Supply Chain Strategies Customer-driven and customer-focused Tony Hines ELSEVIER BUTTERWORTH HEINEMANN AMSTERDAM BOSTON HEIDELBERG LONDON NEW YORK OXFORD PARIS SAN DIEGO SAN FRANCISCO SINGAPORE SYDNEY TOKYO
Contents Preface xi 1 Globalization - global markets and global supply strategies 1 Introduction Globalization The reality of global markets New technologies and innovation Conclusions Note References Strategic concepts and the customer-focused, market-driven supply chain Strategy Strategic planning or strategic management? Defining strategy Levels of strategy Strategic thinking, systems and learning Static or dynamic environments Competence and capability Learning and organizational capability Developing strategic objectives Supply chain strategies and strategic fit Summary Note References 1 7 16 24 26 29 29 31 32 32 33 36 40 42 48 51 53 57 64 66 66
vi Contents 3 The emergence of supply chain management and supply chain strategy as a critical success factor for organizations 69 Introduction 70 Historical developments 70 Category management 77 Empirical evidence 84 Conclusions 94 Note 98 References 98 4 Market-driven and customer-focused supply chain strategies 102 Organizational structure in relation to supply chain strategies 103 Products (tangible) or services (intangible) 106 Customer focus 116 Product development 129 Market development 129 Diversification 130 Supply chain strategies that win orders 130 Summary 133 References 134 5 Supplier sourcing, procurement and evaluation 136 Sourcing and procurement decisions 137 Buying locally 137 Buying nationally 138 Global sourcing 138 An iceberg theory of cost comparison 142 Supplier selection 150 Ethical considerations in sourcing and procurement 153 Supplier development programmes 156 Supply base rationalization 157 Summary 159 Notes 162 References 162
Contents vii 6 Supply chain structures and relationships 163 Relationships and structures 163 Purchasing and procurement 164 The purchasing decision 165 Purchase frequency 170 Supplier relationships 171 Make or buy decisions 184 Summary 188 Notes 189 References 189 7 Supply chain integration and e-business strategies 192 e-business and supply chain management - an introduction 192 Looking upstream - a consumer perspective 196 B2B 203 e-supply chain opportunities 204 Customer relationship management 214 Summary 219 Glossary of e-business terminology 220 References 222 8 Strategic supply chain cost, value and measurement 223 Introduction to cost and value concepts Supply chain cost and control Activity-based cost and management systems Direct product profitability Total cost of ownership Performance measurement - an introduction Benchmarking Balanced scorecard Summary Notes References 223 227 234 237 239 246 252 259 261 262 262 Inventory management Introduction ABC analvsis aoolvine Pareto's concept 264 264 265
Contents vii 6 Supply chain structures and relationships 163 Relationships and structures 163 Purchasing and procurement 164 The purchasing decision 165 Purchase frequency 170 Supplier relationships 171 Make or buy decisions 184 Summary 188 Notes 189 References 189 7 Supply chain integration and e-business strategies 192 e-business and supply chain management - an introduction 192 Looking upstream - a consumer perspective 196 B2B 203 e-supply chain opportunities 204 Customer relationship management 214 Summary 219 Glossary of e-business terminology 220 References 222 8 Strategic supply chain cost, value and measurement 223 Introduction to cost and value concepts 223 Supply chain cost and control 227 Activity-based cost and management systems 234 Direct product profitability 237 Total cost of ownership 239 Performance measurement - an introduction 246 Benchmarking 252 Balanced scorecard 259 Summary 261 Notes 262 References 262 9 Inventory management 264 Introduction 264 ABC analysis applying Pareto's concept 265
viii Contents Stockless buying or systems contracting 268 Economic order quantities 269 Demand-led management 273 Just-in-Time 278 Lean and agile strategies 282 Materials requirement planning 282 Enterprise resource planning systems 285 Business process re-engineering 286 Summary 287 References 288 10 Supply chain profitability, quality and world-class organizations 290 Supply chain management and profitability 290 World-class supply chain management principles 291 Quality management 296 Management approaches to achieving quality 299 Summary 304 References 305 11 Logistics and fulfilment strategies 307 Introduction 307 Definition of warehousing 310 Location of storage facilities 313 Types of storage facility 317 From 'push' to 'pull' - the changing face of retail 319 Factory gate pricing (FGP) 325 Storage and material handling equipment 326 Assessing storage requirements 328 Stores layout 329 Transport decisions and supply chain strategies 332 Summary 334 References 335 12 The supply chain challenges - strategies for the future 337 Mass customization - the supply chain challenge 338 Globalization - the supply chain challenge 349 Greening the supply chain 351 Ethical supply chains 353
Contents ix Information, integration and intelligent systems 354 Implications for managers, organizations and policymakers 355 Implications for a research agenda 356 References 359 Afterword 360 Glossary 365 Author Index 382 Index 385