CHAPTER 15- LOOKING TO THE FUTURE

OF SUPPLY CHAIN MANAGEMENT

Principles of Supply Chain Management:

A Balanced Approach

Prepared by Daniel A. Glaser-Segura, PhD

 Learning Objectives

You should be able to:

– Discuss the current state & future challenges of SCM.
– Explain why Supply Chains are becoming more global.
– Describe how firms are expanding their SCM efforts to second-
& third-tier members of their supply chains.
– Discuss why & how supply chains are making greater efforts to
become more environmental responsible.
– Explain how supply chains are becoming faster.
– Explain why firms are outsourcing some or all SCM processes.
– Describe some of the ways supply chains are reducing total
costs.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Chapter Fifteen Outline
Expanding the Supply Chain
Extending Progress Integration
throughout the SC
The Global Expansion of Supply
Chains
The Greening of Supply Chains
Increasing SC Responsiveness
Reducing SC Costs
Reducing Purchasing Costs
Outsourcing SCM Functions
Managing Inventories Along the SC

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Introduction
Changes that have acted to bring about SCM.
– Transportation deregulation in the 1970s & 1980s allowed
companies to think more about distribution strategies &
logistics
– Computing Systems such as MRP, DRP, MRP-II, ERP
software systems.
– Electronic data interchange (EDI) in the 1980s & now Internet
– Communication & information transfer- companies & their
supply chains are finding new & better ways to satisfy
customers, reduce costs, improve quality, & enhance
competitive position.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Expanding the Supply Chain

Extending Process Integration Throughout the SC

– With second-& third-tier SC members was facilitated by
rapid advances in communication software
– Web services present one of the newest opportunities
for SC partners to connect over the Web. flexible, quick
& efficient integration
– Reverse logistics- firms must deal with faulty, unwanted,
worn out, damaged return products.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Expanding the Supply Chain- Cont.
Le Stop, Monsieur
Package
The Global Expansion of Supply Chains
– Companies see global expansion of markets
& foreign suppliers as profitability &
competitiveness strategies
– Risks abound, however, in the form of:
• Higher insurance costs,
• Shipping costs,
• Tightly monitored & time-consuming
customs procedures, shortages & delays
• Political upheavals
• Foreign social problems

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 The Greening of Supply Chains

Global supply chains face environmental

regulations
Customers demand to know where products
come from & how they are made

Green supply chain involves:

– Collecting & analyzing environmental
regulations & customer surveys
– Discussing environmental issues with
procurement, engineering, & quality
– Developing, communicating, &
managing green SC programs

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Reducing Supply Chain Costs

Cost reduction is often only option for improving profits with the
caveat that customers must be satisfied with the products & services.
Reducing Purchasing Costs
– Firms must be careful not to jeopardize existing long-term
supplier partnerships when trying to reduce costs, or to
jeopardize long-term SC strategies.
– Downward price adjustments can have a lasting detrimental
impact on supplier relationships & performance.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Reducing Supply Chain Costs- Cont.

Outsourcing Supply Chain Management

Functions
Commonly outsourced SCM functions
include:
– inbound & outbound transportation
– warehousing,
– purchasing & inventory management
Systems management companies tend to
outsource functions that are not seen as
core competencies.

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
 Reducing Supply Chain Costs- Cont.

Managing Inventories Along the Supply Chain

– Improving merchandising & inventory management
– Working with suppliers to improve stocking
– Redesigning logistics, international distribution centers, transit
facilities, & transportation routes.
Methods to reduce inventory:
• Periodic inventory
reviews
• ABC inventory method
• Managing the entire SC.
• SC systems (i.e.,
warehouse & logistics
management software)
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing