Principles Of Supply Chain Management, Second Edition

Series on Resource ManagementPrinciples ofSupply Chain ManagementSECOND EDITIONRichard E. CrandallWilliam R. CrandallCharlie C. Chen

Principles ofSupply Chain ManagementSECOND EDITION

Series on Resource ManagementRECENT TITLESPrinciples of Supply Chain Management, Second Editionby Richard E. Crandall, William R. Crandall, and Charlie C. ChenISBN: 978-1-4822-1202-0Supply Chain Risk Management: An Emerging Disciplineby Gregory L. Schlegel and Robert J. TrentISBN: 978-1-4822-0597-8Supply Chain Optimization through Segmentation and Analyticsby Gerhard J. PlenertISBN: 978-1-4665-8476-1Vanishing Boundaries: How Integrating Manufacturing and ServicesCreates Customer Value, Second Editionby Richard E. Crandall and William R. CrandallISBN: 978-1-4665-0590-2Food Safety Regulatory Compliance: Catalyst for a Lean andSustainable Food Supply Chainby Preston W. BlevinsISBN: 978-1-4398-4956-9Driving Strategy to Execution Using Lean Six Sigma: A Framework forCreating High Performance Organizationsby Gerhard Plenert and Tom CluleyISBN: 978-1-4398-6713-6Building Network Capabilities in Turbulent Competitive Environments:Practices of Global Firms from Korea and Japanby Young Won Park and Paul HongISBN: 978-1-4398-5068-8Integral Logistics Management: Operations and Supply ChainManagement Within and Across Companies, Fourth Editionby Paul SchönslebenISBN: 978-1-4398-7823-1Lean Management Principles for Information Technologyby Gerhard J. PlenertISBN: 978-1-4200-7860-2Supply Chain Project Management:A Structured Collaborative and Measurable Approach, Second Editionby James B. AyersISBN: 978-1-4200-8392-7Modeling and Benchmarking Supply Chain Leadership:Setting the Conditions for Excellenceby Joseph L. WaldenISBN: 978-1-4200-8397-2

Principles ofSupply Chain ManagementSECOND EDITIONRichard E. CrandallWilliam R. CrandallCharlie C. Chen

CRC PressTaylor & Francis Group6000 Broken Sound Parkway NW, Suite 300Boca Raton, FL 33487-2742 2015 by Taylor & Francis Group, LLCCRC Press is an imprint of Taylor & Francis Group, an Informa businessNo claim to original U.S. Government worksVersion Date: 20140721International Standard Book Number-13: 978-1-4822-1205-1 (eBook - PDF)This book contains information obtained from authentic and highly regarded sources. Reasonable efforts have been made topublish reliable data and information, but the author and publisher cannot assume responsibility for the validity of all materialsor the consequences of their use. The authors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission to publish in this form has not been obtained. If anycopyright material has not been acknowledged please write and let us know so we may rectify in any future reprint.Except as permitted under U.S. Copyright Law, no part of this book may be reprinted, reproduced, transmitted, or utilized in anyform by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming,and recording, or in any information storage or retrieval system, without written permission from the publishers.For permission to photocopy or use material electronically from this work, please access www.copyright.com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400.CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For organizations that have beengranted a photocopy license by the CCC, a separate system of payment has been arranged.Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.Visit the Taylor & Francis Web site athttp://www.taylorandfrancis.comand the CRC Press Web site athttp://www.crcpress.com

To Jean—yesterday, today, and tomorrowTo Sue, my wife and friend foreverTo Fu-Mei, my mother and mentor forever

ContentsPreface to the Second Edition. xxixPreface to the First Edition. on. xxxixSection IOverview of Supply Chain Management1. Evolution of Supply Chains. 3Learning Outcomes.3What Is a Supply Chain?.6Importance of SCM. 7Evolution of Supply Chains.9Early Supply Chains. 9Local Supply Chains. 9Global Supply Chains. 10Changing Government Orientation. 13State-Controlled Governments. 13Market-Driven Governments. 13Current Trends That Link Supply Chain Participants More Closely. 14Relationship Building. 14Customer Relationship Management. 14Supplier Relationship Management. 15Product Life Cycle Management. 15Electronic Business. 15Developing Economies. 16Outsourcing. 16Need for Quality Improvement. 17Changing Customer Demands. 18Decreasing Response Time. 18Lean Supply Chains to Reduce Waste. 18Current Developments in SCM. 19Power Has Shifted from Manufacturers to Retailers. 19Consolidation of Small, Local, or Regional Retailers into National Chains. 20Emergence of “Killer Category” Retailers. 20From a Make-and-Sell Mentality to a Sense-and-Respond Orientation. 20Obstacles to Supply Chain Integration. 21Need for Globalization.22Complexity of Arranging Entities with Common Interests.22Lack of Effective Interorganizational Systems. 23vii

viiiContentsNeed for Multiple Supply Chains within Companies. 23Lack of Trust between Participants. 23Examples of Companies with Successful Supply Chains. 25Summary. 25Discussion Questions. 28References. 282. Supply Chains as a System. 31Learning Outcomes. 31Company Profile: Zara’s. 31Introduction. 35Supply Chain Systems. 37Inputs. 37Transformation. 38Outputs. 38Manufacturing versus Services. 39Characteristics of Supply Chains. 39Physical Flow. 40Information Flow. 41Funds Flow.42Relational Flow.42Examples of Supply Chains in Different Industries.43Internal and External Customers. 45Open Systems versus Closed Systems. 46Effect of External Influences on Supply Chains. 48Obstacles and Enablers of Supply Chain Integration. 48Obstacles. 49Enablers. 50Performance Measurement. 50Allocation of Costs, Resources, and Benefits along the Supply Chain. 53Value Creation as the Ultimate Objective.54Summary. 56Hot Topic. 56Discussion Questions. 59References. 59Section IIDemand Perspective3. Determining Customer Needs.63Learning Outcomes.63Company Profile: McDonald’s.63Introduction. 67Group Customers into Homogeneous Segments. 68Determine Needs of the Ultimate Consumer. 69Product Needs. 70Service Needs. 70Marketing Mix. 70Manufacturing and Service Supply Chains. 71

ContentsixAccurately Determine Customer Needs. 72Approaches. 72Market Research. 73Open System Scanning. 74Competition. 74Technology. 74Economy. 75Government. 76Social Trends. 76Business Environment.77Develop Reliable Demand Forecasts. 78Quantitative Forecasting Methods. 78Simple Moving Average. 79Weighted Moving Average.80Exponential Smoothing. 81Exponential Smoothing with Trend Adjustment. 81Seasonal Factor Forecasting. 81Regression Analysis. 82Qualitative Forecasting Methods.83Survey Method.83Delphi Method.83Collaborative Forecasting.84Determine the Attributes of a Well-Designed Product.84Functionality (Product Works to Satisfy Customers’ Needs).84Validity (Product Has Value and Functions at a Reasonable Cost).84Manufacturability (Product Can Be Efficiently Produced). 85Reliability (Product Has a Variety of Quality Attributes). 85Serviceability (Product Can Be Serviced during Its Effective Life). 85Recyclability (Product Can Be Recycled along the Reverse Logistics Supply Chain). 86Consider Alternative Product Design Approaches. 86Quality Function Deployment. 87Concurrent Engineering. 87Design for Manufacturability. 88Design for Sustainability. 88Determine the Number of Supply Chains Needed by a Company. 89Align with Customer Segment. 89Align with Product/Service Bundle.90Align with Supplier Category. 91Align with Common Incentives. 91Respond to Needs of Internal Customers. 92Conclusion. 92Hot Topic: Human Trafficking. 93Discussion Questions. 94References. 954. A System to Meet Customer Needs. 97Learning Outcomes. 97Company Profile: GE Aviation. 97Supply Chain Models. 101Global Supply Chain Forum Model. 102

xContentsCustomer Relationship Management. 104Origins of CRM. 104What Can CRM Do?. 105Benefits. 105CRM Processes. 106Problems. 107CRM’s Future. 108Product Life Cycle Management. 109What Is PLM?. 109How Did PLM Evolve?. 110What Does PLM Include?. 110What Does PLM Not Include?. 111What Are the Benefits of PLM?. 111What Are the Obstacles?. 112What Is the Present Status of PLM?. 113What Does the Future Hold?. 114Supply Chain Configuration. 115Basic (Generic) Supply Chain. 115Variations for Different Industries. 116Supply Chain Mapping. 116Determining Resource Requirements. 116Facilities. 116Equipment. 119Employees. 120Inventory. 120Information Systems. 120Designing Processes to Match with Products. 121Make to Stock. 122Assemble to Order. 122Make to Order. 122Engineer to Order. 122Determining the Mix of Make and Buy. 123Core Competency Concept. 123Total Cost of Ownership. 123Cost Reduction versus Revenue Increase Considerations. 124Effect of Outsourcing Movement. 124Aligning Entities along the Supply Chain. 125Entities to Be Involved. 126Allocation of Authority and Responsibility among Entities. 126Collaboration Process. 126Implementation Plan. 127Evaluating the System Design. 127Will It Accomplish Its Objectives?. 128Is It Sustainable?. 128Is It Flexible?. 129Summary. 129Hot Topic: Sweatshops. 130Discussion Questions. 132References. 133

Contentsxi5. Demand Management. 137Learning Outcomes. 137Company Profile: NextEra. 137Introduction. 143Definition of Demand Management. 144Importance of Demand Management. 146Managing Demand. 146Accept All Demand. 147Select the Types of Demand to Accept. 147Solicit External Input in Forming Demand Patterns. 147Design the Form in Which Demand Will Be Accepted. 147Impose Constraints on Demand Submission. 148Managing Supply. 148Select a Demand Management Strategy. 148Develop a Demand-Forecasting System. 148Determine the Resource Requirements to Meet the Demand. 149Merging Supply and Demand into a Demand Management Process. 149Sales and Operations Planning to Match Short-Term Supply and Demand. 149Collaboration among Supply Chain Participants. 150Demand Management in Manufacturing. 151Demand Management in Services. 152Proposed Demand Management Strategies. 154Factors That Affect Selection of a Demand Management Strategy. 155Resources’ Value. 155Type of Demand. 157Top Management Strategies. 157Relationship between Factors and Strategies. 158Model for Integrating Demand and Supply Management. 160Programs Used to Implement Demand Management Strategies. 164Provide Strategy Programs. 164Match Strategy Programs. 165Influence Strategy Programs. 165Control Strategy Programs. 166Demand Management along the Supply Chain.

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 . Supply Chain Risk Management: An Emerging Discipline by Gregory L. Schlegel and Robert J. Trent ISBN: 978-1-4822-0597-8