Book Manifesto ix
Chapter 1 Key Concepts of Supply Chain Management 1
Chapter 2 Supply Chain Operations: Planning and Sourcing 39
Chapter 3 Supply Chain Operations: Making and Delivering 75
Chapter 4 Using Information Technology 109
Chapter 5 Metrics for Measuring Supply Chain Performance 147
Chapter 6 Supply Chain Coordination 183
Chapter 7 Supply Chain Innovation for the Real-Time Economy 213
Chapter 8 Defi ning Supply Chain Opportunities 241
Chapter 9 Creating Supply Chains for Competitive
Chapter 10 The Promise of the Real-Time Supply Chain 307
About the Author 323
My intention in this book is to speak to a wide audience of business, technical, and professional people and others looking to understand this increasingly import area of activity. I provide a clear framework for understanding supply chain theory, operations, and opportunities. I then build on that framework and show ways to create supply chains with the performance levels needed for success in this real‐time global economy we live in.
I know you are busy and your time is valuable. So, I’ve worked hard to get to the point quickly and explain things clearly and concisely. This book provides a framework to understand the structure and operation of any supply chain. It also provides guidance and insights for how to make good use of the flood of new supply chain technologies. Ideas are provided for combining technology, people, and business processes to deliver greater levels of supply chain performance.
Chapters 1, 2, and 3 provide an introduction to the basic principles and practices that drive supply chain operations. Chapters 4, 5, and 6 discuss technologies, metrics, and techniques that are making significant impacts on the way supply chains are designed, monitored, and managed.
Chapter 7 is an exploration of how new technology can be combined with supply chain best‐practices such as sales and operations planning (S&OP) to deliver a new level of supply chain performance through effective collaboration between companies working together in supply chains. The potential for using cloud computing and presently available software applications to build real‐time supply chain collaboration platforms is presented.
Chapters 8 and 9 provide a pragmatic approach based on personal experience for defining supply chain opportunities, and designing and building systems to effectively respond to those opportunities. I present two case studies and show how companies can develop supply chain capabilities to support their evolving business The last chapter, Chapter 10, outlines opportunities for individual companies and alliances of companies to work together and employ the power of the self‐adjusting feedback loop to drive real‐time operations. Real‐time and collaborative supply chains are the next step in the evolution of supply chain management. Self‐adjusting supply chains and the economic growth and stability they make possible are central to the creation and preservation of wealth in this century.
What I say in this book is based on decades of personal experience in building and operating supply chains, plus many conversations with fellow practitioners and researchers. I am also much influenced by reading the works of other authors whom I quote and acknowledge in these chapters.goals.
This book is dedicated to the idea that there is a set of highly effective concepts and practices that supply chain professionals can use to significantly increase the competitiveness and profi tability of their companies. Even though supply chains and the technology they employ are changing rapidly, these concepts and practices remain highly relevant over time—they are the essentials of supply chain management. From decades of personal experience in the fi eld and from many conversations and reading the works of other supply chain professionals and researchers, I have distilled out these supply chain essentials. I know you are busy and your time is valuable so I make every attempt to get to the point quickly and explain things clearly and concisely. This book provides a framework to understand the structure and operation of any supply chain. It also provides guidance in how to make effective use of the fl ood of new supply chain technologies, and how to operate the constantly changing real-time supply chains that support our global economy.
Supply Chains as Massively Multi-Player Online Role Playing Games
One of the most promising new technologies for designing and coordinating the operation of supply chains comes from the world of online gaming. I’m referring to a type of game called a “massively multi-player online role playing game” (MMORPG). In these online games, players from all over the globe log into virtual worlds via the Internet; they learn different roles and skill sets, and come together in self-selecting teams to carry out missions in pursuit of common goals. Question: How is this any different than the challenges that await us in the global real-time economy we now inhabit?
If you’re part of the generation just starting out in business, answers to this question probably seem pretty obvious. If you’re part of a generation that’s already been in business for a while, answers might not seem so obvious (at fi rst). Unfortunately, the word “game” is associated with activities that seem frivolous or unimportant. That is not what I mean here; please hold your judgement while I explain. Popular MMORPGs such as EVE-Online and World of Warcraft bring together hundreds of thousands of simultaneous online players from countries around the globe to interact in complex, realistic three dimensional worlds. What if we did the same to design, monitor and operate the global supply chains that support our real-time economy?
As a companion to this book I have collaborated with a group of people to create a massively multi-player online role playing game to use for gaining a better understanding of the dynamics that underlie supply chains and their operations. This game allows people from all over the world to collaborate in the design and operation of supply chains. In effect, the game creates one big “sandbox” where people can experiment with the effects of different supply chain designs. It can be used to model real or imaginary supply chains and simulate their operations. It will show the performance characteristics and operating costs of these supply chains under different circumstances. The purpose of this game is to engage people in an interactive experience that accelerates their learning and increases their mastery of the skills involved in supply chain management. The ideas behind this game and its operation are explored in more detail in Chapter 7—Supply Chain Innovation for the Real-Time Economy.
A Real-Time Supply Chain Simulation System
SCM Globe is a simulation game that provides a map of the world and on that map, people working together in supply chains can draw in their factories, warehouses, retail stores, and the transportation routes such as roads, railways, and harbors that connect those locations. Then people can defi ne the production volumes of the factories, storage capacity of the warehouses, and movement capacity of the different modes of transportation. And fi nally, they can associate operating costs with each facility and each mode of transportation.
This supply chain game has some pretty challenging dynamics. Players need to fi gure out how to deliver products where and when they are needed to meet demand while at the same time minimizing inventory levels and holding down transportation and manufacturing costs. If you succeed in keeping down inventory levels and costs but fail to meet product demand, you lose. And if you always deliver the products but fail to keep the other factors under control, then your costs get out of hand and you don’t make any money.
If supply chain professionals and researchers can literally draw supply chain designs on an electronic map display and simulate the operations of those supply chains over some time period, they will quickly learn what designs produce the best results. And in the process, they will become immersed and involved in exploring supply chain dynamics. How long would it be before the people playing such a game developed high levels of skill in designing and operating high performance supply chains that responded effectively to changing market conditions? I invite you to try this game and see for yourself. This game is an evolving work in progress and I invite your feedback. Your feedback on what you like and what additional features you would like to see will guide the enhancement of this system.