Supply Chain Strategies. Demand driven and customer focused. Second Edition. Tony Hines. Routledge R Taylor & Francis Croup LONDON AND NEW YORK

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1 Supply Chain Strategies Demand driven and customer focused Second Edition Tony Hines Routledge R Taylor & Francis Croup LONDON AND NEW YORK

2 Contents List offigures List of tables Preface How to use this book 1 Globalization: global demand and supply Strategie«1 Introduction l Why should we study supply chains? 5 Supply chain strategy: a definition 6 Globalization 8 The reality of global markets 20 New technologies and Innovation 28 Conclusions 29 Discussion questions 31 References 32 2 Strategie concepts and the customer focused, market driven supply chain 34 Strategy 35 Strategie planning or Strategie management? 35 Defining strategy 36 Levels of strategy 39 Strategie thinking, systems and learning 42 Static or dynamie environments 43 Competenee and capability 49 Learning and organizational capability 52 Developing Strategie objectives 53 Supply chain strategies and Strategie fit 58 Summary 65 Discussion questions 65 References 66 3 The emergence of supply chain management and supply chain strategy as a critical success factor for organizations 69 Introduction 69 Historical developments 70 xi xiv xvi xix

3 viii Contents Definition of supply chain strategy 75 Category management 75 Empirical evidence 81 Conclusions 89 Discussion questions 94 References 94 4 Market driven and customer focused supply chain strategies 101 Organizational structure in relation to supply chain strategies 102 Products (tangible) or services (intangible) 104 Customer focus 112 Product development 122 Market development 123 Divers ification 123 Supply chain strategies that win Orders 123 Service, Operand and operant resources 126 Summary 126 References Supplier sourcing, procurement and evaluation 128 Sourcing and procurement decisions 128 Buying locally 129 Buying nationally 129 Global sourcing 129 An iceberg theory of cost comparison 133 An example of the iceberg effect 137 Supplier selection 139 Ethical considerations in sourcing and procurement 142 Supplier development programmes 144 Summary 146 Discussion questions 147 Review questions 149 References Supply chain structures and relationships 150 Relationships and structures 150 Purchasing and procurement 150 The purchasing decision 152 Purchase frequency 155 Supplier relationships 156 Summary 174 Discussion questions 174 References Supply chain Integration, technology and e-business strategies 177 Market driven and customer focused 177 Demand driven supply chains: an introduction 179

4 Technology and supply chain Integration 179 Nike shoes fly on to the shelves 183 Looking upstream: a consumer perspective 183 e-supply chain opportunities 188 Customer Relationship Management (CRM) 198 Summary 202 Discussion questions 202 Glossary of e-business lerminology 203 References 204 Strategie supply chain cost, value and measurement Introduction to cost and value concepts 205 Supply chain cost and control 208 Definition 212 Direct Product Profitability (DPP) 217 Total Cost of Chvnership (TCO) 218 The three component costs oftco 220 Supply chain financials 225 Performance measurement: an introduction 227 Benchmarking 233 Balanced Score Card (BSC) 240 Summary 241 Discussion topics 241 References 242 Service levels, synchronization of business processes and inventories Introduction 243 Inventory management 244 ABC analysis applying Pareto 's concept 244 Stockless buying or systems contracting 247 Economic Order Quantities (EOQ') 248 Demand led management 251 Just-in-Time (JiT) 255 Lean and agile strategies 258 Materials Requirement Planning (MRP) 259 Enterprise Resource Planning (ERP) systems 261 Business Process Design (BPD) 261 Business Process Re-engineering (BPR) 262 Service levels 262 Summary 263 Discussion questions 264 References 264

5 x Contents 10 Supply chain profitability, quality and world-class organizations 266 Supply chain management and profitability 266 World-class supply chain management principles 266 Quality management 271 Summary 279 Discussion questions 279 References Logistics and fulfilment strategies 281 Introduction 281 A retail example 282 Third Party Logistics (3PL): outsourcing the logistics function 282 Trade-off concept 283 Definition of warehousing 283 Location of storage facilities 286 Types of storage facility 289 From 'push'to 'pull' the changing face of retail 292 Tesco: a case in point 293 Factory Gate Pricing (FGP) 296 Storage methods 296 Two important types of storage equipment 297 Assessing storage requirements 298 Stores layout 299 Transport decisions and supply chain strategies 302 Summary 304 Discussion questions 304 References The supply chain challenges 306 Strategies for the future 306 Mass customization: the supply chain challenge 307 Globalization: the supply chain challenge 319 Greening the supply chain 320 Ethical supply chains 321 Sustainability 322 Information, Integration and intelligent systems 324 Implications for managers, organizations and policy makers 325 Implications for a research agenda 325 Discussion questions 327 References Afterword 329 Glossary of supply chain terms 334 Index 344

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