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PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS

MANAGEMENTMANAGEMENT

Ch. 12: Supply -Chain Ch. 12: Supply -Chain ManagementManagement

SUMMARYSUMMARY

BASIC POINTSBASIC POINTS

o Meaning of supply chain Meaning of supply chain managementmanagement

o Elements:Elements:o PurchasingPurchasingo Production controlProduction controlo DistributionDistribution

o Purchasing function. Definition Purchasing function. Definition and strategiesand strategieso Make buyMake buyo CentralizeCentralizeo Cooperate - CompeteCooperate - Competeo Few suppliers - Many Few suppliers - Many

supplierssupplierso Keiretsu networkKeiretsu networko Vertical integrationVertical integrationo Virtual companyVirtual company

o DistributionDistributiono Inventory measures and SC Inventory measures and SC

performanceperformanceo SC dynamicsSC dynamics

o Negotiation strategiesNegotiation strategieso cost-based price model cost-based price model o market-based price model market-based price model o competitive biddingcompetitive bidding

o Materials managementMaterials management

HOW CAN WE MANAGE SUPPLIES AND END PRODUCTS?HOW CAN WE MANAGE SUPPLIES AND END PRODUCTS?

QUESTIONS (I)• Under what conditions might a firm decide to organize its Under what conditions might a firm decide to organize its

procurement function as a materials management function? As a procurement function as a materials management function? As a supply management function? As a source management function?supply management function? As a source management function?

• What can the procurement function do to implement just-in-time What can the procurement function do to implement just-in-time techniques with suppliers?techniques with suppliers?

• What information does purchasing receive from other functional areas What information does purchasing receive from other functional areas of the firm?of the firm?

• How does a traditional adversarial relationship with suppliers change How does a traditional adversarial relationship with suppliers change when a firm makes a decision to move to Just-in-time deliveries?when a firm makes a decision to move to Just-in-time deliveries?

• What reservations do suppliers have about JIT purchasing?What reservations do suppliers have about JIT purchasing?

• Discuss on the potential strategies of the purchasing function in Discuss on the potential strategies of the purchasing function in relation with suppliersrelation with suppliers

QUESTIONS (II)

• Discuss the objectives of purchasing management and its role in Discuss the objectives of purchasing management and its role in materials management. How does it help in reducing the inventory materials management. How does it help in reducing the inventory costs?costs?

• Getting products to customers, obtaining and managing raw Getting products to customers, obtaining and managing raw materials, and packaging finished products are all activities materials, and packaging finished products are all activities ofof– procurement.procurement.

– LogisticsLogistics

– production.production.

– materials management.materials management.

What ifWhat if

• ASSIGNMENT:– You manage a factory in Madrid

producing wooden tables– Supplied with wood by local producers– Distribution of final product throughout

Europe– Distribution points: One warehouse per

country, 10 in Spain– How would you organize the supply

chain?

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New Supplies!!New Supplies!!

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SUPPLY METHODSSUPPLY METHODS