Logistical Management Chapter 6 Operational Integration Supply Chain

Logistical Management Chapter 6: Operational Integration Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Integrative Management Value Proposition Economic Value Lowest Total Landed Cost Market Value Relevancy Value Attractive Assortment Customization Economy-of-Scale Efficiency Economy-of-Scope Segmental Diversity Effectiveness Product/ Service Creation Product/ Service Presentation Product/ Service Positioning Procurement/ Manufacturing Strategy Market/ Distribution Strategy Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Internal Integration The Great Divide Procurement and Manufacturing Integration Distribution and Marketing Integration The challenge of managing across functional boundaries. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Supply Chain Flows Product- Service Value Flow Resource Base Market Accommodation Flow Information Flow End Customers Cash Flow Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Supply Chain Framework R E S O U R C E B A S E PRODUCT-SERVICE VALUE FLOW MARKET ACCOMMODATION FLOW BEHAVIORAL CONTEXT Relationship PLANNING AND CONTROL CONTEXT Measurement Technology and Planning OPERATIONAL CONTEXT Material and Service Supplier Integration Internal Operations INFORMATION FLOW FINANCIAL FLOW Customer Integration E N D C U S T O M E R S Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Supply Chain Context, Competencies and Supportive Capabilities Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Factors Increasing Likelihood of Supply Chain Relationship Success Retailers Manufacturers • • • High level of cooperation Similarity of goals/ objectives Clear communications Senior management support Control of inventory Information sharing Recognition of mutual benefits Controlled implementation Joint task force Commitment/ resource dedication Benefits realization Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Common Obstacles Confronted When Creating Supply Chain Relationships Retailers Manufacturers • Low-volume stockkeeping units (SKU’s) • Resistance of manufacturers to change • Information systems • Noncompatible data formats • • • Lack of communication Trust level Noncompatible systems Understanding of technical issues Resistance of customers to change Readiness of retailers Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

1997 Global Logistics Expenditures Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

1997 Global Logistics Expenditures (cont. ) Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

Characteristics of Global Development Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

International Logistics Documentation • Export irrevocable commercial letter of credit. A contract between an importer and a bank that transfers liability or paying the exporter from the importer to the (supposedly more creditworthy) importer’s bank. • Bank draft (or bill of exchange). A means of payment for an import-export transaction. Two types exist: transaction payable on sight with proper documents (sight draft), and transaction payable at some fixed time after acceptance of proper documents (time draft). Either type or draft accompanied by instructions and other documents (but no letter of credit) are a documentary draft. • Bill of lading. Issued by the shipping company or its agent as evidence of a contract for shipping the merchandise and as a claim to ownership of the goods. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.

International Logistics Documentation (cont. ) • Combined transport document. May replace the bill of lading if goods are shipped by air (airway bill) or by more than one mode of transportation. • Commercial invoice. A document written by the exporter to precisely describe the goods and the terms of sale (similar to a shipping invoice used in domestic shipments). • Insurance certificate. Explains what type of coverage is utilized (fire, theft, water), the name of the insurer, and the exporter whose property is being insured. • Certificate of origin. Denotes the country in which the goods were produced in order to assess tariffs and other government-imposed restrictions on trade. Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper. Copyright© 2002 by The Mc. Graw-Hill Companies, Inc. All rights reserved.