Supply Chain Management

Chapter 16

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• Companies don’t compete against other
companies; they compete against each
others’ supply chains.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What is a supply chain?
– A supply chain is the network of organizations
involved in the movement of materials,
information, and money as raw materials flow
from their source through production until they
are delivered as a finished product or service
to the final customer.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• Who are the participants in supply chains?
– Multiple suppliers
– Wholesalers
– Manufacturers
– warehouses
– Distribution centers
– Retailers
– Customers

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What drives supply chains?
– Money
– Materials
– Information

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What should supply chain design
consider?
– The products travelling the supply chain
– The services travelling through the supply
chain
– The information travelling through the supply
chain
– The structure of the supply chain
– How each segment of the supply chain be
managed and optimized
Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What are the benefits of effective supply
chains?
– Effective supply chains optimize the value
creation process by improving processes,
implementing lean principles, optimizing asset
allocation, and monitoring quality assurance.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What are the critical elements of supply
chain management?
– Inventory management
– Information sharing
– E-commerce
– Logistics,
– Purchasing

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• Why is information sharing critical when
creating an effective supply chain?
– organizations need to know what is needed,
how much, and when.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• How does e-commerce support supply chain
management?
– Faster purchasing cycle times
– Reduced inventory
– Fewer order processing people
– Faster product or service search and ordering
– Greater information availability
– Automated validation and pre-approved spending
– Less printed material like order forms or invoices
– Increased flexibility
– On-line communication
Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What is logistics?
– Logistics is the process of determining the
best methods of procuring, maintaining,
packaging, transporting, and storing materials
and personnel in order to satisfy customer
demand.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What role does purchasing play in supply
chain management?
– Purchases are driven by several factors,
including quality of the goods or services,
timing of the deliveries of the goods or
services, and the costs associated with
purchasing the goods or services.

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights
 Supply Chain Management
• What challenges face the development of
an effective supply chain?
– Synchronization
– Fluctuations in demand
– Long supply chains
– Great distances between supply chain
members
– Lack of communication
– Lack of information sharing

Lean Six Sigma: Process Improvement Tools © 2011 Pearson Higher Education,
and Techniques Upper Saddle River, NJ 07458. • All Rights