Supply Chain Management

594 Pages·2011·5.01 MB·English

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Principles of
Supply Chain
Management
A BALANCED APPROACH
3e
J D. W
OEL ISNER
University of Nevada, Las Vegas
(cid:129)
K -C T
EAH HOON AN
University of Nevada, Las Vegas
(cid:129)
G. K L
EONG EONG
University of Nevada, Las Vegas
Australia(cid:129)Brazil(cid:129)Japan(cid:129)Korea(cid:129)Mexico(cid:129)Singapore(cid:129)Spain(cid:129)UnitedKingdom(cid:129)UnitedStates
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To CJ, Hayley and Blake.
JOEL D. WISNER
To Shaw Yun, Wen Hui and Wen Jay.
KEAH-CHOON TAN
To Lin and Michelle.
G. KEONG LEONG
Brief Contents
Preface xv
Acknowledgements xvii
About the Authors xviii
Part 1
Supply Chain Management: An Overview 1
Chapter 1 Introduction to Supply Chain Management 3
Part 2
Supply Issues in Supply Chain Management 35
Chapter 2 Purchasing Management 37
Chapter 3 Creating and Managing Supplier Relationships 73
Chapter 4 Ethical and Sustainable Sourcing 99
Part 3
Operations Issues in Supply Chain Management 131
Chapter 5 Demand Forecasting 133
Chapter 6 Resource Planning Systems 165
Chapter 7 Inventory Management 207
Chapter 8 Process Management—Lean and Six Sigma
in the Supply Chain 249
Part 4
Distribution Issues in Supply Chain Management 297
Chapter 9 Domestic U.S. and Global Logistics 299
Chapter 10 Customer Relationship Management 343
Chapter 11 Global Location Decisions 375
Chapter 12 Service Response Logistics 401
Part 5
Integration Issues in Supply Chain Management 445
Chapter 13 Supply Chain Process Integration 447
Chapter 14 Performance Measurement Along the Supply Chain 481
On the Companion Website
Cases in Supply Chain Management
Student and Instructor Materials
iv
Contents
Preface xv
Acknowledgements xvii
About the Authors xviii
Part 1
Supply Chain Management: An Overview 1
Chapter 1 Introduction to Supply Chain Management 3
Introduction 5
Supply Chain Management Defined 6
The Importance of Supply Chain Management 9
The Origins of Supply Chain Management in the U.S. 12
The Foundations of Supply Chain Management 15
Supply Elements 15
Operations Elements 17
Logistics Elements 19
Integration Elements 21
Current Trends in Supply Chain Management 22
Expanding (and Contracting) the Supply Chain 23
Increasing Supply Chain Responsiveness 24
The Greening of Supply Chains 25
Reducing Supply Chain Costs 26
Summary 28
Key Terms 28
Discussion Questions 28
Internet Questions 29
Appendix 1.1: The Beer Game 30
Beer Game Questions and Exercises 34
Part 2
Supply Issues in Supply Chain Management 35
Chapter 2 Purchasing Management 37
Introduction 39
A Brief History of Purchasing Terms 39
The Role of Supply Management in an Organization 40
The Financial Significance of Supply Management 42
The Purchasing Process 43
The Manual Purchasing System 43
Electronic Procurement Systems (e-Procurement) 47
Small Value Purchase Orders 49
Sourcing Decisions: The Make-or-Buy Decision 53
Reasons for Buying or Outsourcing 54
v
vi Contents
Reasons for Making 54
Make-or-Buy Break-Even Analysis 55
Roles of Supply Base 57
Supplier Selection 57
How Many Suppliers to Use 60
Reasons Favoring a Single Supplier 60
Reasons Favoring Multiple Suppliers 61
Purchasing Organization 61
Advantages of Centralization 62
Advantages of Decentralization 62
International Purchasing/Global Sourcing 63
Reasons for Global Sourcing 64
Potential Challenges for Global Sourcing 64
Countertrade 65
Procurement for Government/Nonprofit Agencies 65
Characteristics of Public Procurement 66
Summary 68
Key Terms 68
Discussion Questions 69
Internet Questions 70
Spreadsheet Problems 70
Chapter 3 Creating and Managing Supplier Relationships 73
Introduction 75
Developing Supplier Relationships 75
Building Trust 76
Shared Vision and Objectives 76
Personal Relationships 76
Mutual Benefits and Needs 76
Commitment and Top Management Support 77
Change Management 77
Information Sharing and Lines of Communication 77
Capabilities 78
Performance Metrics 78
Continuous Improvement 81
Key Points 81
Supplier Evaluation and Certification 82
The Weighted Criteria Evaluation System 84
ISO 9000 87
ISO 14000 88
Supplier Development 89
Supplier Recognition Programs 91
Supplier Relationship Management 92
Summary 97
Key Terms 97
Discussion Questions 97
Contents vii
Chapter 4 Ethical and Sustainable Sourcing 99
Introduction 100
Ethical and Sustainable Sourcing Defined 102
Ethical Sourcing 102
Sustainable Sourcing 105
Developing Ethical and Sustainable Sourcing Strategies 109
Supply Base Rationalization Programs 111
Ethical and Sustainable Supplier Certification Programs 112
Outsourcing Products and Services 113
Insourcing 114
Co-sourcing 114
Early Supplier Involvement 115
Vendor Managed Inventories 116
Supplier Co-location 117
Strategic Alliance Development 117
Negotiating Win-Win Strategic Alliance Agreements 119
Use of E-Procurement Systems 121
Rewarding Supplier Performance 123
Benchmarking Successful Sourcing Practices 124
Using Third-Party Supply Chain Management Services 125
Assessing and Improving the Firm’s Own Sourcing Function 126
Summary 128
Key Terms 128
Discussion Questions 128
Internet Questions 130
Part 3
Operations Issues in Supply Chain Management 131
Chapter 5 Demand Forecasting 133
Introduction 135
Demand Forecasting 136
Forecasting Techniques 137
Qualitative Methods 137
Quantitative Methods 138
Forecast Accuracy 147
Useful Forecasting Websites 150
Collaborative Planning, Forecasting and Replenishment 150
Software Solutions 156
Forecasting Software 156
CPFR Software 161
Summary 162
Key Terms 162
Discussion Questions 162
Spreadsheet Problems 163
viii Contents
Chapter 6 Resource Planning Systems 165
Introduction 166
Operations Planning 167
The Aggregate Production Plan 168
The Chase Production Strategy 169
The Level Production Strategy 171
Master Production Scheduling 173
Master Production Schedule Time Fence 174
Available-to-Promise Quantities 175
The Bill of Materials 178
Material Requirements Planning 181
Terms used in Material Requirements Planning 182
Capacity Planning 185
Capacity Strategy 186
Distribution Requirements Planning 187
The Legacy Material Requirements Planning Systems 187
Manufacturing Resource Planning 189
The Development of Enterprise Resource Planning Systems 190
The Rapid Growth of Enterprise Resource
Planning Systems 192
Implementing Enterprise Resource Planning Systems 193
Advantages and Disadvantages of Enterprise Resource
Planning Systems 195
Enterprise Resource Planning System Advantages 195
Enterprise Resource Planning System Disadvantages 197
Enterprise Resource Planning Software Applications 197
Enterprise Resource Planning Software Providers 199
Summary 201
Key Terms 201
Discussion Questions 202
Internet Questions 203
Spreadsheet Problems 203
Chapter 7 Inventory Management 207
Introduction 208
Dependent Demand and Independent Demand 210
Concepts and Tools of Inventory Management 210
The Functions and Basic Types of Inventory 211
Inventory Costs 211
Inventory Investment 212
The ABC Inventory Control System 213
Radio Frequency Identification 217
Inventory Models 222
The Economic Order Quantity Model 222
The Quantity Discount Model 227