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Chapter 11
Supply Chain Management

Roboam Kakap
2 Learning Objectives
1. Explain what supply chain is
2. Explain the need to manage a supply chain and potential benefits for doing so
3. Explain the increasing importance of outsourcing
4. State the objectives of supply chain management
5. List the elements of supply chain management
6. Identify the strategic, and tactical and operation issues in supply chain management
7. Describe the bullwhip effect and the reason why it occurs
8. Explain the value of strategic partnering
9. Discuss the critical importance of information exchange across a supply chain
10. Outline the key steps and potential challenges in creating an effective supply chain
11. Explain the importance of the purchasing function in business organisations
12. Describe the responsibilities of purchasing
13. Explain the term value analysis
14. Identify several guidelines for ethical behaviour in purchasing
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3 Introduction
Basics of supply chain management

The need for supply chain

Elements of managing a supply chain

Steps in creating effective supply chain

Challenges in supply chain

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4 Supply chain Management
Supply chain

A sequence of organisations their facilities, functions and activities that are involved in
producing and delivering a product or service.

Supply chain management

The strategic coordination of the supply chain for the purpose of integrating supply and
demand management.


Coordinating activities

Sourcing and procurement of materials and services

Transforming activities


Typical supply chain see pages 504-504

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5 Logistics
The part of a supply chain involved with the forward and reverse flow of
goods, services, cash and information

Logistics management management of inbound and outbound

transportation, material handling, warehousing, inventory, order fulfilment
and distribution, third party logistics and reverse logistics (return of goods
from customers)

Supply chain- sometimes known as value chains

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6 The need for supply chain management

1. The need to improve operations

2. Increasing levels of outsourcing

3. Increasing transportation costs

4. Competitive pressures

5. Increasing globalisation

6. Increasing importance of e-business

7. The complexity of supply chains

8. The need to manage inventories

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7 The Bullwhip Effect
Without effective management of supply chain

Demand variations begin at the customer end of the chain and become

increasingly large as they radiate backwards through the chain

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8 Global supply chain

As businesses increases, make use of outsourcing and pursue opportunities

beyond domestic markets

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9 Outsourcing

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10 Benefits of effective supply chain management

1. Lower inventories

2. Lower costs

3. Higher productivity

4. Greater agility

5. Shorter learn times

6. Greater customer loyalty

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11 Elements of supply chain management



Capacity planning







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12 Logistics
1. Movement with a Facilities

2. Incoming and outgoing shipments

3. Distribution requirement planning

4. 3-PL

5. Reverse Logistics

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13 E-business
The use of electronic technology to facilitate business transaction

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14 Advantages of e-business
1. Easy access to information

2. Improve competitiveness and quality

3. Information about customers

4. Supply chain response time is shortened

5. Reduce costs and purchasing options

6. Cost savings- huge options/choices

7. Creation of virtual companies

8. Playing field is levelled.

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15 Creating an effective supply chain

1. Share forecast

2. Determine the status of orders in real time

3. Access inventories data of partners

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16 Requirement for a successful supply chain

1. Trust

2. Effective communication

3. Supply chain visibility

4. Event management capability

1. Monitoring the system

2. Notifying planned or unplanned events

3. Simulating potential solutions

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17 Steps in creating an effective supply chain

1. Develop strategic objectives and tactics

2. Integrate and coordinate activates in the internal portion of the chain

3. Coordinate activities with suppliers and with customers

4. Coordinate planning and execution across the supply chain

5. Consider the possibilities of forming strategic partnerships

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18 Challenges
1. Barriers to integration of separate organisations

2. Getting CEO, Board of Directors, Managers and Employees Onboard.

3. Dealing with trade-offs

4. Small businesses

5. Variability and uncertainty

6. Response time

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19 Purchasing
Purchasing Cycle

1. Purchasing receives the requisition

2. Purchasing selects a partner

3. Purchasing places the order with a vendor

4. Monitoring orders

5. Receiving orders

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20 Ethics in Purchasing

Guidelines for ethic behaviour in purchasing

1. Loyalty to employer

2. Justice to those you deal with

3. Faith in your professional

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