Disposal Role of Private Industry New Paradigms in Product Design (Design for Sustainability) Design and Operate Green Supply Chains Develop Systems to Manage Reverse Logistics Participate in Joint Ventures to Seek Social Objectives Role of Government Research: To Identify Threats and Opportunities Legislation: To Standardize Business Requirements Regulation: To Monitor Performance Participation: To Encourage and Support Ongoing Programs Role of Consumer Participant in Reverse Supply Chain Programs Educated Consumer Supporter of Green Supply Chain Efforts Reverse Logistics Network Continuation of the Forward Supply Chain Open System Environment Heavily Outsourced by Major Businesses Need for a Life Cycle Systems Approach Need for IT Other Considerations in Designing Reverse Supply Chains Future Growth in Amount of Materials Recycled Increase in Number of Companies Performing Reverse Logistics Activities Joint Ventures between Private Business and Government Increased Emphasis on Prevention, Not Just Reusing More Companies Will Design Integrated Reverse Logistics Systems Summary Hot Topic: Reshoring: Revisiting the Make or Buy Decision Discussion Questions References NEED FOR INTEGRATION The Need to Integrate Expected Outcomes Company Profile: Cisco Introduction Setting the Stage Reasons to Integrate Research in Support of Integration Efforts From Mass Production to Mass Customization From Craft to Mass Production Prelude to Mass Customization From Vertical Integration to Virtual Integration From Homogeneous Cultures to Diverse Cultures From Bottom Line to Triple Bottom Line Drivers of Change Global Competition Global Markets Economic Advantage Relationships and Trust among Supply Chain Participants Trust between Individuals Formal Contracts or Agreements Common Interests or Projects (Enforced Trust) Involves Change Management Change Is Difficult within a Company Change Is More Difficult for a Community Change Is Most Difficult for an Entire Country Steps in the Integration Process Build Interfaces with Customers and Suppliers Change Interfaces to Interlaces to Make the Relationships Closer Change Interlaces to Integrated Relationships Need for Strategic Planning Categories of Operations Normal Operations Improvement Programs Problem-Solving Programs Crisis Management Need for a Multiyear Project Plan Performance Measurement across the Supply Chain Integration Requires Sharing Summary Hot Topic: Atomic Energy Canada Limited Encounters Problems with Its Cancer-Fighting Machine, Part 1 Discussion Questions References Why Integration Is Difficult Learning Outcomes Company Profile: Boeing Introduction Determining Strategic Objectives Evaluating the Potential Return on Investment Uncertainty of Benefits Uncertainty of Costs Uncertainty of Assets Employed Designing for Participant Differences Participants Are Not Equal Technical Differences Need for Multiple Supply Chains Different Customer Segments Different Supplier Segments Different Logistics Networks Separating Interwoven Networks Selecting and Implementing Technology Product and Service Processes Incomplete Interorganizational Systems Financial Funds Flow Realigning Infrastructure Internal Organization Effect of Outsourcing Movement External Organization Policies and Procedures Physical Infrastructure Transforming Company Cultures Internal External Building Relationships Communicate Coordinate Cooperate Collaborate Lack of Trust Inhibits Collaboration Measuring Performance Maintaining the System During the Implementation Process During the Operation of the Supply Chain Extension into Reverse Logistics Obstacles to International SCM Summary Hot Topic: Atomic Energy Canada Limited Encounters Problems with Its Cancer Fighting Machine (Part 2) Discussion Questions References How to Build an Integrated Supply Chain Learning Outcomes Company Profile: Interface, Inc. Introduction Who Manages the Supply Chain? Past and Future of Supply Chain Management Present Supply Chains Virtual Supply Chains Contractual Alliances Dominant Party Management Third-Party Direct Management Third-Party Indirect (Third-Party) Management World of Lean Production Product Purchasing Process Production Process Delivery Process Demand Variation Moving from Functional Focus to Cross-Enterprise Collaboration Comprehensive Supply Chain Model Decisions Needed to Achieve a Lean and Agile Supply Chain Commitment Concept Configuration Customization Integrated Supply Chain Coordination Cooperation Collaboration Steps in the Change Process Investigate Involve Include Initiate Invigorate Implement Integrate Institutionalize Innovate A Look Ahead Complexity Clairvoyance Summary Hot Topic: Atomic Energy Canada Limited Encounters Problems with Its Cancer Fighting Machine (Part 3) Discussion Questions References FINANCIAL AND INFORMATION TECHNOLOGY PERSPECTIVES Information Flow along the Supply Chain Learning Outcomes Company Profile: SAP Introduction Need for Information Flow Types of Information Transmitted Upstream Suppliers Midstream (Internal) Downstream Customers Reverse Supply Chain Supply Chain Connectivity Intracompany Technologies Used Data Capture and Communication Data Storage and Retrieval Data Manipulation and Reporting Supply Chain Direct Links Customer Relationship Management Supplier Relationship Management Linking Technologies Interorganizational Systems EDI and Internet EDI Linking Applications Videoconferencing Sales and Operations Planning Product Life Cycle Management Third-Party Services Service-Oriented Architecture Software as a Service Cloud Computing Benefits of Information Technologies Tangible Benefits Intangible Benefits Barriers to IT Adoption Technological Obstacles Managerial Obstacles Societal Obstacles Model of an Integrated Supply Chain Information System Summary Hot Topic: The Boeing 787: A New Supply Chain Model in the Commercial Aircraft Industry-Part 1 Discussion Questions References Funds Flow along the Supply Chain Learning Outcomes Company Profile: Wells Fargo Overview of the Flow of Funds Need for Cash Flow within a Company Supply Chain Funds Flow Flows in a Supply Chain Benefits of Improved Funds Flow Obstacles External Sources of Funds Banks and Other Lending Institutions Supply Chain Finance Performance Measurement Financial Accounting Measures: Current Ratio Management Accounting Measures Need for Finance and Operations to Collaborate Effect of Production Strategies on Funds Flow Effect of Outsourcing on Product Costs and Capital Requirements Interorganizational Systems Benefits Obstacles Evolution Future EDI Benefits Funds Flow in the Reverse Supply Chain Comprehensive Example Components of a Financial Statement Analyzing the Cash Flow Statement Looking at Alternatives Summary Hot Topic: The Boeing 787, Problems in the Supply Chain (Part 2) Discussion Questions References ROI for Supply Chains and Other Issues Learning Outcomes Company Profile: Apple Supply Chain Configurations Programs Requiring Close Supply Chain Relationships Need to Evaluate Supply Chain ROI Tangible Benefits Tangible Costs Indirect Costs Intangible Benefits Intangible Costs Obstacles to Equitable Distribution among Members How to Organize? How to Distribute? Supply Chain Governance Models Prime Mover in the Supply Chain Organize Select the Team Monitor Ongoing Operations Evaluate Performance Initiate Change Third-Party Provider Changes in Supply Chain Composition Dictated by Prime Mover Consensus of the Supply Chain Participants Consultation with an Outside Adviser Mediation by Third Party Legal Action Case Studies Use of Accounting Records RFID Implementation Cost Reductions with Investment Requirements Supply Chain Finance Benefits of Supply Chain Collaboration Summary Hot Topic: The Boeing 787, Pushing the Limits of Outsourcing (Part 3) Discussion Questions References THE FUTURE Trends in Supply Chain Management Learning Outcomes Company Profile: Amazon From the Past to the Present From the American Revolution to World War II From World War II until the Present Evolution of Critical Success Factors in the United States Beginning (from First Settlements through 1800) Industrial Revolution (1840s-1890s) Growth and Recovery (1890s-1930s) Mass Production (1940s-1950s) Arisings (1960s-1970s) Awakening (1980s) Globalization I (1990s) Globalization II and Mass Customization (2000 and after) Major Drivers of Change in Supply Chains Global Business Perspective Balanced Approach to Offshore Outsourcing Total Cost of Ownership Risk Management Other Issues Continuing Advances in Technology Retail Operations Demand Forecasting Transportation and Distribution Information Systems From Special-Purpose to General-Purpose Resources Evolution from Transactions to Processes Transactions versus Processes Benefits of a Process Orientation Vanishing Boundaries between Manufacturing and Services Infrastructure Refinements From Vertical to Horizontal Organizations From Rigid Rules to Flexible Policies and Procedures From Tacit Knowledge to Implicit Knowledge From Financial Accounting to Management Accounting Culture and Employees From Passive or Obstructing Culture to Engaged and Receptive Culture Employees: From Specialized to Empowered Supply Chain Relationships From Adversarial to Collaborative Trust and Distrust Emergence of Third-Party Supply Chain Coordinators Risk Management Increased Complexity and Risk Internal Risks External (Open System Environment) Influences Natural Disasters Sustainability Triple Bottom Line Beyond the Triple Bottom Line Why Should Business Take the Lead? Need for Alliances Benefits and Obstacles Sustainability in the Future Strategic Employee Plan Summary Hot Topic: Finding Solutions to the Sweatshop Problem Discussion Questions References Preparation for the Future Learning Outcomes Company Profile: Google Recognize the Need to Adapt Globalization Competition Economy Technology Customers Employees Develop New Measures of Success Financial Success Social Responsibility Environment Integrating Financial Results, Society Equity, and Sustainability Identify What Needs to Be Done APICS E&R Foundation Inc McKinsey Study University of Tennessee Adapt to Government Actions Environment Business Ethics Product Safety Social Equity Infrastructure Capitalize on Third-Party Skills Direct Support: Outsourcing Indirect Support: Financing and Insurance Advisory: Consulting and Training Analyst: Measure Performance and Identify Needs Manager: Virtual Holding Company Utilize Information Technology Enterprise Resource Planning Extension Service-Oriented Architecture Internet Processes Interorganizational Systems Take Advantage of Other Technologies Organization and Teams Project Management Process Technology Build Strategic and Operational Plans Continue the Drive for Collaboration Develop Performance Measures for Supply Chain Management Integrate Delivery Effectiveness Measures Integrate Cost and Quality Measures Supplier Profitability Effectiveness of Supply Chain Integration Structure the Organization to Manage Change Purchasing Integrate All Functions Educate the Work Force Increase Marketing Influence Overcome Inertia Expand Knowledge Management From Data to Information From Information to Knowledge From Knowledge to Wisdom Some Ways to Learn Obstacles to Knowledge Transfer Will Knowledge Replace "Things"? Acquire Data Analytics Capabilities Background Benefits Obstacles Applications Techniques Conclusions Integrate Manufacturing and Services Apply Chaos Theory to Business Summary Hot Topic: How Social Media Knocked Down the Lean Finely Textured Beef Industry Discussion Questions References Index