Supply Chain Management

Preface xi

1 Introduction To Supply Chain Management 1

What is Supply Chain Management (SCM)? 3

Supply Chain Leader’s Box: Amazon.com 9

The Boundary-Spanning Nature of SCM 10

The Rise of SCM 13

Supply Chain Leader’s Box: Dell Computer Corporation 14

Characteristics of a Competitive Supply Chain 14

Global Insights Box: Zara 15

Trends in SCM 16

Supply Chain Leader’s Box: Wal-Mart 17

Big Data Analytics Box: Tesco 18

Managerial Insights Box—Outsourcing Innovation: Goldcorp Inc. 22

Empowering Entrepreneurs Box 23

Careers in SCM and Professional Organizations 23

Chapter Highlights 24

Key Terms 24

Discussion Questions 24

Case Study: McNulty’s Muscular Materials (MMM) 25

Case Study: Making Decisions with Data Analytics: FutureChain 25

Bibliography 26

2 Supply Chain Strategy 27

What is Supply Chain Strategy? 29

Achieving a Competitive Advantage 30

Supply Chain Leader’s Box: Wal-Mart 31

Global Insights Box: Toyota Motor Corporation 33

Building Blocks of Supply Chain Strategy 33

Managerial Insights Box—Outsourcing Alliances: Li & Fung Ltd. 39

Supply Chain Strategic Design 40

Supply Chain Leader’s Box: Barlean’s Organic Oils 43

Strategic Considerations 44

Big Data Analytics Box: Amazon 45

Empowering Entrepreneurs Box 46

Productivity as a Measure of Competitiveness 46

Chapter Highlights 48

Key Terms 48

Discussion Questions 49

Problems 49

Case Study: Surplus Styles 49

Case Study: Making Decisions with Data Analytics: Whole Goods 50

Bibliography 50

3 Network and System Design 51

The Supply Chain System 53

Supply Chain Leader’s Box—Moving to Process Thinking: LG Electronics 56

Understanding Processes: Theory of Constraints (TOC) 56

Integration of Supply Chain Processes 61

Designing Supply Chain Networks 62

Managerial Insights Box: Coca-Cola 63

Big Data Analytics Box: Segmentation in Retail 66

Empowering Entrepreneurs Box 66

Enterprise Resource Planning (ERP) 66

Chapter Highlights 69

Key Terms 69

Discussion Questions 69

Problems 70

Case Study: Boca Electronics LLC 70

Case Study: Making Decisions with Data Analytics: J-Consulting 71

Bibliography 71

4 Marketing 72

What is Marketing? 74

Supply Chain Leader’s Box: Gap Inc. 75

Supply Chain Leader’s Box—Accommodating Changing Customer Preferences: PepsiCo 77

Customer-Driven Supply Chains 78

Managerial Insights Box—Understanding the Customer: Target 80

Delivering Value to Customers 82

Global Insights Box—Global Customer Service: Coca-Cola Japan 86

Channels of Distribution 87

Managerial Insights Box—Changing the Distribution Channel: Steinway Pianos 89

Big Data Analytics Box: Oasis 91

Empowering Entrepreneurs Box 92

Chapter Highlights 92

Key Terms 92

Discussion Questions 93

Case Study: Gizmo 93

Case Study: Making Decisions with Data Analytics: Your Friend Mark 94

Bibliography 94

5 Operations Management 95

What is Operations Management (OM)? 97

Supply Chain Leader’s Box: Wal-Mart 100

Product Design 101

Big Data Analytics Box: Honda 102

Global Insights Box: Ryanair 103

Process Design 107

Managerial Insights Box—A New Manufacturing Process: Rapid Manufacturing 110

Facility Layout 110

Managerial Insights Box: Mazzi’s versus Totino’s Pizza 112

Line Balancing in Product Layouts 112

Process Automation 116

Global Insights Box: Kuka Robotics Corp. 116

Empowering Entrepreneurs Box 117

Chapter Highlights 118

Key Terms 118

Discussion Questions 118

Problems 119

Case Study: Making Decisions with Data Analytics: Song’s Mumbai Restaurant 119

Bibliography 120

6 Sourcing 121

What is Sourcing? 123

Supply Chain Leader’s Box—Co-Creation: The Auto Industry 126

The Sourcing Function 126

Sourcing and SCM 128

Global Insights Box—Outsourcing Analytics: Accenture 129

Supply Chain Leader’s Box—Risk Management: IBM 130

Managerial Insights Box—Outsourcing Alliances: Roots 133

Big Data Analytics Box: Fedex 135

Measuring Sourcing Performance 135

Empowering Entrepreneurs Box 136

Chapter Highlights 137

Key Terms 137

Discussion Questions 137

Problems 138

Class Exercise: Toyota 138

Case Study: Snedeker Global Cruises 138

Case Study: Making Decisions with Data Analytics: J&G 139

Bibliography 139

7 Logistics 141

What is Logistics? 143

Supply Chain Leader’s Box: United Parcel Service (UPS) 144

Logistics Tasks 149

Big Data Analytics Box—Autonomous Vehicles: Uber 149

Transportation 151

Supply Chain Leader’s Box: Sysco 152

Global Insights Box—Rail Service Between China and Europe: “Northeast Passage” 153

Warehousing 154

Third-Party Logistics (3PL) Providers 157

Empowering Entrepreneurs Box 157

Chapter Highlights 157

Key Terms 158

Discussion Questions 158

Problems 158

Case Study: Strategic Solutions Inc. 159

Case Study: Making Decisions with Data Analytics: Morning Foods Inc. 160

Bibliography 161

8 Forecasting and Demand Planning 162

What is Forecasting? 164

Managerial Insights Box: Forecasting Beyond Widgets 166

Global Insights Box—Matching Supply and Demand: World Health Organization (WHO) 167

The Forecasting Process 168

Managerial Insights Box: Predictive Analytics 170

Types of Forecasting Methods 171

Big Data Analytics Box—Improving Weather Forecasting: NOAA 174

Time Series Forecasting Models 174

Causal Models 180

Measuring Forecast Accuracy 183

Collaborative Forecasting and Demand Planning 185

Supply Chain Leader’s Box—Using Collaborative Technology: Li & Fung 186

Empowering Entrepreneurs Box 188

Chapter Highlights 188

Key Terms 188

Discussion Questions 189

Problems 189

Case Study: Speedy Automotive 190

Case Study: Making Decisions With Data Analytics: TechGiant 192

Bibliography 192

9 Inventory Management 193

Basics of Inventory Management 195

Managerial Insights Box—Service Inventory: Zoots 196

Supply Chain Leader’s Box: John Deere & Company 200

Inventory Systems 200

Fixed-Order Quantity Systems 203

Big Data Analytics Box—Analytics Driven Inventory: Dell 209

Fixed-Time Period Systems 210

Independent versus Dependent Demand 212

Global Insights Box: Intel Corporation 212

Managing Supply Chain Inventory 213

Empowering Entrepreneurs Box 216

Chapter Highlights 216

Key Terms 217

Discussion Questions 217

Problems 218

Case Study: Making Decisions With Data Analytics: Colorworld 218

Bibliography 219

10 Lean Systems and Six-Sigma Quality 220

What is Lean? 222

Big Data Analytics Box: General Electric 224

Supply Chain Leader’s Box: U.S. Army 225

Lean Production 226

Global Insights Box: UPS 226

Respect for People 228

Total Quality Management (TQM) 230

Managerial Insights Box: Lean Tools in the Popular Press 233

Statistical Quality Control (SQC) 234

Supply Chain Leader’s Box: Intel Corporation 235

Six Sigma Quality 241

The Lean Six Sigma Supply Chain 243

Empowering Entrepreneurs Box 245

Chapter Highlights 246

Key Terms 246

Discussion Questions 246

Problems 247

Case Study: Buckeye Technologies 248

Case Study: Making Decisions with Data Analytics: Calloway Inc. 248

Bibliography 249

11 Supply Chain Relationship Management 250

Supply Chain Relationships 252

Big Data Analytics Box—The Network Effect: Amazon 255

Supply Chain Leader’s Box—Open Innovation: Proctor & Gamble 257

The Role of Trust 258

Global Insights Box—Growth Through Partnership: Coca-Cola in Africa 262

Managing Conflict and Dispute Resolution 262

Managerial Insights Box: Commodity Swapping 266

Negotiation Concepts, Styles, and Tactics 266

Relationship Management in Practice 271

Empowering Entrepreneurs Box 273

Chapter Highlights 274

Key Terms 274

Discussion Questions 274

Case Study: Lucid v. Black Box 274

Case Study: Making Decisions with Data Analytics: Buckeye Deliveries 275

Bibliography 276

12 Global Supply Chain Management 277

Global Supply Chain Management 279

Supply Chain Leader’s Box—Challenges of Global Culture: Wal-Mart 281

Global Market Challenges 283

Managerial Insights Box: Coca-Cola’s China Branding Challenge 285

Global Infrastructure Design 287

Big Data Analytics Box—Supplier Risk: Cisco 288

Cost Considerations 289

Managerial Insights Box—Beyond Cost: BMW 290

Political and Economic Factors 291

Empowering Entrepreneurs Box 293

Chapter Highlights 294

Key Terms 294

Discussion Questions 294

Case Study: Wú’s Brew Works 294

Case Study: Making Decisions with Data Analytics: Mika Enterprises 299

Bibliography 299

13 Sustainable Supply Chain Management 300

What is Sustainability? 302

Global Insights Box: The Great Pacific Garbage Patch 303

Supply Chain Leader’s Box: Fibria Celulose 305

Evaluating Sustainability in SCM 309

Big Data Analytics Box: Coca-Cola 317

Sustainability in Practice 319

Managerial Insights Box: Carbon Fiber Auto Parts 320

Empowering Entrepreneurs Box 323

Chapter Highlights 323

Key Terms 324

Discussion Questions 324

Case Study: Haitian Oil 324

Case Study: Making Decisions with Data Analytics: Wellington’s Coffee House 325

Bibliography 326

Appendix The Standard Normal Distribution A-1

Glossary G-1

Index I-1