SUPPLY CHAINMANAGEMENT

A GLOBALPERSPECTIVE

Nada R. SandersLehigh University

WILEY

John Wiley & Sons, Inc.

C O N T E N T S

PREFACE

CHAPTER 1

CHAPTER 2

Introduction to Supply Chain ManagementWhat is Supply Chain Management (SCM)?

Supply Chain Leader's Box: Amazon.com

The Boundary-Spanning Nature of SCMThe Rise of SCM

Supply Chain Leader's Box: Dell Computer Corporation

Characteristics of a Competitive Supply Chain

Global Insights Box: Zara

Trends in SCM

Supply Chain Leader's Box: Wal-MartManagerial Insights Box—Outsourcing Innovation: Goldcorp Inc.

Careers in SCM and Professional OrganizationsChapter HighlightsKey TermsDiscussion Questions

Case Study: McNulty's Muscular Materials (MMM)Case Questions

References **'••

Supply Chain Strategy

What is Supply Chain Strategy?Achieving a Competitive Advantage

Supply Chain Leader's Box: Wal-MartGlobal Insights Box: Toyota Motor Corporation

Building Blocks of Supply Chain Strategy

Managerial Insights Box—Outsourcing Alliances: Li & Fung Ltd.

Supply Chain Strategic Design

Supply Chain Leader's Box: Barlean's Organic Oils

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viii Contents

CHAPTER 3

CHAPTER 4

Strategic Considerations 55Productivity as a Measure of Competitiveness 56Chapter Highlights 58Key Terms 59Discussion Questions 59Problems 60

Case Study: Surplus Styles 60Case Questions 61

References 62

Network & System Design 63

The Supply Chain System 65

Supply Chain Leader's Box—Moving to Process Thinking: LG Electronics 69

Understanding Processes: Theory of Constraints (TOC) 70Integration of Supply Chain Processes 75

Designing Supply Chain Networks 77

Managerial Insights Box—Outsourcing Versus In-House: Sony Versus Samsung 78

Enterprise Resource Planning (ERP) 82Chapter Highlights 85Key Terms 86Discussion Questions 86Problems 87

Case Study: Boca Electronics, LLC 87Case Questions 88

References 88

Marketing £' ' 91

What is Marketing? 93

Supply Chain Leader's Box: Gap Inc. 94Supply Chain Leader's Box—Accommodating Changing Customer Preferences:PepsiCo 97

Customer-Driven Supply Chains 98

Managerial Insights Box— Understanding the Customer: Keurig Versus Flavia 101

Delivering Value to Customers 103

Global Insights Box—Global Customer Service: Coca-Cola 110

Channels of Distribution 110

Managerial Insights Box—Changing the Distribution Channel: Steinway Pianos 113

Contents ix

CHAPTERS

CHAPTER 6

Chapter HighlightsKey TermsDiscussion Questions

Case Study: GizmoCase Questions

References

Operations Management

What is Operations Management (OM)?

Supply Chain Leader's Box: Wal-Mart

Product Design

Global Insights Box: Smartcup

Process Design

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Managerial Insights Box—A New Manufacturing Process: Rapid Manufacturing 138

Facility Layout

Managerial Insights Box: Mazzi's Versus Totino s Pizza

Line Balancing in Product LayoutsProcess Automation

Global Insights Box: KUKA Robotics Corp.

Chapter HighlightsKey TermsDiscussion QuestionsProblemsReferences

Sourcing pi*

What is Sourcing?

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Supply Chain Leader's Box—The Expansive Role of Suppliers: Philips Lighting 157

The Sourcing Function , 157Sourcing and SCM 160

Global Insights Box—Functional Products Challenge: Global Fast Food Markets 161Supply Chain Leader's Box—Innovative Product Challenge:

Apple Computer Corp. 163Managerial Insights Box—Outsourcing Alliances: Roots 167

Measuring Sourcing Performance 169Chapter Highlights 170Key Terms 171

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CHAPTER 7

CHAPTER 8

Discussion Questions 171Problems 172

Class Exercise: Toyota 172Case Study: Snedeker Global Cruises 173Case Questions 174

References 174

Logistics 177

What is Logistics? 179

Supply Chain Leader's Box: United Parcel Service (UPS) 180

Logistics Tasks 187Transportation 189

Supply Chain Leader's Box: Sysco 190Global Insights Box—Rail Service Between China and Europe:

"Northeast Passage" 192

Warehousing 193Third-Party Logistics (3PL) Providers - 197Chapter Highlights 197Key Terms 198Discussion Questions 198Problems 199

Case Study: Strategic Solutions Inc. 200Case Questions 202

References , 202

Forecasting & Demand Planning 203

What is Forecastirigf 205

Managerial Insights Box: Forecasting Beyond Widgets 207Global Insights Box—Matching Supply and Demand:

World Health Organization (WHO) 209

The Forecasting Process 210

Managerial Insights Box: How Information is Transforming Forecasting 213

Types of Forecasting Methods 214Time Series Forecasting Models 217Causal Models 224Measuring Forecast Accuracy 227Collaborative Forecasting and Demand Planning 230

Supply Chain Leader's Box—Using Collaborative Technology: Li & Fung 231

Contents x i

CHAPTER 9

CHAPTER 10

Chapter HighlightsKey TermsDiscussion QuestionsProblems

Case Study: Speedy AutomotiveCase Questions

References

Inventory Management

Basics of Inventory Management

Managerial Insights Box—Service Inventory: ZootsSupply Chain Leader's Box: John Deere & Company

Inventory SystemsFixed-Order Quantity SystemsFixed-Time Period SystemsIndependent Versus Dependent Demand

Global Insights Box: Intel Corporation

Managing Supply Chain InventoryChapter HighlightsKey TermsDiscussion QuestionsProblemsReferences,,

Lean Systems & Six-Sigma Quality

What is Lean? ,'

Supply Chain Leader's Box: U.S. Army

Lean Production

Global Insights Box: Elcoteq

Respect for People

Total Quality Management (TQM)

Managerial Insights Box: Lean Tools in the Popular Press

Statistical Quality Control (SQC)

Supply Chain Leader's Box: Intel Corporation

Six Sigma Quality

The Lean Six Sigma Supply ChainChapter HighlightsKey Terms

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CHAPTER 11

CHAPTER 12

Discussion Questions 305Problems 305

Case Study: Buckeye Technologies 307

Case Questions 308

References 308

Supply Chain Relationship Management 311

Supply Chain Relationships 313

Supply Chain Leader's Box: Proctor & Gamble 319

The Role of Trust 319

Global Insights Box: Coca-Cola in Africa 325

Managing Conflict and Dispute Resolution 325

Managerial Insights Box: Commodity Swapping 330

Negotiation Concepts, Styles and Tactics 330Relational Management in Practice 337Chapter Highlights 339Key Terms ' 340Discussion Questions 340

Case Study: Lucid Versus Black Box 341

Case Questions 342

References 342

Global Supply Chain Management 343

Global Supply Chain Management ' 345

Supply Chain Leader's Box—Challenges of Global Culture: Wal-Mart 347

Global Market Challenges 350

Managerial Insights Box: Coca-Cola's China Branding Challenge 353

Global Infrastructure Design 356

Cost Considerations 358

Managerial Insights Box—Beyond Cost: BMW 360

Political and Economic Factors 361Chapter Highlights 364Key Terms 365Discussion Questions 365

Case Study: Wu 's Brew Works 365Case Questions 371

References 372

Contents xi i i

CHAPTER 13

APPENDIX

GLOSSARY

INDEX

Sustainable Supply Chain Management

What is Sustainability?

Global Insights Box: The Great Pacific Garbage PatchSupply Chain Leader's Box: Aracruz Celulose

Evaluating Sustainability in SCMSustainability in Practice

Managerial Insights Box: Carbon Fiber Auto Parts

Chapter HighlightsKey TermsDiscussion Questions

Case Study: Haitian OilCase Questions

References

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