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    The 7 Principles of Supply Chain Management

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    Shilpa
    The document outlines 7 principles of supply chain management: 1) segment customers based on their service needs, 2) customize logistics networks to meet customer segment requirements, 3) listen to market signals and plan accordingly, 4) differentiate products closer to customers to speed conversion, 5) source strategically to reduce costs, 6) develop an enterprise-wide technology strategy, and 7) adopt measures to gauge collective success beyond individual functions. Implementing these principles requires orchestrating improvement efforts, balancing long and short-term needs, and extensive leadership participation.

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    The 7 Principles of Supply Chain Management

    Uploaded by

    Shilpa
    23 views18 pages
    The document outlines 7 principles of supply chain management: 1) segment customers based on their service needs, 2) customize logistics networks to meet customer segment requirements, 3) listen to market signals and plan accordingly, 4) differentiate products closer to customers to speed conversion, 5) source strategically to reduce costs, 6) develop an enterprise-wide technology strategy, and 7) adopt measures to gauge collective success beyond individual functions. Implementing these principles requires orchestrating improvement efforts, balancing long and short-term needs, and extensive leadership participation.

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    The document outlines 7 principles of supply chain management: 1) segment customers based on their service needs, 2) customize logistics networks to meet customer segment requirements, 3) listen to market signals and plan accordingly, 4) differentiate products closer to customers to speed conversion, 5) source strategically to reduce costs, 6) develop an enterprise-wide technology strategy, and 7) adopt measures to gauge collective success beyond individual functions. Implementing these principles requires orchestrating improvement efforts, balancing long and short-term needs, and extensive leadership participation.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    23 views18 pages

    The 7 Principles of Supply Chain Management

    Uploaded by

    Shilpa
    The document outlines 7 principles of supply chain management: 1) segment customers based on their service needs, 2) customize logistics networks to meet customer segment requirements, 3) listen to market signals and plan accordingly, 4) differentiate products closer to customers to speed conversion, 5) source strategically to reduce costs, 6) develop an enterprise-wide technology strategy, and 7) adopt measures to gauge collective success beyond individual functions. Implementing these principles requires orchestrating improvement efforts, balancing long and short-term needs, and extensive leadership participation.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    The 7 principles of Supply Chain

    Management
    Introduction
    Successful managers
    Think of supply chain as a whole
    Pursue tangible outcomes focused on
     Revenue growth
     Asset utilization
     Cost
    Principle 1
    Segment customers
    Based on service needs (against traditional ways of
    grouping by industry, product or trade channels)
    Adapt supply chain to serve them

    Types of needs?
    Segments?
    Segment customers

    Need based segmentation may produce odd


    Principle 1
    Helps understand
    Relative value customers place on service offerings
    Which customers are most profitable to serve?
     Important to correctly match accounts with service packages
    Analyze
    Profitability of segments
    Costs & benefits of alternate service packages
    Helps to
    Better align their investment in particular customer relationship with the return the
    customer generates
    Strike & sustain appropriate balance between service and profitability
    Set priorities and provide tailored services to maximize customer impact

    Activity Based Costing


    Principle 2
    Customize logistics network
    To service requirements & profitability of customer
    segments

    Multi level networks


    Cross docking
    3rd party logistics
    Principle 3
     Listen to market signals & plan accordingly
    Across SC
    Consistent forecasts
    Optimal resource allocation
    Principle 4
    Differentiate products closer to customer & speed
    conversion

    Cellular manufacturing
    Just-in-time
    Mass customization
    Postponement
    Modular design
    Principle 5
    Source strategically
    To reduce total cost of owning materials & services
    Long term contracts
    SCORE: Chrysler
    Keiretsu
    Business network of different companies with close business
    relationships and shareholdings in each others companies
     Japan – after World War II and collapse of family controlled
    monopolies
    Horizontal (financial) keiretsu – banks
    Vertical (industrial) keiretsu – link suppliers, manufacturers
    and distributors in one industry
    Principle 6
    Develop SC technology strategy
    Enterprise wide information systems
    Integrate
     Short term transaction & operation management
     Mid-term planning & decision support
     Long term strategic analysis
    Bar coding vs. RFID
    SCM software
    Principle 7
    Adopt channel spanning measures
    Gauge collective success, not functional

    Perfect order
    Activity based costing
     Identify actual costs & revenues required to serve an account
     Data warehouse
    Translating principles into practice

    Orchestrate improvement efforts


    Blueprint to map linkages among initiatives &
    implementation sequence
    Rigorous assessment of entire supply chain
    Set explicit outcome targets for revenue growth, asset
    utilization & cost
    Translating principles into practice
    Rome wasn’t built in a day
    Massive task
    Balance long term & immediate business needs

    Recognize difficulty of change


    Extensive visible participation by top managers
    Cross-Docking
    Popularized by Wal-Mart
    Warehouses function as inventory coordination points
    rather than as inventory storage points.
    Goods arriving at warehouses from the manufacturer:
    are transferred to vehicles serving the retailers
    are delivered to the retailers as rapidly as possible.
    Goods spend very little time in storage at the warehouse
    Often less than 12 hours
    Limits inventory costs and decreases lead times
    Issues with Cross-Docking
    Require a significant start-up investment and are very
    difficult to manage
    Supply chain partners must be linked with advanced
    information systems for coordination
    A fast and responsive transportation system is necessary
    Forecasts are critical, necessitating the sharing of
    information.
    Effective only for large distribution systems
    Sufficient volume every day to allow shipments of fully
    loaded trucks from the suppliers to the warehouses.
    Sufficient demand at retail outlets to receive full truckload
    quantities

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