Supply Chain Management

Transcription

1 Supply Chai Maagemet Douglas M. Lambert The Ohio State Uiversity ad Uiversity of North Florida There is a great deal of cofusio regardig exactly what supply chai maagemet ivolves. I fact, most people usig the ame supply chai maagemet treat it as a syoym for logistics or as logistics that icludes customers ad suppliers. However, successful supply chai maagemet requires cross-fuctioal itegratio of key busiess processes withi the firm ad across the etwork of firms that comprise the supply chai. The challege is to determie how to successfully accomplish this itegratio. First, the distictio betwee logistics ad supply chai maagemet is idetified. Next, a framework for supply chai maagemet is preseted as well as suggestios for how it might be implemeted. Case studies coducted at several compaies ad ivolvig multiple members of their supply chais are used to illustrate the cocepts described. Oe of the most sigificat paradigm shifts of moder busiess maagemet is that idividual busiesses o loger compete as solely autoomous etities, but rather as supply chais. Busiess maagemet has etered the era of iter-etwork competitio. I this emergig competitive eviromet, the ultimate success of the sigle busiess will deped o maagemet's ability to itegrate the compay's itricate etwork of busiess relatioships []. Icreasigly the maagemet of relatioships across the supply chai is beig referred to as Supply Chai Maagemet (SCM). Strictly speakig, the supply chai is ot a chai of busiesses with oe-to-oe, busiess-to-busiess relatioships, but a etwork of busiesses ad relatioships. SCM offers the opportuity to capture the syergy of itraad iter-compay itegratio ad maagemet. I that sese, SCM deals with total busiess process excellece ad represets a ew way of maagig the busiess ad relatioships with other members of the supply chai. Thus far, there has bee relatively little guidace from academia, which has i geeral bee followig rather tha leadig busiess practice [2]. There is a eed for buildig theory ad developig ormative tools ad methods for successful SCM practice. The Global Supply Chai Forum, a group of o-competig firms ad a team of academic researchers, has bee meetig regularly sice 993 with the objective to improve the theory ad practice of SCM. The defiitio of SCM developed ad used by the members of The Global Supply Chai Forum follows [3]: This mauscript is adapted from the followig materials: Martha C. Cooper, Douglas M. Lambert ad Jaus D. Pagh, "Supply Chai Maagemet: More Tha a New Name for Logistics," The Iteratioal Joural of Logistics Maagemet, Vol. 8, No., 997, pp. -4; Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities," The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2, 998, pp. -9; ad, Keely L. Croxto, Sebastiá J. García-Dastugue, Douglas M. Lambert, ad Dale S. Rogers, The Supply Chai Maagemet Processes, The Iteratioal Joural of Logistics Maagemet, Vol. 2, No. 2, 200, pp

2 Supply Chai Maagemet is the itegratio of key busiess processes from ed user through origial suppliers that provides products, services, ad iformatio that add value for customers ad other stakeholders. This broader view of SCM is illustrated i Figure, which depicts a simplified supply chai etwork structure, the iformatio ad product flows, ad the key supply chai maagemet processes peetratig fuctioal silos withi the compay as well as corporate silos across the supply chai. Thus, busiess processes become supply chai processes liked across itra- ad iter-compay boudaries. Figure Supply Chai Maagemet : Itegratig ad Maagig Busiess Processes Across the Supply Chai Iformatio Flow Tier 2 Supplier Tier Supplier Purchasig Maufacturer Logistics Marketig Customer Cosumer/ Ed-Customer Productio PRODUCT FLOW R&D Fiace CUSTOMER RELATIONSHIP MANAGEMENT Supply Chai Maagemet Processes CUSTOMER SERVICE MANAGEMENT DEMAND MANAGEMENT ORDER FULFILLMENT MANUFACTURING FLOW MANAGEMENT SUPPLIER RELATIONSHIP MANAGEMENT PRODUCT DEVELOPMENT AND COMMERCIALIZATION RETURNS MANAGEMENT Source: Adapted from Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998), p. 2. This paper is orgaized as follows. First there is a brief literature review relatig SCM to logistics ad to marketig chaels research. Next, the coceptual framework of SCM is described. The some of the fidigs ad key issues related to each of the three elemets of the SCM framework are reported. For simplicity each elemet is dealt with 2

3 separately, although i practice they are closely iterrelated. Issues regardig how to map busiess processes across the supply chai, reegieer improvemet ito the supply chai, ad implemet itegrated supply chai maagemet are briefly described. Fially, coclusios are outlied. SCM versus Logistics The term SCM was origially itroduced by cosultats i the early 980's [4] ad subsequetly has become widely used [5]. Sice the early 990's, academics have attempted to give structure to SCM [6]. Bechtel ad Jayaram [7] provided a extesive retrospective review of the literature ad research o SCM. They idetified geeric schools of thought, ad the major cotributios ad fudametal assumptios of SCM that must be challeged i the future. Util recetly most practitioers [8], cosultats [9] ad academics [0] viewed SCM as ot appreciably differet from the cotemporary uderstadig of logistics maagemet, as defied by the Coucil of Logistics Maagemet (CLM) i 986 []. That is, SCM was viewed as logistics outside the firm to iclude customers ad suppliers. Logistics as defied by the CLM always represeted a supply chai orietatio, "from poit of origi to poit of cosumptio." The why the cofusio? It is probably due to the fact that logistics is a fuctioal silo withi compaies ad is also a bigger cocept that deals with the maagemet of material ad iformatio flows across the supply chai. This is similar to the cofusio over marketig as a cocept ad marketig as a fuctioal area. Thus, the quote from the CEO who said, "Marketig is too importat to be left to the marketig departmet." Everybody i the compay should have a customer focus. The marketig cocept does ot apply just to the marketig departmet. Everyoe i the orgaizatio should focus o servig the customer's eeds. The uderstadig of SCM has bee re-coceptualized from itegratig logistics across the supply chai to itegratig ad maagig key busiess processes across the supply chai [2]. Based o this emergig distictio betwee SCM ad logistics, i October 998, CLM aouced a modified defiitio of logistics. The modified defiitio explicitly declares CLM's positio that logistics maagemet is oly a part of SCM. The revised defiitio follows: Logistics is that part of the supply chai process that plas, implemets, ad cotrols the efficiet, effective flow ad storage of goods, services, ad related iformatio from the poit-of-origi to the poit-of-cosumptio i order to meet customers' requiremets [3]. Imagie the degree of complexity required maagig all suppliers back to the poit of origi ad all products/services out to the poit of cosumptio. It is probably easier to uderstad why executives would wat to maage their supply chais to the poit of cosumptio because whoever has the relatioship with the ed-user has the power i the supply chai. Itel created a relatioship with the ed-user by havig computer maufacturers place a "Itel iside" label o their computers. This affects the computer maufacturer's ability to switch microprocessor suppliers. I ay case, maagig all Tier 3

4 Tier 3 to customers Tier 3 to suppliers suppliers' etworks to the poit of origi is a eormous udertakig. Maagig the etire supply chai is a very difficult ad challegig task, as illustrated i Figure 2. Figure 2 Supply Chai Network Structure Tier 3 to Iitial suppliers Tier 2 Suppliers Tier Suppliers Tier Customers Tier 2 Customers Tier 3 to Cosumers/ Ed-customers 2 2 Iitial Suppliers Cosumers/Ed-customers 2 Source: Adapted from Douglas M. Lambert, Martha C. Cooper, ad Jaus D. Pagh, Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2, 998, p. 3. The Marketig Perspective The early marketig chaels researchers such as Wroe Alderso ad Louis P. Buckli coceptualized why ad how chaels are created ad structured [4]. From a supply chai stadpoit these researchers were o the right track i terms of: ) idetifyig who should be a member of the marketig chael, 2) describig the eed for chael coordiatio, ad 3) drawig actual marketig chaels. However, for the last 35 years most marketig chaels researchers igored two critical issues. First, they did ot build o the early cotributios by icludig suppliers to the maufacturer, ad thus eglected the importace of a total supply chai perspective. Secod, they focused o marketig activities ad flows across the chael, ad overlooked the eed to itegrate ad maage multiple key processes withi ad across compaies. I 992, Webster [5] challeged marketers ad marketig researchers to cosider relatioships with multiple firms. He also called for cross-fuctioal cosideratio i strategy formulatio. Ulike the marketig chaels literature, a major weakess of much of the SCM literature is that the authors appear to assume that everyoe kows who is a member of the 4

5 supply chai. There has bee little effort to idetify specific supply chai members, key processes that require itegratio or what maagemet must do to successfully maage the supply chai. A Coceptual Framework of SCM The coceptual framework emphasizes the iter-related ature of SCM ad the eed to proceed through several steps to desig ad successfully maage a supply chai. The SCM framework cosists of three closely iter-related elemets: the supply chai etwork structure, the supply chai busiess processes, ad the supply chai maagemet compoets (see Figure 3). Figure 3 Supply Chai Maagemet Framework: Elemets ad Key Decisios 2) What processes should be liked with each of these key supply chai members? Supply Chai Busiess Processes Supply Chai Maagemet Compoets Supply Chai Network Structure 3) What level of itegratio ad maagemet should be applied for each process lik? ) Who are the key supply chai members with whom to lik processes? Source: Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities," The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998), p. 4. The supply chai etwork structure is comprised of the member firms ad the liks betwee these firms. Busiess processes are the activities that produce a specific output of value to the customer. The maagemet compoets are the maagerial variables by which the busiess processes are itegrated ad maaged across the supply chai. Each 5

6 of the three iterrelated elemets that costitute the framework are described i the followig sectios. Supply Chai Network Structure All firms participate i supply chais from the raw materials to the ultimate cosumer. How much of these supply chais eed to be maaged depeds o several factors, such as the complexity of the product, the umber of available suppliers, ad the availability of raw materials. Dimesios to cosider iclude the legth of the supply chai ad the umber of suppliers ad customers at each tier. It would be rare for a firm to participate i oly oe supply chai. For most maufacturers such as 3M, the supply chai looks less like a pipelie or chai tha a uprooted tree where the braches ad roots are the extesive etwork of customers ad suppliers [6]. The questio is how may of these braches ad roots eed to be maaged. It should be oted that i each firm, maagemet views its orgaizatio as the focal compay ad the supply chai will look differet depedig o where the firm is positioed i it. For example, for a retailer such as Wal-Mart, the supply chai looks like a Bayesia decisio tree (the root system of the uprooted tree). Maagemet eeds to choose the type of relatioship appropriate for particular supply chai liks [7]. Not all liks throughout the supply chai should be closely coordiated ad itegrated. The most appropriate relatioship is the oe that best fits the specific set of circumstaces [8]. Determiig which parts of the supply chai deserve maagemet attetio must be weighed agaist firm capabilities ad the importace to the firm. It is importat to have a explicit kowledge ad uderstadig of how the supply chai etwork structure is cofigured. The three primary structural aspects of a compay's etwork structure are: ) the members of the supply chai; 2) the structural dimesios of the etwork; ad, 3) the differet types of process liks across the supply chai. Idetifyig Supply Chai Members. Whe determiig the etwork structure, it is ecessary to idetify those firms that are the members of the supply chai. Icludig all types of members may cause the total etwork to become highly complex, sice it may explode i the umber of members added from tier to tier [9]. To itegrate ad maage all process liks with all members across the supply chai would, i most cases, be couterproductive, if ot impossible. The key is to sort out some basis for determiig which members are critical to the success of the compay ad the supply chai, ad thus should be allocated maagerial attetio ad resources. Marketig chaels researchers idetified members of the chael based o who takes part i the various marketig flows, icludig product, title, paymet, iformatio, ad promotio flows [20]. Each flow icluded relevat members, such as baks for the paymet flow ad advertisig agecies for the promotio flow. The chaels researchers sought to iclude all members takig part i the marketig flows, regardless of how much impact each member had o the value provided to the ed-customer or other stakeholders. The members of a supply chai iclude all compaies/orgaizatios with whom the focal compay iteracts directly or idirectly through its suppliers or customers, from poit of origi to poit of cosumptio. However, to make a very complex etwork more 6

7 maageable it seems appropriate to distiguish betwee primary ad supportig members. The defiitios of primary ad supportig members are based o iterviews ad discussios with the members of The Global Supply Chai Forum, ad by applyig the defiitio of a busiess process by Daveport [2]. Primary members of a supply chai are all those autoomous compaies or strategic busiess uits who carry out value-addig activities (operatioal ad/or maagerial) i the busiess processes desiged to produce a specific output for a particular customer or market. I cotrast, supportig members are compaies that simply provide resources, kowledge, utilities or assets for the primary members of the supply chai. For example, supportig compaies iclude those that lease trucks to the maufacturer, baks that led moey to a retailer, the ower of the buildig that provides warehouse space, or compaies that supply productio equipmet, prit marketig brochures or provide temporary secretarial assistace. These supply chai members support the primary members. The same compay ca perform both primary ad supportig activities. Likewise, the same compay ca perform primary activities related to oe process ad supportig activities related to aother process. A example from oe of the case studies is a OEM that buys some critical ad complex productio equipmet from a supplier. Whe the OEM develops ew products they work very closely with the equipmet supplier to assure there is the right equipmet to make the ew product. Thus the supplier is a primary member of the OEM's ew product developmet ad commercializatio process. However, oce the machiery is i place, the supplier is a supportig ad ot a primary member for the maufacturig flow maagemet process, sice supplyig the equipmet does ot i itself add value to the output of the process eve though the equipmet adds value. It should be oted that the distictio betwee primary ad supportig supply chai members is ot obvious i all cases. Nevertheless, this distictio provides a reasoable maagerial simplificatio ad yet captures the essetial aspects of who should be cosidered as key members of the supply chai. The approach for differetiatig betwee types of members is to some extet similar to how Porter distiguished betwee primary ad support activities i his "Value Chai" framework [22]. The defiitios of primary ad supportig members make it possible to defie the poit-of-origi ad the poit-of-cosumptio of the supply chai. The poit-of-origi of the supply chai occurs where o previous primary suppliers exist. All suppliers to the poit-oforigi members are solely supportig members. The poit-of-cosumptio is where o further value is added, ad the product ad/or service is cosumed. The Structural Dimesios of the Network. Three structural dimesios of the etwork are essetial whe describig, aalyzig, ad maagig the supply chai. These dimesios are the horizotal structure, the vertical structure, ad the horizotal positio of the focal compay withi the ed poits of the supply chai. The horizotal structure refers to the umber of tiers across the supply chai (see Figure 2). The supply chai may be log, with umerous tiers, or short, with few tiers. As a example, the etwork structure for bulk cemet is relatively short. Raw materials are take from the groud, combied with other materials, moved a short distace, ad used to costruct buildigs. The vertical structure refers to the umber of suppliers/customers 7

8 represeted withi each tier (see Figure 2). A compay ca have a arrow vertical structure, with few compaies at each tier, or a wide vertical structure with may suppliers ad/or customers at each tier. The third structural dimesio is the compay's horizotal positio withi the supply chai. A compay ca be positioed at or ear the iitial source of supply, be at or ear to the ultimate customer, or somewhere betwee these ed poits of the supply chai. I the compaies studied, differet combiatios of these structural variables were foud. I oe example, a arrow ad log etwork structure o the supplier side was combied with a wide ad short structure o the customer side. Icreasig or reducig the umber of suppliers ad/or customers effects the structure of the supply chai. For example, as some compaies move from multiple to sigle source suppliers, the supply chai may become arrower. Outsourcig logistics, maufacturig, marketig or product developmet activities is aother example of decisio makig that may chage the supply chai structure. It may icrease the legth ad width of the supply chai, ad likewise ifluece the horizotal positio of the focal compay i the supply chai etwork. Supply chais that burst to may Tier customers/suppliers strai resources i terms of how may process liks the focal compay ca itegrate ad closely maage beyod Tier. I geeral, our research team has foud that compaies with immediately wide vertical structures, actively maaged oly a few Tier 2 customers or suppliers. Some of the compaies studied have trasferred servicig small customers to distributors, thus, movig the small customers further dow the supply chai from the focal compay. This priciple, kow as fuctioal spi-off, is described i the marketig chaels literature [23], ad also ca be applied to the focal compay's etwork of suppliers. I the compaies studied, the supply chais looked differet from each compay's perspective, sice maagemet of each compay sees its firm as the focal compay, ad views membership ad etwork structure differetly. However, because each firm is a member of the other s supply chai, it is importat for maagemet of each firm to uderstad their iterrelated roles ad perspectives. The itegratio ad maagemet of busiess processes across compay boudaries will be successful oly if it makes sese from each compay s perspective [24]. Supply Chai Busiess Processes [25] Successful supply chai maagemet requires a chage from maagig idividual fuctios to itegratig activities ito key supply chai processes. I may major corporatios, such as 3M, maagemet has reached the coclusio that optimizig the product flows caot be accomplished without implemetig a process approach to the busiess. The key supply chai processes idetified by members of The Global Supply Chai Forum are: customer relatioship maagemet customer service maagemet demad maagemet order fulfillmet maufacturig flow maagemet supplier relatioship maagemet 8

9 product developmet ad commercializatio returs maagemet These processes are show i Figure. A descriptio of each of the eight processes follows [26]. Customer Relatioship Maagemet. Customer relatioship maagemet provides the structure for how the relatioships with customers will be developed ad maitaied. Maagemet idetifies key customers ad customer groups to be targeted as part of the firm s busiess missio. The goal is to segmet customers based o their value over time ad icrease customer loyalty by providig customized products ad services. Customer teams tailor Product ad Service Agreemets (PSA) to meet the eeds of key accouts ad for segmets of other customers. The PSAs specify levels of performace. Customer teams work with key customers, improve processes ad elimiate demad variability ad o-value-added activities. Performace reports are desiged to measure the profitability of idividual customers as well as the fiacial impact o the customer [27]. Customer Service Maagemet. Customer service maagemet is the firm s face to the customer. It provides the key poit of cotact for admiisterig the PSA. Customer service provides the customer with real-time iformatio o promised shippig dates ad product availability through iterfaces with the firm s fuctios such as maufacturig ad logistics. The customer service process may also iclude assistig the customer with product applicatios. Demad Maagemet. Hewlett-Packard's experiece idicates that ivetory is either essetial or variability drive [28]. Essetial ivetory icludes work-i-process i factories ad products i the pipelie movig from locatio to locatio. Variability stock is preset due to variace i process, supply, ad demad. Customer demad is by far the largest source of variability ad it stems from irregular order patters. Give this variability i customer orderig, demad maagemet is a key to effective SCM. Demad maagemet is the supply chai maagemet process that balaces the customers requiremets with the capabilities of the supply chai. With the right process i place, maagemet ca match supply with demad proactively ad execute the pla with miimal disruptios. The process is ot limited to forecastig. It icludes sychroizig supply ad demad, icreasig flexibility, ad reducig variability. A good demad maagemet system uses poit-of-sale ad "key" customer data to reduce ucertaity ad provide efficiet flows throughout the supply chai. Marketig requiremets ad productio plas should be coordiated o a eterprise-wide basis. Thus, multiple sourcig ad routig optios are cosidered at the time of order receipt which allows market requiremets ad productio plas to be coordiated o a orgaizatio-wide basis. I advaced applicatios customer demad ad productio rates are sychroized to maage ivetories globally. Order Fulfillmet. Order fulfillmet is a key process i maagig the supply chai. It is customers orders that put the supply chai i motio, ad fillig them efficietly ad effectively is the first step i providig customer service. However, the order fulfillmet process ivolves much more tha just fillig orders. It ivolves desigig a etwork ad a process that permits a firm to meet customer requests while miimizig the total delivered 9

10 cost. This is ot just the logistics fuctio, but istead eeds to be implemeted crossfuctioally ad with the coordiatio of key suppliers ad customers. The objective is to develop a seamless process from the supplier to the orgaizatio ad the o to its various customer segmets. Maufacturig Flow Maagemet. Maufacturig i make-to-stock firms traditioally produced ad supplied products to the distributio chael based o historical forecasts. Products were pushed through the plat to meet a schedule. Ofte the wrog mix of products was produced resultig i ueeded ivetories, excessive ivetory carryig costs, mark dows ad trasshipmets of product. With SCM, product is pulled through the plat based o customer eeds. Maufacturig processes must be flexible to respod to market chages. This requires the flexibility to perform rapid chageover to accommodate mass customizatio. Orders are processed o a just-i-time basis i miimum lot sizes. Productio priorities are drive by required delivery dates. Maufacturig plaers work with customer plaers to develop strategies for each customer segmet. Chages i the maufacturig flow process lead to shorter cycle times meaig improved resposiveess to customers. Maufacturig flow maagemet is the supply chai maagemet process that icludes all activities ecessary to move products through the plats ad to obtai, implemet ad maage maufacturig flexibility i the supply chai. Maufacturig flexibility reflects the ability to make a wide variety of products i a timely maer at the lowest possible cost. To achieve the desired level of maufacturig flexibility, plaig ad executio must exted beyod the four walls of the maufacturer i the supply chai. Supplier Relatioship Maagemet. Supplier relatioship maagemet is the process that defies how a compay iteracts with its suppliers. As the ame suggests, this is a mirror image of customer relatioship maagemet. Just as a compay eeds to develop relatioships with its customers, it also eeds to foster relatioships with its suppliers. As i the case of customer relatioship maagemet, a compay will forge close relatioships with a small subset of its suppliers, ad maage arm-legth relatioships with others. A PSA is egotiated with each key supplier that defies the terms of the relatioship. For segmets of less critical suppliers, the PSA is ot egotiable. Supplier relatioship maagemet is about defiig ad maagig these PSAs. Strategic plas are developed with key suppliers to support maufacturig flow maagemet ad product developmet ad commercializatio. Suppliers are categorized based o several dimesios such as their cotributio ad criticality to the orgaizatio. I compaies where operatios exted worldwide, sourcig should be maaged o a global basis. Log-term parterships are developed with a small core group of suppliers. The desired outcome is a wi-wi relatioship where both parties beefit. This is a chage from the traditioal bid ad buy system to ivolvig key suppliers early i the desig cycle which ca lead to dramatic reductio i product developmet cycle times. Havig early supplier iput reduces time by gettig the required coordiatio betwee egieerig, purchasig, ad suppliers prior to desig fializatio. 0

11 Product Developmet ad Commercializatio. If ew products are the lifeblood of a corporatio, the product developmet is the lifeblood of a compay's ew products. Customers ad suppliers must be itegrated ito the product developmet process i order to reduce time to market. As product life cycles shorte, the right products must be developed ad successfully lauched i ever-shorter time frames i order to remai competitive. Maagers of the product developmet ad commercializatio process must: Coordiate with customer relatioship maagemet to idetify customer articulated ad uarticulated eeds. Select materials ad suppliers i cojuctio with the supplier relatioship maagemet process. Develop productio techology i maufacturig flow to maufacture ad itegrate ito the best supply chai flow for the product/market combiatio. Returs Maagemet. Returs maagemet is the supply chai maagemet process by which activities associated with returs, reverse logistics, gatekeepig, ad avoidace are maaged withi the firm ad across key members of the supply chai. The correct implemetatio of this process eables maagemet ot oly to maage the reverse product flow efficietly, but to idetify opportuities to reduce uwated returs ad to cotrol reusable assets such as cotaiers. Effective returs maagemet is a importat part of SCM ad provides a opportuity to achieve a sustaiable competitive advatage. I may coutries maagemet s iterest i this process may be result of evirometal or legislatio cocers. Effective returs maagemet eables idetificatio of productivity improvemet opportuities ad breakthrough projects. At Xerox, returs are maaged i four categories: equipmet, parts, supplies, ad competitive trade-is [29]. Retur to available is a velocity measure of the cycle time required to retur a asset to a useful status. This metric is particularly importat for those products where customers are give a immediate replacemet i the case of product failure. Also, equipmet destied for scrap ad waste from maufacturig plats are measured i terms of the time util cash is received. Types of Busiess Process Liks As oted earlier, itegratig ad maagig all busiess process liks throughout the etire supply chai is likely ot appropriate. Sice the drivers for itegratio are situatioal ad differet from process lik to process lik, the levels of itegratio should vary from lik to lik, ad over time. Some liks are more critical tha others [30]. As a cosequece, the task of allocatig scarce resources amog the differet busiess process liks across the supply chai becomes crucial. The Global Supply Chai Forum research idicates that four fudametally differet types of busiess process liks ca be idetified betwee members of a supply chai. These are maaged busiess process liks, moitored busiess process liks, ot maaged busiess process liks, ad o-member busiess process liks. Maaged Process Liks. Maaged process liks are liks that the focal compay fids importat to itegrate ad maage. I the supply chai draw i Figure 4, the maaged process liks are idicated by the thickest solid lies. The focal compay will

12 Tier 3 to customers Tier 3 to suppliers itegrate ad maage process liks with Tier customers ad suppliers. As idicated by the remaiig thick solid lies i Figure 4, the focal compay is actively ivolved i the maagemet of a umber of other process liks beyod Tier. Moitored Process Liks. Moitored process liks are ot as critical to the focal compay, however, it is importat to the focal compay that these process liks are itegrated ad maaged appropriately betwee the other member compaies. Thus, the focal compay, as frequetly as ecessary, simply moitors or audits how the process lik is itegrated ad maaged. The thick dashed lies i Figure 4 idicate the moitored process liks. Figure 4 Types of Iter-compay Busiess Process Liks Tier 3 to Iitial suppliers Tier 2 Suppliers Tier Suppliers Tier Customers Tier 2 Customers Tier 3 to Cosumers/ Ed-customers 2 2 Iitial Suppliers Cosumers/Ed-customers 2 Maaged Process Liks Moitor Process Liks Not-Maaged Process Liks No-Member Process Liks Focal Compay Members of the Focal Compay s Supply Chai No-members of the Focal Compay s Supply Chai Source: Adapted from Douglas M. Lambert, Martha C. Cooper, ad Jaus D. Pagh, Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2, 998, p. 7. Not-maaged Process Liks. Not-maaged process liks are liks that the focal compay is ot actively ivolved i maagig, or are they critical eough to use resources for moitorig. I other words, the focal compay fully trusts the other members to maage the process liks appropriately, or because of limited resources leaves it up to them. The thi solid lies i Figure 4 idicate the ot-maaged process liks. For example, a maufacturer has a umber of potetial suppliers for cardboard shippig cartos. Usually 2

13 the maufacturer will ot choose to itegrate ad maage the liks beyod the cardboard carto supplier all the way back to the growig of the trees. The maufacturer wats certaity of supply, but it may ot be ecessary to itegrate ad maage the liks beyod the cardboard carto supplier. No-member Process Liks. The case studies clearly idicated that maagers are aware that their supply chais are iflueced by decisios made i other coected supply chais. For example, a supplier to the focal compay is also a supplier to the chief competitor, which may have implicatios for the supplier's allocatio of mapower to the focal compay's product developmet process, availability of products i times of shortage, ad/or protectio of cofidetiality of iformatio. No-member process liks are process liks betwee members of the focal compay's supply chai ad o-members of the supply chai. No-member liks are ot cosidered as liks of the focal compay's supply chai structure, but they ca ad ofte will affect the performace of the focal compay ad its supply chai. The thi dashed lies i Figure 4 illustrate examples of o-member process liks. Based o the process liks just described, our research reveals variatio i how closely compaies itegrate ad maage liks further away from the first tier. I some compaies, maagemet works through or aroud other members/liks i order to achieve specific supply chai objectives, such as product availability, improved quality, or reduced overall supply chai costs. For example, a tomato ketchup maufacturer i New Zealad coducts research o tomatoes i order to develop plats that provide larger tomatoes with fewer seeds. Their cotracted growers are provided with youg plats i order to esure the quality of the output. Sice the growers ted to be small, the maufacturer egotiates cotracts with suppliers of equipmet ad supplies such as fertilizer ad chemicals. The farmers are ecouraged to purchase their raw materials ad machiery usig the maufacturer s cotract rates. This results i higher quality raw materials ad lower prices without sacrificig the margis ad fiacial stregth of the growers. There are several examples of compaies who, i times of shortage, discovered that it was importat to maage beyod Tier suppliers for critical times. Oe example ivolves a material used i the maufacture of semi-coductors. It tured out that the six Tier suppliers all purchased from the same Tier 2 supplier. Whe shortages occurred, it became apparet that the critical relatioship was with the Tier 2 supplier. It is importat to idetify the critical liks i the supply chai ad these may ot be the immediately adjacet firms. Busiess Process Chais Daveport defied a process as "a structured ad measured set of activities desiged to produce a specific output for a particular customer or market" [3]. A process ca be viewed as a structure of activities desiged for actio with a focus o edcustomers ad o the dyamic maagemet of flows ivolvig products, iformatio, cash, kowledge ad/or ideas. Thousads of activities are performed ad coordiated withi a compay, ad every compay is by ature i some way ivolved i supply chai relatioships with other compaies [32]. Whe two compaies build a relatioship, certai of their iteral activities will be liked ad maaged betwee the two compaies [33]. Sice both 3

14 compaies have liked some iteral activities with other members of their supply chai, a lik betwee two compaies is thus a lik i what might be coceived as a supply chai etwork. For example, the iteral activities of a maufacturer are liked with ad ca affect the iteral activities of a distributor, which i tur are liked with ad ca have a effect o the iteral activities of a retailer. Ultimately, the iteral activities of the retailer are liked with ad ca affect the activities of the ed-customer. The results of empirical research by Håkasso ad Sehota stress that "the structure of activities withi ad betwee compaies is a critical corerstoe of creatig uique ad superior supply chai performace" [34]. I this research, the executives believed that competitiveess ad profitability could icrease if iteral key activities ad busiess processes are liked ad maaged across multiple compaies. Thus, "successful supply chai maagemet requires a chage from maagig idividual fuctios to itegratig activities ito key supply chai busiess processes" [35]. Our research team has foud that i some compaies executives emphasize a fuctioal structure, others a process structure ad others a combied structure of processes ad fuctios. Those compaies with processes had differet umbers of processes cosistig of differet activities ad liks betwee activities. Differet ames were used for similar processes, ad similar ames for differet processes. This lack of iter-compay cosistecy is a cause for sigificat frictio ad iefficiecies i supply chais. It is importat that maagers i differet firms speak the same laguage (use the same termiology). At least with fuctioal silos, there is geerally a uderstadig of what fuctios like marketig, maufacturig ad accoutig/fiace represet. If each firm idetifies its ow set of processes, how ca these processes be liked across firms? A simplified illustratio of such a discoected supply chai is show i Figure 5. It is ecessary to address which processes are critical ad/or beeficial to itegrate ad maage across the supply chai. I the case study compaies, it became clear that i some cases busiess processes exteded to suppliers ad were maaged to some extet betwee the two firms ivolved. This may imply that whe a leadership role is take, firms i the supply chai will use the same busiess processes. The obvious advatage whe this is possible is that each member of the bad is playig the same tue. The umber of busiess processes it is critical ad/or beeficial to itegrate ad maage betwee compaies will likely vary. However, i each specific case, it is importat that executives thoroughly aalyze ad discuss which key busiess processes to itegrate ad maage. The major compoets for itegratig ad maagig a supply chai etwork are addressed ext. The Maagemet Compoets of SCM The maagemet compoets of SCM are the third elemet of the SCM framework (see Figure 3). The level of itegratio ad maagemet of a busiess process lik is a fuctio of the umber ad level, ragig from low to high, of compoets added to the lik [36]. Cosequetly, addig more maagemet compoets or icreasig the level of each compoet ca icrease the level of itegratio of the busiess process lik. 4

15 Figure 5 Supply Chai Maagemet: The Discoects Iformatio Flow Tier 2 Supplier Tier Supplier Purchasig Productio Maufacturer Logistics PRODUCT FLOW R&D Marketig Fiace Customer Cosumer/ Ed-Customer CUSTOMER RELATIONSHIP MANAGEMENT CUSTOMER SERVICE MANAGEMENT DEMAND MANAGEMENT ORDER FULFILLMENT MANUFACTURING FLOW MANAGEMENT SUPPLIER RELATIONSHIP MANAGEMENT PRODUCT DEVELOPMENT AND COMMERCIALIZATION RETRUNS MANAGEMENT Source: Adapted from Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998), p.0. The literature o busiess process reegieerig [37], buyer-supplier relatioships [38], ad SCM [39] suggests umerous possible compoets that must receive maagerial attetio whe maagig supply relatioships. Based o the maagemet compoets idetified i our previous work, review of the literature, ad iterviews with 80 maagers, ie maagemet compoets are idetified for successful SCM: plaig ad cotrol, work structure, orgaizatio structure, product flow facility structure, iformatio flow facility structure, maagemet methods, power ad leadership structure, risk ad reward structure, ad culture ad attitude. These are briefly described below. Plaig ad cotrol of operatios are keys to movig a orgaizatio or supply chai i a desired directio. The extet of joit plaig is expected to bear heavily o the success of the supply chai, differet compoets may be emphasized at differet times durig the life of the supply chai but plaig trasceds the phases [40]. The cotrol aspects ca be operatioalized as the best performace metrics for measurig supply chai success. The work structure idicates how the firm performs its tasks ad activities. The level of itegratio of processes across the supply chai is a measure of orgaizatioal structure. 5

16 All but oe of the literature sources examied cited work structure as a importat compoet. Orgaizatioal structure ca refer to the idividual firm ad the supply chai; the use of cross-fuctioal teams would suggest more of a process approach. Whe these teams cross orgaizatioal boudaries, such as i-plat supplier persoel, the supply chai should be more itegrated. Product flow facility structure refers to the etwork structure for sourcig, maufacturig, ad distributio across the supply chai. Sice ivetory is ecessary i the system, some supply chai members may keep a disproportioate amout of ivetory. As it is less expesive to have ufiished or semi-fiished goods i ivetory tha fiished goods, upstream members may bear more of this burde. Ratioalizig the supply chai etwork has implicatios for all members. Virtually every author idicates that the iformatio flow facility structure is key. The kid of iformatio passed amog chael members ad the frequecy of iformatio updatig has a strog ifluece o the efficiecy of the supply chai. This may well be the first compoet itegrated across part or all of the supply chai. Maagemet methods iclude the corporate philosophy ad maagemet techiques. It is very difficult to itegrate a top-dow orgaizatio structure with a bottomup structure. The level of maagemet ivolvemet i day-to-day operatios ca differ across supply chai members. The power ad leadership structure across the supply chai will affect its form. Oe strog leader will drive the directio of the chai. I most supply chais studied to date, there are oe or two strog leaders amog the firms. The exercise of power, or lack of, ca affect the level of commitmet of other members. Forced participatio will ecourage exit behavior, give the opportuity [4]. The aticipatio of sharig of risks ad rewards across the supply chai affects log-term commitmet of its members. The importace of corporate culture ad its compatibility across members of the supply chai caot be uderestimated. Meshig cultures ad idividuals attitudes is time cosumig but is ecessary at some level for the chael to perform as a chai. Aspects of culture iclude how employees are valued ad icorporated ito the maagemet of the firm. Figure 6 illustrates how the maagemet compoets ca be divided ito two groups. The first group is the physical ad techical group, which icludes the most visible, tagible, measurable, ad easy-to-chage compoets. This research, ad much literature o chage maagemet [42] shows that if this group of maagemet compoets is the oly focus of maagerial attetio, the results will be disappoitig at best. The secod group is comprised of the maagerial ad behavioral compoets. These compoets are less tagible ad visible ad are ofte difficult to assess ad alter. The maagerial ad behavioral compoets defie the orgaizatioal behavior ad ifluece how the physical ad techical maagemet compoets ca be implemeted. If the maagerial ad behavioral compoets are ot aliged to drive ad reiforce a orgaizatioal behavior supportive to the supply chai objectives ad operatios, the 6

17 supply chai will likely be less competitive ad profitable. If oe or more compoets i the physical ad techical group are chaged, maagemet compoets i the maagerial ad behavioral group likewise may have to be readjusted. The groudwork for successful SCM is established by uderstadig each of these SCM compoets ad their iterdepedece. Hewitt stated that true itra- ad iter-compay busiess process maagemet, or redesig, is oly likely to be successful if it is recogized as a multicompoet chage process, simultaeously ad explicitly addressig all SCM compoets [43]. Figure 6 Supply Chai Maagemet: Fudametal Maagemet Compoets Physical & Techical Maagemet Compoets Maagerial & Behavioral Maagemet Compoets Plaig ad Cotrol Methods Maagemet Methods Work Flow/ Activity Structure Power ad Leadership Structure Orgaizatio Structure Risk ad Reward Structure Commuicatio ad Iformatio Flow Facility Structure Culture ad Attitude Product Flow Facility Structure Source: Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998), p. 2. All ie maagemet compoets were foud i the busiess process liks studied, icludig examples of successful SCM applicatios. However, the umber, levels of compoets ad combiatios of represetatios varied. A fidig is that the physical ad techical compoets were well uderstood ad maaged the farthest up ad dow the supply chai. For example, i oe case, the focal compay had itegrated its demad maagemet process across four liks by applyig the followig compoets: plaig ad cotrol methods, work flow/activity structure, commuicatio ad iformatio flow facility structure ad product flow facility structure. The maagerial ad behavioral maagemet compoets were, i geeral, less well uderstood ad more difficulties were ecoutered i their implemetatio. Oly oe example was foud of maagerial ad behavioral maagemet compoets applied more tha oe lik across the supply chai. 7

18 Mappig the Supply Chai I the compaies studied, maagemet did ot lik all eight busiess processes across all firms i the same tier. I other words, differet busiess processes had differet lookig supply chai etwork structures. A example is a focal compay that ivolves Supplier A, but ot Supplier B i its product developmet ad commercializatio process, whereas the demad maagemet process is liked with both suppliers. Maagemet will choose to itegrate ad maage differet supply chai liks with the busiess processes that offer both firms the potetial for improved performace. Figure 7 is a illustratio of how the itegrated ad maaged busiess process liks of a focal compay may differ from process to process. For simplicity oly the maaged ad ot-maaged busiess process liks are illustrated. The moitored ad o-member process liks are omitted. Oly very few supply chai members are icluded. Also, the diagram oly cotais four of the busiess processes. It is suggested that maagers map idividual processes ad the superimpose them o oe supply chai map. Figure 7 A Illustratio of a Supply Chai Combiig the Itegrated ad Maaged Busiess Process Liks Maaged Demad Maagemet Process Liks Maaged Order Fulfillmet Process Liks Maaged Product Develop./Commercial. Process Liks Maaged Customer Relatioship Maag. Process Liks Not-Maaged Busiess Process Liks. Focal Compay. Selected Other Members of the Focal Compay's Supply Chai. Source: Douglas M. Lambert, Martha C. Cooper ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities, The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998),p. 3. 8

19 Previous literature has idicated that some or all busiess processes should be liked across the supply chai, from the iitial source of supply to the ultimate edcustomer. I this research, there were o examples of this, or were there ay i the cases described i the literature. I fact the compaies studied had oly itegrated some selected key process liks, ad were likewise oly moitorig some other selected liks. Reegieerig Improvemet ito the Supply Chai A critical part of streamliig supply chais ivolves reegieerig the firm s key processes to meet customer eeds. Reegieerig is a process aimed at producig dramatic chages quickly. Hammer ad Champy defie it as the fudametal rethikig ad radical redesig of busiess processes to achieve dramatic improvemets i critical cotemporary measures of performace such as cost, quality service, ad speed [44]. Improvemet through reegieerig caot be accomplished i a haphazard maer. These chages must be supported at the top ad drive through a overall maagemet pla. A typical reegieerig process proceeds through three stages: () fact fidig; (2) idetifyig areas for improvemet to busiess process redesig; ad, (3) creative improvemets. The fact-fidig stage is a very detailed examiatio of the curret systems, procedures, ad workflow. Key focus is placed o separatig facts from opiios. Armed with the facts collected i the first stage, reegieerig teams idetify areas for improvemet. They aalyze where value was added for the fial customer with particular emphasis o customer cotact poits ad product iformatio trasfers, which are curretly ieffective or iefficiet. After idetifyig improvemet poits the creative phase of redesigig busiess process ad iformatio flow begis. The outcomes of the creative phase will fudametally chage both the ature of the work ad how it is performed. Figure 8 illustrates a geeral framework which ca be used whe udertakig busiess process reegieerig. Orgaizatioal eergy eeds to focus o the firm's missio statemet. The missio statemet drives the busiess requiremets i the orgaizatio. A complete assessmet is made of the firm's culture, strategies, busiess practices, ad processes. If this aalysis proves acceptable, maagemet implemets its busiess solutio across the supply chai. Typically, improvemets are required i oe of the areas to ehace supply chai performace. A example of reegieerig is the ew Mercedes- Bez micro car, which is based o the priciple of systems supply [45]. Reegieerig resulted i delegatig more desig activities to suppliers reducig the amout of egieerig ad labor at the primary maufacturer. The savigs of these efficiecies are passed alog to the customer i the form of icreased value. 9

20 Figure 8 Reegieerig SCM Process Flow Chart Missio statemet Missio statemet Busiess requiremets Busiess requiremets Assess: Culture Strategies Practices Processes Acceptable Not acceptable Revise/reegieer Parterships Orgaizatio structure Huma resource capabilities Iformatio systems New eterprise desig for itegrated process Implemet busiess solutio i supply chai Source: Douglas M. Lambert, Larry C. Guiipero ad Gary J. Ridehower, Supply Chai Maagemet: A Key to Achievig Busiess Excellece i the 2st Cetury, upublished mauscript. All Rights reserved. Implemetig Itegrated Supply Chai Maagemet Implemetig SCM requires makig the trasitio from a focus o fuctios to a focus o supply chai maagemet processes. Figure 9 illustrates how each fuctio withi the orgaizatio provides iput to the eight key processes. I the customer relatioship maagemet process, sales ad marketig provides the accout maagemet expertise, egieerig provides the specificatios which defie the requiremets, logistics provides kowledge of customer service requiremets, maufacturig provides the maufacturig strategy, purchasig provides the sourcig strategy, ad fiace provides customer profitability reports. The customer service requiremets must be used as iput to maufacturig, sourcig, ad logistics strategies. If the proper coordiatio mechaisms are ot i place across the various fuctios, the process will be either effective or efficiet. By takig a process focus all fuctios that touch the product or provide iformatio must work together. For example, purchasig depeds o sales/marketig data fed through a productio schedule to assess specific 20

21 order levels ad timig of requiremets. These orders drive productio requiremets which i tur are trasmitted upstream to suppliers. Typical Fuctioal Silos Busiess Processes Customer Relatioship Maagemet Figure 9 Implemetatio Of Supply Chai Maagemet Marketig Accout Maagemet Research & Developmet Requiremets Defiitio Logistics Productio Purchasig Fiace Requiremets Defiitio Maufacturig Strategy Sourcig Strategy Customer Profitability Customer Service Maagemet Accout Admiistratio Techical Service Performace Coordiated Specificatios Executio Priority Assessmet Cost To Serve SUPPLIERS Demad Maagemet Fulfillmet Maufacturig Flow Maagemet Supplier Relatioship Maagemet Demad Plaig Special Orders Packagig Specificatios Order Bookig Process Requiremets Evirometal Requiremets Process Stability Material Specificatios Forecastig Network Plaig Prioritizatio Criteria Iboud Flow Capability Plaig Plat Direct Productio Plaig Itegrated Plaig Sourcig Selected Supplier(s) Itegrated Supply Supplier Maagemet Tradeoff Aalysis Distributio Cost Maufacturig Cost Materials Cost CUSTOMERS Product Developmet ad Commercializatio Busiess Pla Product Desig Movemet Process Material Requiremets Specificatios Specificatios R & D Cost Returs Maagemet Product Product Reverse Remaufacturig Iformatio Specificatio Material Life Cycle Iformatio Desig Architecture, Logistics Data Base Strategy, Visibility Reveue & Costs Iformatio Architecture, Data Base Strategy, Iformatio Visibility Note: Process sposorship ad owership must be established to drive the attaimet of the supply chai visio ad elimiate the fuctioal barriers that artificially separate the process flows. Source: Adapted from Douglas M. Lambert, Larry C. Guiipero ad Gary J. Ridehower, Supply Chai Maagemet: A Key to Achievig Busiess Excellece i the 2st Cetury, upublished mauscript. The use of outsourcig has accelerated the eed to coordiate supply chai processes sice the orgaizatio becomes more depedet o outside cotractor suppliers. Cosequetly, coordiatio mechaisms must be i place withi the orgaizatio. Whe logistics third parties are used they serve o process teams as represetatives of the logistics fuctio. There are several process redesig ad reegieerig techiques that ca be applied to the supply chai processes. Chrysler Corporatio's developmet of Neo was accomplished through the efforts of 50 iteral employees. This core group leveraged their efforts to 600 egieers, 289 suppliers ad lie employees. Cocurret egieerig techiques required the ivolvemet of persoel from all key fuctioal areas workig with suppliers to develop the vehicle i 42 moths. The use of cocurret egieerig resulted i the avoidace of later disagreemets, misuderstadigs ad delays. 2

22 Typically, firms withi the supply chai will have their ow fuctioal silos that must be overcome ad a process approach accepted i order to successfully implemet SCM. The requiremets for successful implemetatio of SCM iclude: Executive support, leadership ad commitmet to chage. A uderstadig of the degree of chage that is ecessary. Agreemet o the SCM visio ad the key processes. The ecessary commitmet of resources ad empowermet to achieve the stated goals. Coclusios Executives are becomig aware of the emergig paradigm of iter-etwork competitio, ad that the successful itegratio ad maagemet of key supply chai maagemet processes across members of the supply chai will determie the ultimate success of the sigle eterprise. Maagig the supply chai caot be left to chace. For this reaso, executives are strivig to iterpret ad determie how to maage the compay's supply chai etwork, ad achieve the potetial of SCM. Research with member firms of The Global Supply Chai Forum at The Ohio State Uiversity idicates that maagig the supply chai ivolves three closely iter-related elemets: ) the supply chai etwork structure; 2) the supply chai busiess processes; ad, 3) the maagemet compoets. The structure of activities/processes withi ad betwee compaies is vital for creatig superior competitiveess ad profitability. Successful SCM requires itegratig busiess processes with key members of the supply chai. Much frictio, ad thus waste of valuable resources results whe supply chais are ot itegrated, appropriately streamlied ad maaged. A prerequisite for successful SCM is to coordiate activities withi the firm. Oe way to do this is to idetify the key busiess processes ad maage them usig cross-fuctioal teams. Hopefully, this paper provides clarificatio o key aspects of SCM that will aid practitioers ad researchers i their desire to uderstad ad implemet SCM. It is importat to distiguish betwee primary ad supportig supply chai members, ad to idetify the horizotal structure, the vertical structure, ad the horizotal positio of the focal compay i the supply chai etwork. There are four fudametally differet types of busiess process liks: maaged busiess process liks, moitored busiess process liks, ot maaged busiess process liks, ad o-member busiess process liks. Marketig researchers were i the forefrot of studyig critical aspects of what we ow call supply chai maagemet, particularly with respect to idetifyig the members of a chael of distributio. The focus was from the maufacturer to the customer for the most part. The approach to SCM preseted here esures iclusio of suppliers ad customers. There are several implicatios for marketig practitioers ad researchers. There is a eed to itegrate activities across the firm ad across firms i the supply chai. While marketig strategy formulatio has always cosidered iteral ad exteral costraits, SCM makes the explicit evaluatio of these factors eve more critical. Additioally, traditioal roles of marketig ad sales people are chagig. Team efforts are becomig more commo for developig ad marketig ew products, as well as maagig curret oes. The role of the 22

23 firm s sales force is chagig to oe of measurig ad sellig the value that the firm is providig for the customer. I combiatio, the SCM defiitio ad the ew framework move SCM philosophy to its ext evolutioary stage. The implemetatio of SCM ivolves idetifyig the supply chai members, with whom it is critical to lik, what processes eed to be liked with each of these key members, ad what type/level of itegratio applies to each process lik. The objective of SCM is to create the most value ot simply for the compay but the whole supply chai etwork icludig the ed-customer. Cosequetly, supply chai process itegratio ad reegieerig iitiatives should be aimed at boostig total process efficiecy ad effectiveess across members of the supply chai. Refereces [] Drucker, Peter F., "Maagemet's New Paradigms," Forbes Magazie, October 5, 998, pp ; Marti G. Christopher, "Relatioships ad Alliaces: Embracig the Era of Network Competitio," i Strategic Supply Chai Maagemet, ed. Joh Gattora, Hampshire, Eglad: Gower Press, 998, pp ; ad, Doald J. Bowersox, "Itegrated Supply Chai Maagemet: A Strategic Imperative," Aual Coferece Proceedigs, Chicago, Illiois: Coucil of Logistics Maagemet (997), pp [2] Hewitt, Fred, "Supply Chai Redesig," The Iteratioal Joural of Logistics Maagemet, Vol. 5, No. 2 (994), pp. -9; Martha C. Cooper, Douglas M. Lambert ad Jaus D. Pagh, Supply Chai Maagemet: More Tha a New Name for Logistics, The Iteratioal Joural of Logistics Maagemet, Vol. 8, No. (997), pp. -4; ad, Douglas M. Lambert, Martha C. Cooper, ad Jaus D. Pagh, "Supply Chai Maagemet: Implemetatio Issues ad Research Opportuities," The Iteratioal Joural of Logistics Maagemet, Vol. 9, No. 2 (998), pp. -9. [3] Previously the Research Roudtable of The Iteratioal Ceter for Competitive Excellece, Uiversity of North Florida, Dr. Douglas M. Lambert, Director, 994. I 996, this group moved with Dr. Lambert to The Ohio State Uiversity ad became The Global Supply Chai Forum. Begiig Jauary 999, the group is joitly ivolved with OSU ad UNF. [4] Oliver, R. Keith ad Michael D. Webber, "Supply-Chai Maagemet: Logistics Catches Up with Strategy," Outlook, (982), cit. Marti G. Christopher, Logistics, The Strategic Issue, Lodo: Chapma ad Hall, 992. [5] La Lode, Berard J., "Supply Chai Evolutio by the Numbers," Supply Chai Maagemet Review, Vol. 2, No. (998), pp [6] For example, Steves, Graham C., Itegratio of the Supply Chai, Iteratioal Joural of Physical Distributio ad Logistics Maagemet, Vol. 9, No. 8 (989), pp. 3-8; Deis R. Towill, Mohamed M. Naim, ad J. Wiker, Idustrial Dyamics Simulatio Models i the Desig of Supply Chais, Iteratioal Joural of Physical Distributio ad Logistics Maagemet, Vol. 22, No. 5 (992), pp. 3-3; ad, Lisa M. Ellram ad Martha C. Cooper, "The Relatioship Betwee Supply Chai Maagemet ad Keiretsu," The Iteratioal Joural of Logistics Maagemet, Vol. 4, No. (993), pp [7] Bechtel, Christia ad Jayath Jayaram, "Supply Chai Maagemet: A Strategic Perspective," The Iteratioal Joural of Logistics Maagemet, Vol. 8, No. (997), pp

24 [8] Davis, Tom, Effective Supply Chai Maagemet, Sloa Maagemet Review, Vol. 34, No. 4, Summer (993), pp ; Bruce C. Artze, Gerald G. Brow, Thomas P. Harriso ad Lida L. Trafto, Global Supply Chai Maagemet Digital Equipmet Corporatio, Iterfaces, Vol. 25, No. (995), pp ; Hau L. Lee, Corey Billigto ad Bret Carter, Hewlett-Packard Gais Cotrol of Ivetory ad Service through Desig for Localizatio, Iterfaces, Vol. 23, No. 4 (993), pp. -; Hau L. Lee ad Corey Billigto, The Evolutio of Supply Chai Maagemet Models ad Practice at Hewlett-Packard, Iterfaces, Vol. 25, No. 5 (995), pp ; ad, Robert C. Camp ad Da N. Colbert, The Xerox Quest for Supply Chai Excellece, Supply Chai Maagemet Review, Sprig (997), pp [9] Scharlacke, Joh W., "The Seve Pillars of Global Supply Chai Plaig," Supply Chai Maagemet Review, Vol. 2, No. (998), pp ; Gee Tydall, Christopher Gopal, Wolfgag Partsch ad Joh Kamauff, Superchargig Supply Chais, New York: Joh Wiley & Sos, Ic., 998; ad, William C. Copacio, Supply Chai Maagemet: The Basics ad Beyod, Boca Rato, FL: St. Lucie Press, 997. [0] Fisher, Marshall L., What is the Right Supply Chai for Your Product? Harvard Busiess Review, Vol. 75, No. 2, March-April (997), pp. 05-6; Hau L. Lee ad Corey Billigto, Maagig Supply Chai Ivetory: Pitfalls ad Opportuities, Sloa Maagemet Review, Vol. 33, No. 3, Sprig (992), pp ; Robert B. Hadfield ad Erest L. Nichols, Jr., Itroductio to Supply Chai Maagemet, Upper Saddle River, New Jersey, Pretice Hall, 999; Yossi Sheffi ad Peter Klaus, Logistics at Large; Jumpig the Barriers of the Logistics Fuctios, Proceedigs of the Twety-sixth Aual Trasportatio ad Logistics Educators Coferece, Chicago, Illiois, October 5 th (997), pp Edited by James M. Masters, The Ohio State Uiversity; ad, Doald J. Bowersox ad David J. Closs, Logistical Maagemet The Itegrated Supply Chai Process, New York: McGraw- Hill Compaies, 996. [] I 986, the Coucil of Logistics Maagemet (CLM), the leadig-edge professioal orgaizatio with a curret membership of over 5,000, defied logistics maagemet as: The process of plaig, implemetig, ad cotrollig the efficiet, costeffective flow ad storage of raw materials, i-process ivetory, fiished goods, ad related iformatio flow from poit-of-origi to poit-of-cosumptio for the purpose of coformig to customer requiremets. Coucil of Logistics Maagemet, What's It All About?, Oak Brook, IL, 986. [2] Cooper, Martha C., Douglas M. Lambert ad Jaus D. Pagh, "Supply Chai Maagemet: More Tha a New Name for Logistics," The Iteratioal Joural of Logistics Maagemet, Vol. 8, No. (997), pp. -4. [3] Preseted at the aual busiess meetig, Coucil of Logistics Maagemet, Aaheim, CA, October, 998. The defiitio is posted at the CLM's homepage: [4] Alderso, Wroe, "Marketig Efficiecy ad the Priciple of Postpoemet, Cost ad Profit Outlook, Vol. 3, September (950); Reavis Cox ad Wroe Alderso (eds.) Theory i Marketig, Chicago, IL: Richard D. Irwi, Ic., (950); ad, Louis P. Buckli, A Theory of Distributio Chael Structure, IBER Special publicatio, Berkeley, Califoria (966). [5] Frederick E. Webster, Jr. (992), The Chagig Role of Marketig i the Corporatio, Joural of Marketig, No. 56, (October), pp. -7; Atul Parvatiyar ad Jagdish N. Sheth, Relatioship Marketig: Theory, Methods, ad Applicatios, Jagdish N. Sheth ad Atul Parvatiyar (eds.), Atlata: Emory Uiversity Ceter for Relatioship Marketig,

25 [6] Cooper, Martha C., Lisa M. Ellram, Joh T. Garder ad Albert M. Haks, Meshig Multiple Alliaces, Joural of Busiess Logistics, Vol. 8, No. (997), pp [7] Lambert, Douglas M., Margaret A. Emmelhaiz ad Joh. T. Garder, "Developig ad Implemetig Supply Chai Partership," The Iteratioal Joural of Logistics Maagemet, Vol.7, No.2 (996), pp.-7. [8] Cooper, Martha C. ad Joh T. Garder "Good Busiess Relatioships: More Tha Just Parterships or Strategic Alliaces," Iteratioal Joural of Physical Distributio ad Logistics Maagemet, Vol.23, No.6 (993), pp [9] Cooper, Martha C., Lisa M. Ellram, Joh T. Garder ad Albert M. Haks, "Meshig Multiple Alliaces," Joural of Busiess Logistics, Vol. 8, No. (997), pp [20] Ster, Louis W. ad Adel El-Asary, Marketig Chaels, 5th Editio, Eglewood Cliffs, NJ: Pretice Hall, 995. [2] Daveport, Thomas H., Process Iovatio - Reegieerig Work through Iformatio Techology, Bosto, Massachusetts: Harvard Busiess School Press, 993. [22] Porter, Michael E., Competitive Advatage - Creatig ad Sustaiig Superior Performace, New York: The Free Press, 984, pp. 36. [23] Ster, Louis W. ad Adel El-Asary, Marketig Chael, 5th Editio, Eglewood Cliffs, NJ: Pretice Hall, 995. [24] Cooper, Martha C., Lisa M. Ellram, Joh T. Garder ad Albert M. Haks, "Meshig Multiple Alliaces," Joural of Busiess Logistics, Vol. 8, No. (997), pp [25] This material is adapted from Douglas M. Lambert, Larry C. Guiipero ad Gary J. Ridehower, Supply Chai Maagemet: A Key to Achievig Busiess Excellece i the 2st Cetury, all rights reserved; ad, Douglas M. Lambert, James R. Stock ad Lisa M. Ellram, Fudametals of Logistics Maagemet, Burr Ridge, Illiois: Irwi/McGraw-Hill, 998. [26] Keely L. Croxto, Sebastiá J. García-Dastugue, Douglas M. Lambert, ad Dale S. Rogers, The Supply Chai Maagemet Processes, The Iteratioal Joural of Logistics Maagemet, Vol. 2, No. 2, (200), pp [27] Douglas M. Lambert ad Terrace L. Pohle, Supply Chai Metrics, The Iteratioal Joural of Logistics Maagemet, Vol. 2, No., (200), pp. -9. [28] Tom Davis, Effective Supply Chai Maagemet, Sloa Maagemet Review, Vol. 34, No. 4 (Summer 993), pp [29] Joh A. Cledei, "Closig the Supply Chai Loop: Reegieerig the Returs Chael Process," The Iteratioal Joural of Logistics Maagemet, Vol. 8, No. (997), pp [30] Håkasso, Håka ad Iva Sehota, Developig Relatioships i Busiess Networks, Lodo: Routledge, 995. [3] Daveport, Thomas H., Process Iovatio, Reegieerig Work through Iformatio Techology, Bosto, Massachusetts: Harvard Busiess School Press, 993. [32] Bowersox, Doald J., Itegrated Supply Chai Maagemet; A Strategic Perspective, Aual Coferece Proceedigs, Chicago, Illiois: Coucil of Logistics Maagemet (997), pp. 8-89; George E. Stigler, The Divisio of Labor Is Limited by the Extet of the Market, Joural of Political Ecoomy, Vol. 59, No. 3 (95), pp ; ad, R. H. Coase, The Nature of the Firm, Ecoomica, Vol. 4 (937), pp [33] Håkasso, Håka ad Iva Sehota, Developig Relatioships i Busiess Networks, Lodo: Routledge,

26 [34] Håkasso, Håka ad Iva Sehota, Developig Relatioships i Busiess Networks, Lodo: Routledge, 995. [35] Lambert, Douglas M., Larry C. Guiipero ad Gary J. Ridehower, "Supply Chai Maagemet: A Key to Achievig Busiess Excellece i the 2st Cetury, upublished mauscript (997); ad, Douglas M. Lambert, James R. Stock, ad Lisa M. Ellram, Fudametals of Logistics Maagemet, Bosto: Irwi/McGraw-Hill, 998. [36] Lambert, Douglas M., Margaret A. Emmelhaiz ad Joh T. Garder, "So You Thik You Wat a Parter? Marketig Maagemet, Vol. 5, No. 2, Summer (996), pp. 25-4; ad, Martha C. Cooper, Lisa M. Ellram, Joh T. Garder ad Albert M. Haks, Meshig Multiple Alliaces, Joural of Busiess Logistics, Vol. 8, No. (997), pp [37] Hammer ad Champy (993), op. cit; Same as referece 24; Towers (994), op. cit; ad, Fred Hewitt, Supply Chai Redesig, The Iteratioal Joural of Logistics Maagemet, Vol. 5, No. 2 (994), pp. -9. [38] Ellram, Lisa M. ad Martha C. Cooper, Supply Chai Maagemet, Partership, ad the Shipper Third Party Relatioship, The Iteratioal Joural of Logistics Maagemet, Vol., No. 2 (990), pp. -0; Graham C. Steves, Itegratio of the Supply Chai, Iteratioal Joural of Physical Distributio ad Logistics Maagemet, Vol. 9, No. 8 (989), pp. 3-8; Cooper ad Ellram (993), op. cit; ad Houliha (985), op. cit. [39] See literature review by Martha C. Cooper, Douglas M. Lambert ad Jaus D. Pagh, "Supply Chai Maagemet: More Tha a New Name for Logistics, The Iteratioal Joural of Logistics Maagemet, Vol. 8, No. (997), pp. -4; Douglas M. Lambert, Margaret A. Emmelhaiz ad Joh T. Garder, So You Thik You Wat a Parter? Marketig Maagemet, Vol. 5, No. 2, Summer (996), pp. 25-4; Rasmus F. Olse ad Lisa M. Ellram, A Portfolio Approach to Supplier Relatioships, Idustrial Marketig Maagemet, Vol. 26 (997), pp. 0-3; ad, Peter W. Turbull, A Review of Portfolio Plaig Models for Idustrial Marketig ad Purchasig Maagemet, Europea Joural of Marketig, Vol. 24, No. 3 (990), pp [40] Cooper ad Ellram (993), op. cit. [4] Maceil, Ia R., The New Social Cotract, ad Iquiry ito Moder Cotractual Relatios, New Have, CT; Yale Uiversity Press, 980; ad, Oliver E. Williamso, Markets ad Hierarchies; Aalysis ad Atitrust Implicatios, New York, Free Press, 975. [42] Jaffe, Deis T. ad Cythia D. Scott, Reegieerig i Practice: Where Are the People? Where Is the Learig, Joural of Applied Behavioral Sciece, Vol. 34, No. 3 (998), pp ; Dorie C. Adrews ad Susa K. Stalick, Busiess Reegieerig: The Survival Guide, st ed., Eglewood Cliffs, NJ: Yourdo Press, 994; Michael Hammer, Reegieerig Work: Do't Automate, Obliterate, Harvard Busiess Review, Vol. 68, No. 4 (990), pp. 04-2; Michael Hammer ad James Champy, Reegieerig the Corporatio: a Maifesto for Busiess Revolutio, New York: Harper Busiess, 993; ad, Stephe Towers, Busiess Process Re-egieerig, A Practical Hadbook for Executives, Staley thors, 994. [43] Hewitt, Fred, "Supply Chai Redesig, The Iteratioal Joural of Logistics Maagemet, Vol. 5, No. 2 (994), pp. -9. [44] Michael Hammer ad James Champy, Reegieerig the Corporatio: A Maifesto for Busiess Revolutio, New York, NY: Harper ad Row, 993. [45] J. L. Colema, A. K. Bhattacharya ad G. Brace Supply Chai Reegieerig: A Supplier s Perspective, The Iteratioal Joural of Logistics Maagemet, Vol. 6, No. (995), pp

27 Ackowledgemet The author would like to ackowledge the cotributio of the members of The Global Supply Chai Forum whose practice, isight, ideas, ad commets have cotributed sigificatly to this paper. The member compaies i The Global Supply Chai Forum are: 3M; Cargill; The Coca-Cola Compay; Colgate-Palmolive Compay; Ford Motor Compay; Hewlett-Packard Compay; Iteratioal Paper; Limited Logistics Services; Lucet Techologies; Masterfoods USA; Moe Icorporated; Shell Global Solutios Iteratioal B.V.; Taylor Made-adidas Golf Compay; Sysco Corporatio; ad, Wedy s Iteratioal. DOUGLAS M. LAMBERT is the Raymod E. Maso Chair i Trasportatio ad Logistics, ad Director of The Global Supply Chai Forum, Fisher College of Busiess, The Ohio State Uiversity, ad the Prime F. Osbor III Emiet Scholar Chair i Trasportatio, Professor of Marketig ad Logistics, ad Director of The Iteratioal Ceter for Competitive Excellece, Uiversity of North Florida. Dr. Lambert has served as a faculty member for over 500 executive developmet programs i North ad South America, Europe, Asia, ad Australia. He is the author of The Developmet of a Ivetory Costig Methodology, The Distributio Chaels Decisio, The Product Abadomet Decisio, ad co-author of Maagemet i Marketig Chaels, Strategic Logistics Maagemet, ad Fudametals of Logistics Maagemet. His publicatios iclude more tha 00 articles. I 986, Dr. Lambert received the CLM Distiguished Service Award for his cotributios to logistics maagemet. He holds a hoors BA ad MBA from the Uiversity of Wester Otario ad Ph.D. from The Ohio State Uiversity. He ca be reached at The Ohio State Uiversity, 506 Fisher Hall, 200 Neil Aveue, Columbus, OH Phoe: (64) Fax: (64) [email protected]. He also ca be reached at the Uiversity of North Florida, 4567 St. Johs Bluff Rd. South, Jacksoville, FL Phoe: 904/ Fax: 904/ [email protected]. 27