Supply Chain Management From Vision to Implementation

by Fawcett, Stanley E.; Ellram, Lisa M.; Ogden, Jeffrey A.

• ISBN13: 9780131015043
• ISBN10: 0131015044
• Edition: 1st
• Format: Paperback
• Copyright: 2006-10-16
• Publisher: Pearson

Summary

For undergraduate or MBA courses in Supply Chain Management. This text takes a strategic, managerial, and cross-functional view of supply chain management, enabling managers to participate in the vision and implementation of world-class supply chain networks. To achieve this, the book introduces a Supply Chain Roadmap process model as a guiding framework for designing and implementing integrated supply chains. Students gain the knowledge and analytical tools to perform analysis and act as change agents within their organizations.

Author Biography

Stanley E Fawcett is the Donald L. Staheli Professor of Global Supply Chain Management in the Marriott School at Brigham Young University. Stan earned his undergraduate, MBA, and MA in International Studies from Brigham Young University before obtaining his doctorate at Arizona State University. He began his academic life at Michigan State University before joining the faculty at the Marriott School.

  

Lisa M. Ellram , Ph.D., CPA (MN), C.P.M., C.M.A., Ph.D., Business Administration (Logistics) with a minor in Industrial Engineering, and M.S., Logistics, The Ohio State University; M.B.A., and B.S.B. in Accounting (with high distinction) University of Minnesota, Twin Cities.  She is Chairperson of the Department of Management and the Richard and Lorie Allen Professor of Business at Colorado State University.  Prior to that, she was The John and Barbara Bebbling Professor of Business at Arizona State University’s W.P. Carey School of Business.  She was named as a “purchasing practitioner to know” by Supply and Demand Chain Executive, 2004.  She was also named as a Dean’s Council of 100 Distinguished Scholar at ASU in 2001.

 

Jeffrey A. Ogden earned his Ph.D. and M.B.A. in Supply Chain Management from Arizona State University and a B.S. in Accounting from Weber State University.  He is currently an Assistant Supply Chain Management Professor in the Business Management Department in the Marriott School of Management at Brigham Young University.

 

Table of Contents

Preface	xvii
Acknowledgments	xxi
About the Authors	xxiii
PART I: THE BUILDING BLOCKS OF SUPPLY CHAIN STRATEGY	1	(180)
Supply Chain Management and Competitive Strategy	3	(25)
The Theory of Supply Chain Management	6	(5)
Supply Chain Management Defined	8	(1)
The Internal Value Chain	8	(2)
The Bullwhip Effect	10	(1)
Supply Chain Management in Practice	11	(2)
Integrating Supply Chain Thinking into Corporate Strategy	13	(8)
The Essence and Evolution of Strategic Management	13	(1)
The Four Decision Areas of Strategy	14	(2)
The Influence of SC Thinking on Strategy	16	(3)
A Look Ahead: A Process Road Map for Strategic SCM	19	(2)
Conclusion	21	(7)
Summary of Key Points	22	(1)
Review Exercises	22	(1)
Case: SCM---Latest Fad or Strategic Imperative?	23	(1)
Endnotes	24	(1)
Supplement A: The Beer Game	25	(3)
Customer Fulfillment Strategies	28	(38)
The Information-Empowered Customer	31	(1)
Creating Value to Meet Customers' Needs	32	(4)
Quality	32	(1)
Cost	33	(1)
Flexibility	33	(1)
Delivery	34	(1)
Innovation	35	(1)
Trade-Offs Versus Synergies	35	(1)
Understanding Satisfaction to Fulfill Customers' Needs	36	(6)
Customer Service Strategies	39	(1)
Customer Satisfaction Strategies	39	(1)
Customer Success Strategies	40	(1)
The End Customer	41	(1)
Implementing a Customer-Centric Fulfillment Strategy	42	(7)
Matching Fulfillment Strategies to Customer Needs	42	(2)
Defining Relationship Intensity	44	(2)
Evaluating the Profitability of Customer Relationships	46	(1)
Using Customer Relationship Management Systems	46	(2)
Recognizing Barriers to Effective Customer Fulfillment	48	(1)
Conclusion	49	(17)
Summary of Key Points	50	(1)
Review Exercises	50	(1)
Case: SCM2	51	(1)
Endnotes	52	(1)
Supplement B: Productivity and Quality Management	53	(13)
Process Thinking: SCM's Foundation	66	(34)
A Need for Process Management	69	(1)
Functional Organization and Its Consequences	70	(2)
The Anatomy of a Process	72	(2)
Systems Thinking and Process Management	74	(6)
A Holistic View	75	(1)
Information Availability and Accuracy	75	(1)
Cross-Functional and Interorganizational Teamwork	76	(1)
Measurement	76	(1)
Systems Analysis	77	(2)
Systems Thinking at Work	79	(1)
A Process View of the Company	80	(8)
The Strategic Linkage	81	(3)
Resource Management	84	(3)
Boundary-Spanning Mechanisms	87	(1)
Process Reengineering	88	(4)
Identify Desired Outcomes	88	(1)
Make the Process Visible	89	(1)
Reorganize the Process	89	(1)
Assign Responsibility for Work	89	(1)
Leverage Technology	89	(2)
Reimagine Systematically	91	(1)
Conclusion	92	(8)
Summary of Key Points	92	(1)
Review Exercises	92	(1)
Case: Global Semiconductor's Market Share Slide	93	(1)
Endnotes	94	(1)
Supplement C: Decision Making Under Uncertainty	95	(5)
The New Product Development Process: Managing the Idea Infrastructure	100	(31)
Introduction	103	(1)
Mitigating Risk in New Product Development	104	(4)
Formalized Risk Management	105	(1)
Early Involvement of Critical Supply Chain Players	106	(1)
Core Competencies	107	(1)
``Design for'' Considerations	107	(1)
Modular Versus Integral Product Design	108	(1)
Marketing and the Criticality of the Customer	108	(3)
Customer-Driven Marketing and the Importance of the Product	109	(1)
Harley-Davidson and Its Supply Chain	109	(1)
Product Positioning	110	(1)
Pricing to Meet Consumer Demand	111	(1)
New Product Development	111	(7)
Target Price, Profit, and Cost in NPD	112	(3)
Target Cost Breakdown and the NPD Team	115	(1)
Cost Management Activities During NPD	116	(1)
New Product Launch	117	(1)
The Role of Finance in New Product Development	118	(6)
The Boundary-Spanning Role of Finance at Intel	118	(1)
Measures of Profit	119	(2)
Cash Flow	121	(2)
Economic Value-Added	123	(1)
Conclusion	124	(7)
Summary of Key Points	125	(1)
Review Exercises	125	(1)
Case: Reorganizing for New Product Development and Ongoing Customer Management	126	(1)
Endnotes	127	(1)
Supplement D: Evaluating the Return on a New Product Project	127	(4)
The Order Fulfillment Process: Managing the Physical Flow Infrastructure	131	(50)
Functional Components of the Physical Flow	134	(2)
Acquiring the Goods: The Nature of Purchasing Management	136	(7)
The Purchasing Process	138	(4)
Purchasing Skills for a Supply Chain World	142	(1)
Producing the Goods: The Nature of Production Management	143	(9)
The Production Process	144	(2)
Toyota's Quest for Lean Production	146	(3)
Operations Management in the Services Setting	149	(3)
Operations Skills for a Supply Chain World	152	(1)
Delivering the Goods: The Nature of Logistics Management	152	(9)
The Logistical Process	153	(7)
Logistics Skills for a Supply Chain World	160	(1)
Conclusion	161	(20)
Summary of Key Points	162	(1)
Review Exercises	162	(1)
Case: The Club War	162	(2)
Endnotes	164	(1)
Supplement E: Forecasting and Inventory Management	164	(13)
Part I Epilogue	177	(4)
PART II: DESIGNING THE GLOBAL SUPPLY CHAIN	181	(158)
Scanning and Global Supply Chain Design	184	(29)
Why Supply Chain Management Now?	187	(1)
The Journey from Ownership to Relationship Integration	188	(2)
The Decline of Ownership Integration	188	(1)
The Rise of Relationship Integration	189	(1)
A Changing Supply Chain World	190	(6)
Environmental Scanning	190	(3)
Forces Shaping Today's Supply Chain Environment	193	(3)
The Globalization of Markets	196	(9)
Forces Driving Globalization	196	(1)
Globalization's Implications	197	(4)
Globalization's Rules	201	(2)
Designing a Global Network	203	(2)
Conclusion	205	(8)
Summary of Key Points	205	(1)
Review Exercises	206	(1)
Case: The Scanning and Planning Internship	206	(1)
Endnotes	207	(1)
Supplement F: Facility Location	208	(5)
Supply Chain Mapping	213	(32)
Introduction	216	(1)
The Importance of Supply Chain Design	216	(2)
Nokia	217	(1)
Process Mapping	218	(2)
Process Analysis	220	(2)
Value Stream Mapping	221	(1)
Supply Chain Design	222	(7)
Design for Supply Chain Initiatives	224	(1)
Approaches to Supply Chain Design	224	(5)
Supply Chain Mapping Approaches	229	(3)
Conclusion	232	(13)
Summary of Key Points	233	(1)
Review Exercises	233	(1)
Case: Mapping the Mac	234	(1)
Endnotes	235	(1)
Supplement G: Project Management	236	(9)
Strategic Supply Chain Cost Management	245	(31)
The Profit Leverage Effect of Supply Chain Cost Reduction	248	(1)
Strategic Cost Management Principles	249	(4)
Supply Chain Analysis	249	(1)
Value Proposition Analysis	250	(1)
Cost Driver Analysis	251	(1)
Example of Strategic Cost Management: Southwest Airlines	252	(1)
Responsibility for Strategic Cost Management	253	(1)
Industry Examples	253	(1)
Determining the Tools to Support Strategic Cost Management	254	(5)
Classification of Supply Chain Decisions	254	(2)
Classification of Decisions: Analyzing the Quadrants	256	(2)
Commodity Classification	258	(1)
Activity-Based Cost Management	259	(4)
Problems with Traditional Managerial Accounting Systems	259	(2)
The ABCM Solution	261	(1)
Making Better Decisions	262	(1)
Problems with ABCM Implementation	262	(1)
Total Cost of Ownership	263	(9)
Step 1: Determine Desired Benefits of TCO	264	(1)
Step 2: Form a Team to Work on TCO Analysis	265	(1)
Step 3: Identify Relevant Costs and Gather Data	266	(4)
Step 4: Fine-Tune the TCO Analysis, Including Sensitivity Analysis	270	(1)
Step 5: Present Recommendations to Top Management	270	(1)
Additional Examples of TCO Analysis	271	(1)
Conclusion	272	(4)
Summary of Key Points	272	(1)
Review Exercises	273	(1)
Case: The Costly Packaging Decision	273	(2)
Endnotes	275	(1)
Core Competencies and Outsourcing	276	(28)
What Is a Core Competence?	279	(3)
The Outsourcing Challenge	282	(18)
Benefits of Outsourcing	283	(2)
Constraints and Risks of Outsourcing	285	(1)
Establish the Outsourcing Team and Goals	286	(13)
Skill Level Required for Buyers	299	(1)
Bringing Activities or Processes In-house	300	(1)
Conclusion	300	(4)
Summary of Key Points	301	(1)
Review Exercises	301	(1)
Case: Outsourcing for the First Time	302	(1)
Endnotes	302	(2)
Supply Chain Rationalization and Role Shifting	304	(35)
The Challenge of Complexity	307	(2)
Sources of Complexity	309	(10)
Organizational Structure	310	(1)
Value-Added Processes	311	(1)
The Operating Network	312	(2)
The Company's SKUs	314	(2)
The Supply Base	316	(1)
The Customer Base	316	(1)
The Logistics System	317	(2)
SC Rationalization: The Case of Supply-Base Optimization	319	(7)
How Many Suppliers Do You Need?	319	(2)
The Supply-Base Optimization Process	321	(5)
Shifting Roles Among SC Members	326	(4)
Second-Tier Sourcing Contracts	328	(1)
Supplier Certification	328	(1)
Vendor-Managed Replenishment	329	(1)
Supplier-Integrated Manufacturing	330	(1)
Conclusion	330	(9)
Summary of Key Points	330	(1)
Review Exercises	331	(1)
Case: Designing a Hybrid Global Sourcing Strategy	331	(2)
Endnotes	333	(2)
Part II Epilogue	335	(4)
PART III: COLLABORATING ACROSS THE SUPPLY CHAIN	339	(157)
Relationship Management	342	(31)
Supply Chain Relationships	345	(1)
The Relationship Continuum	346	(3)
Managing Transactional Relationships	349	(2)
Managing Strategic Alliances for Success	351	(6)
A Model for Alliance Management	352	(2)
Practices That Support Synergistic Alliances	354	(2)
Attitudes and Behaviors That Impede Alliance Development	356	(1)
The Role of Trust and Power in Supply Chain Relationships	357	(4)
Trust Is Two Sided	357	(1)
Trust Is Behavior	357	(1)
Trust Requires Open Information Sharing	358	(1)
Trust Is Personal	358	(1)
Trust Means Performance	359	(1)
Assessing Supply Chain Trust	359	(2)
Modern Negotiation and Relationship Management	361	(7)
What Is Negotiation?	361	(1)
When Is Negotiation Appropriate?	362	(1)
Negotiation Philosophies	362	(1)
Preparing for a Successful Negotiation	363	(4)
Conducting Successful Negotiations	367	(1)
Becoming a Skillful Negotiator	368	(1)
Conclusion	368	(5)
Summary of Key Points	369	(1)
Review Exercises	370	(1)
Case: How Close Is Too Close?	370	(1)
Endnotes	371	(2)
Information Sharing	373	(32)
The Importance of Information	376	(2)
Achieving Connectivity Through Information Technology	378	(2)
Brief History of Information System Connectivity	378	(2)
Enterprise Resource Planning (ERP) Systems	380	(11)
ERP Implementation Issues	382	(2)
The Future: ERP II?	384	(1)
E-Commerce and the Internet	385	(2)
E-Marketplaces	387	(1)
Radio Frequency Technology	387	(2)
Electronic On-Line Bidding Events: The Reverse Auction	389	(1)
Information Technology Summary	390	(1)
Achieving Information Sharing Through Willingness	391	(6)
Why Should Information Be Shared?	391	(1)
What Information Should Be Shared?	391	(2)
When Should Information Be Shared?	393	(1)
Who Should Be Sharing the Information?	393	(1)
Challenges to Open Information Sharing	394	(3)
The Information Irony	397	(2)
What Does the Future Hold?	399	(2)
Conclusion	401	(4)
Summary of Key Points	401	(1)
Review Exercises	402	(1)
Case: Supply-Base Reduction at Transport	402	(1)
Endnotes	403	(2)
Performance Measurement	405	(28)
The Role of Performance Measurement	408	(2)
Traditional Measurement	410	(5)
Asset Management	411	(1)
Cost	412	(1)
Customer Service	412	(1)
Productivity	413	(1)
Quality	414	(1)
Caveats Regarding Traditional Measurement Practice	415	(1)
Supply Chain Measurement	415	(10)
Alignment	416	(1)
Customer Satisfaction	417	(1)
Process Costing	418	(2)
Supply Chain Measures	420	(3)
Scorecards	423	(1)
Customized Measures	424	(1)
Benchmarking	425	(2)
Conclusion	427	(6)
Summary of Key Points	429	(1)
Review Exercises	429	(1)
Case: The Gorilla's Dilemma	430	(1)
Endnotes	431	(2)
People Management: Bridge or Barrier to SCM	433	(31)
The Supply Chain Manager	436	(1)
The Most Valuable Asset?	437	(3)
Investing in Employee Capabilities	440	(10)
The Cross-Trained Worker	441	(2)
The Cross-Experienced Manager	443	(2)
Cross-Functional Teams	445	(5)
Establishing an Empowerment Culture	450	(7)
Empowerment at Newmont Gold	451	(2)
The ``ABCs'' of an Empowerment Culture	453	(4)
Integrating People and Technology Systems	457	(1)
Conclusion	458	(6)
Summary of Key Points	459	(1)
Review Exercises	460	(1)
Case: Collaboration's Missing Link	460	(2)
Endnotes	462	(2)
Collaborative Innovation	464	(32)
The Dynamics of Success	467	(3)
The Perils of Complacency	468	(1)
The Learning Organization	469	(1)
Innovation Strategies	470	(9)
Transformational Innovation	470	(2)
Incremental Innovation	472	(1)
Pet Projects at Newmont Gold	473	(2)
FrameworkS at Johnson & Johnson	475	(3)
Employee Initiative and Innovation at 3M	478	(1)
Collaborative Innovation Initiatives	479	(6)
Collaborative Improvement Suggestion Programs	480	(1)
Collaborative Training	481	(1)
Collaborative Problem Solving	482	(1)
Collaborative Pilot Projects	482	(1)
Collaborative Process Improvement	483	(2)
Organizing for Long-Term Collaboration	485	(2)
Executive Governance Councils	485	(2)
Supply Chain Advisory Councils	487	(1)
Conclusion	487	(9)
Summary of Key Points	488	(1)
Review Exercises	489	(1)
Case: The Case for Supply Chain Advisory Boards	489	(1)
Endnotes	490	(3)
Part III Epilogue	493	(3)
Appendix A	496	(19)
Case 1: Creating a Cycle of Satisfaction	500	(2)
Case 2: Getting the Data Right	502	(2)
Case 3: Supplier Quality at Triton Diamond	504	(3)
Case 4: Quality Upstream at HI-TECH Semiconductor	507	(2)
Case 5: Quality Issue/Consequential Damages	509	(1)
Case 6: Chatham, Ltd., Market Analysis	510	(1)
Case 7: Evaluating a Leader's Strategy for Managing Procurement Leverage	511	(2)
Case 8: A Mandate for Costs Reduction Due to the Competitive Environment	513	(2)
Glossary	515	(5)
Index	520