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TransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-1?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458OperationsManagement
Supply-ChainManagement
Chapter11TransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-2?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458OutlineGlobalCompanyProfile:VolkswagonTheStrategicImportanceoftheSupply-ChainGlobalSupply-ChainIssuesPurchasingManufacturingEnvironmentsServiceEnvironmentMake-or-BuyDecisionsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-3?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Outline-continuedSupply-ChainStrategiesManySuppliersFewSuppliersVerticalIntegrationKeiretsuNetworksVirtualCompaniesVendorSelectionVendorEvaluationVendorDevelopmentNegotiationsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-4?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Outline-continuedManagingtheSupply-ChainMaterialsManagementDistributionSystemsBenchmarkingSupply-ChainManagementTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-5?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ExplainsupplychainmanagementStatetheimportanceofpurchasingandmaterialsmanagementCompare&contrastpurchasingstrategiesSummarizevendorrelationsissuesDescribethepurchasingprocessandtechniquesLearningObjectivesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-6?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458VolkswagonBrazilianplantemploys1000workers200workforVW800workforothercontractors:RockwellInternational,CumminsEngines,DelgaAutomotiva,MWM,RemonandVDO,etc.VWresponsibleforoverallquality,marketing,researchanddesignVWlookstoinnovativesupplychaintoimprovequalityanddrivedowncostsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-7?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458VolkswagonUnusualelements:VWisbuyingnotonlymaterials,butalsothelaborandrelatedservicesSuppliersareintegratedtightlyintoVW抯ownnetwork,rightdowntoassemblyworkintheplantTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-8?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Planning,organizing,directing,&controllingflowsofmaterialsBeginswithrawmaterialsContinuesthroughinternaloperationsEndswithdistributionoffinishedgoodsInvolveseveryoneinsupply-chainExample:Yoursupplier抯supplierObjective:Maximizevalue&lowerwasteSupply-ChainManagementTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-9?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ConsumerRetailerManufacturingMateriallFlowVISACreditFlowSupplierSupplierWholesalerRetailerCashFlowOrderFlowSchedulesTheSupply-ChainTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-10?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458TheSupplyChainSupplierSupplierSupplierInventoryInventoryDistributorInventoryInventoryManufacturerCustomerCustomerCustomerMarketresearchdataschedulinginformationEngineeringanddesigndataOrderflowandcashflowIdeasanddesigntosatisfyendcustomerMaterialflowCreditflowTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-11?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.0745811%31%58%MaterialDirWagesOther71%16%13%COGSPayrollOther83%9%8%COGSPayrollOtherManufacturingWholesaleRetailMaterialCostsin
Supply-ChainTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-12?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategySupplier抯goalPrimarySelectionCriteriaSupplydemandatlowestpossiblecostSelectprimarilyforcostLowCostRespondquicklytochangingrequirementsanddemandtominimizestockoutsSelectprimarilyforcapacity,speed,andflexibilityResponseSharemarketresearch;jointlydevelopproductsandoptionsSelectprimarilyforproductdevelopmentskillsDifferentiationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-13?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategy-continuedProcessCharacteristicsMaintainhighaverageutilizationLowCostInvestinexcesscapacityandflexibleprocessesResponseModularprocessestolendthemselvestomasscustomizationInventoryCharacteristicsMinimizeinventorythroughoutthechaintoholddowncostsDevelopresponsivesystem,withbufferstockspositionedtoensuresupplyMinimizeinventoryinthechaintoavoidobsolescenceDifferentiationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-14?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategy-continuedLead-timeCharacteristicsShortenlead-timeaslongasitdoesnotincreasecostsLowCostInvestaggressivelytoreduceproductionlead-timeResponseInvestaggressivelytoreducedevelopmentlead-timeDifferentiationProduct-designCharacteristicsMaximizeperformanceandminimizecostUseproductdesignsthatleadtolowset-uptimeandrapidproductionramp-upUsemodulardesigntopostponeproductdifferentiationforaslongaspossibleTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-15?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458GlobalSupply-ChainIssuesSupplychainsinaglobalenvironmentmustbe:flexibleenoughtoreacttosuddenchangesinpartsavailability,distribution,orshippingchannels,importduties,andcurrencyratesabletousethelatestcomputerandtransmissiontechnologiestomanagetheshipmentofpartsinandfinishedproductsoutstaffedwithlocalspecialiststohandleduties,trade,freight,customsandpoliticalissuesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-16?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Acquisitionofgoods&servicesActivitiesHelpdecidewhethertomakeorbuyIdentifysourcesofsupplySelectsuppliers&negotiatecontractsControlvendorperformanceImportanceMajorcostcenterAffectsqualityoffinalproductPurchasingTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-17?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458PurchasingCostsasaPercentofSalesAllindustryAutomobileFoodLumberPaperPetroleumTransportation52%61%60%61%55%74%63%IndustryPercentofSalesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-18?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458DollarsofAdditionalSalesNeededtoEqual1$SavedThroughPurchasingTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-19?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ObjectivesofthePurchasingFunctionHelpidentifytheproductsandservices thatcanbebestobtainedexternally; andDevelop,evaluate,anddeterminethe bestsupplier,price,anddeliveryfor thoseproductsandservicesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-20?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ThePurchasingFocusMaterialsManagement-Hightransportationcost-HighinventorycostsSupplyManagement-Highcosts-Scarcity:nationalor internationalSourceManagement-Uniqueitems-Custom-madeitems-HightechnologyitemsPurchasingManagement-Commodityitems-StandardproductsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-21?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ReceivingDockPurchaseOrderPackingListOrderProcessingInvoiceReceivablesReportCheckAccountsReceivableAccountsPayableMailMailReconcileMailCustomerSupplierTraditionalPurchasingProcessTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-22?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458PurchasingTechniquesDropshippingandspecialpackagingBlanketordersInvoicelesspurchasingElectronicorderingandfundstransferElectronicdatainterchange(EDI)StocklesspurchasingStandardizationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-23?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Make/BuyConsiderationslowerproductioncostunsuitablesuppliersassureadequatesupplyutilizesurpluslaborandmakeamarginalcontributionobtaindesiredquantityremovesuppliercollusionobtainauniqueitemthatwouldentailaprohibitivecommitmentfromthesuppliermaintainorganizationaltalentprotectproprietarydesignorqualityincrease/maintainsizeofcompanyloweracquisitioncostpreservesuppliercommitmentobtaintechnicalormanagementabilityinadequatecapacityreduceinventorycostsensureflexibilityandalternatesourceofsupplyreciprocityitemisprotectedbypatentortradesecretfreesmanagementtodealwithitsprimarybusiness
ReasonsforMaking ReasonsforBuyingTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-24?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458PlanstohelpachievecompanymissionAffectlong-termcompetitivepositionStrategicoptionsManysuppliersFewsuppliersKeiretsunetworkVerticalintegrationVirtualcompanyPlan?1995CorelCorp.PurchasingStrategiesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-25?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainStrategiesNegotiatewithmanysuppliers;playonesupplieragainstanotherDeveloplong-term損artnering?arrangementswithafewsupplierswhowillworkwithyoutosatisfytheendcustomerVerticallyintegrate;buytheactualsupplierKeiretsu-haveyoursuppliersbecomepartofacompanycoalitionCreateavirtualcompanythatusessuppliersonanas-neededbasis.TransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-26?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ManysourcesperitemAdversarialrelationshipShort-termLittleopennessNegotiated,sporadicPO抯HighpricesInfrequent,largelotsDeliverytoreceivingdock?1995CorelCorp.ManySuppliersStrategyTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-27?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.074581orfewsourcesperitemPartnership(JIT)Long-term,stableOn-siteaudits&visitsExclusivecontractsLowprices(largeorders)Frequent,smalllotsDeliverytopointofuse?1995CorelCorp.FewSuppliersStrategyTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-28?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Chrysler抯SupplierCostReductionEffortTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-29?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458RawMaterial(Suppliers)BackwardIntegrationCurrentTransformationForwardIntegrationFinishedGoods(Customers)AbilitytoproducegoodspreviouslypurchasedSetupoperationsBuysupplierMake-buyissueMajorfinancialcommitmentHardtodoallthingswellVerticalIntegrationStrategyTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-30?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458FormsofVerticalIntegrationIronOreSteelAutomobilesDistributionSystemDealersSiliconIntegratedCircuitsCircuitBoardsComputersWatchesCalculatorsFarmingFlourMillingRawMaterial(Suppliers)BackwardIntegrationCurrentTransformationForwardIntegrationFinishedGoods(Customers)BakedGoodsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-31?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Japanesewordfor慳ffiliatedchainSystemofmutualalliancesand
cross-ownershipCompanystockisheldbyalliedfirmsLowersneedforshort-termprofitsLinksmanufacturers,suppliers,distributors,&lenders慞artnerships?extendacrossentiresupplychainKeiretsuNetworkStrategyTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-32?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458?1995CorelCorp.VirtualCompanyStrategyNetworkofindependentcompaniesLinkedbytechnologyPC抯,faxes,Internetetc.EachcontributescorecompetenciesTypicallyprovideservicesPayroll,editing,designingMaybelongorshort-termUsually,onlyuntilopportunityismetTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-33?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458VendorevaluationIdentifying&selectingpotentialvendorsVendordevelopmentIntegratingbuyer&supplierExample:ElectronicdataexchangeNegotiationsResultsincontractSpecifiesperiodofagreement,price,deliverytermsetc.VendorSelectionStepsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-34?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458CompanyFinancialstabilityManagementLocationProductQualityPriceServiceDeliveryontimeConditiononarrivalTechnicalsupportTrainingSupplierSelectionCriteriaTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-35?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458NegotiationStrategiesThreetypes:cost-basedpricemodel-supplieropensitsbookstopurchaser;pricebaseduponfixedclauseplusescalationclauseformaterialsandlabormarket-basedpricemodel-publishedpriceorindexcompetitivebidding-potentialsuppliersbidforcontractTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-36?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ManagingtheSupply-ChainOptions:PostponementChannelassemblyDropshippingBlanketordersInvoicelesspurchasingElectronicorderingandfundstransferStocklesspurchasingStandardizationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-37?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ManagingtheSupply-Chain-OtherOptionsEstablishinglinesofcreditforsuppliersReducingbank揻loatCoordinatingproductionandshippingscheduleswithsuppliersanddistributorsSharingmarketresearchMakingoptimaluseofwarehousespaceTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-38?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458MaterialsManagementIntegratesallmaterialsfunctionsPurchasingInventorymanagementProductioncontrolInboundtrafficWarehousingandstoresIncomingqualitycontrolObjective:Efficient,lowcostoperationsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-39?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458GoodsMovementOptionsTruckingRailwaysAirfreightWaterwaysPipelinesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-40?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458BenchmarkingSupply-ChainManagementNumberofsuppliersperpurchasingagentPurchasingcostsaspercentofpurchasesLeadtime(weeks)Timespentplacinganorder343.3%1542minutes5.8%815minutesTypicalFirmsBenchmarkFirmsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-41?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainPerformanceComparedTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-1?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458OperationsManagement
Supply-ChainManagement
Chapter11TransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-2?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458OutlineGlobalCompanyProfile:VolkswagonTheStrategicImportanceoftheSupply-ChainGlobalSupply-ChainIssuesPurchasingManufacturingEnvironmentsServiceEnvironmentMake-or-BuyDecisionsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-3?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Outline-continuedSupply-ChainStrategiesManySuppliersFewSuppliersVerticalIntegrationKeiretsuNetworksVirtualCompaniesVendorSelectionVendorEvaluationVendorDevelopmentNegotiationsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-4?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Outline-continuedManagingtheSupply-ChainMaterialsManagementDistributionSystemsBenchmarkingSupply-ChainManagementTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-5?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ExplainsupplychainmanagementStatetheimportanceofpurchasingandmaterialsmanagementCompare&contrastpurchasingstrategiesSummarizevendorrelationsissuesDescribethepurchasingprocessandtechniquesLearningObjectivesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-6?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458VolkswagonBrazilianplantemploys1000workers200workforVW800workforothercontractors:RockwellInternational,CumminsEngines,DelgaAutomotiva,MWM,RemonandVDO,etc.VWresponsibleforoverallquality,marketing,researchanddesignVWlookstoinnovativesupplychaintoimprovequalityanddrivedowncostsTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-7?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458VolkswagonUnusualelements:VWisbuyingnotonlymaterials,butalsothelaborandrelatedservicesSuppliersareintegratedtightlyintoVW抯ownnetwork,rightdowntoassemblyworkintheplantTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-8?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Planning,organizing,directing,&controllingflowsofmaterialsBeginswithrawmaterialsContinuesthroughinternaloperationsEndswithdistributionoffinishedgoodsInvolveseveryoneinsupply-chainExample:Yoursupplier抯supplierObjective:Maximizevalue&lowerwasteSupply-ChainManagementTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-9?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ConsumerRetailerManufacturingMateriallFlowVISACreditFlowSupplierSupplierWholesalerRetailerCashFlowOrderFlowSchedulesTheSupply-ChainTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-10?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458TheSupplyChainSupplierSupplierSupplierInventoryInventoryDistributorInventoryInventoryManufacturerCustomerCustomerCustomerMarketresearchdataschedulinginformationEngineeringanddesigndataOrderflowandcashflowIdeasanddesigntosatisfyendcustomerMaterialflowCreditflowTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-11?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.0745811%31%58%MaterialDirWagesOther71%16%13%COGSPayrollOther83%9%8%COGSPayrollOtherManufacturingWholesaleRetailMaterialCostsin
Supply-ChainTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-12?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategySupplier抯goalPrimarySelectionCriteriaSupplydemandatlowestpossiblecostSelectprimarilyforcostLowCostRespondquicklytochangingrequirementsanddemandtominimizestockoutsSelectprimarilyforcapacity,speed,andflexibilityResponseSharemarketresearch;jointlydevelopproductsandoptionsSelectprimarilyforproductdevelopmentskillsDifferentiationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-13?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategy-continuedProcessCharacteristicsMaintainhighaverageutilizationLowCostInvestinexcesscapacityandflexibleprocessesResponseModularprocessestolendthemselvestomasscustomizationInventoryCharacteristicsMinimizeinventorythroughoutthechaintoholddowncostsDevelopresponsivesystem,withbufferstockspositionedtoensuresupplyMinimizeinventoryinthechaintoavoidobsolescenceDifferentiationTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-14?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Supply-ChainSupportforOverallStrategy-continuedLead-timeCharacteristicsShortenlead-timeaslongasitdoesnotincreasecostsLowCostInvestaggressivelytoreduceproductionlead-timeResponseInvestaggressivelytoreducedevelopmentlead-timeDifferentiationProduct-designCharacteristicsMaximizeperformanceandminimizecostUseproductdesignsthatleadtolowset-uptimeandrapidproductionramp-upUsemodulardesigntopostponeproductdifferentiationforaslongaspossibleTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-15?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458GlobalSupply-ChainIssuesSupplychainsinaglobalenvironmentmustbe:flexibleenoughtoreacttosuddenchangesinpartsavailability,distribution,orshippingchannels,importduties,andcurrencyratesabletousethelatestcomputerandtransmissiontechnologiestomanagetheshipmentofpartsinandfinishedproductsoutstaffedwithlocalspecialiststohandleduties,trade,freight,customsandpoliticalissuesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-16?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458Acquisitionofgoods&servicesActivitiesHelpdecidewhethertomakeorbuyIdentifysourcesofsupplySelectsuppliers&negotiatecontractsControlvendorperformanceImportanceMajorcostcenterAffectsqualityoffinalproductPurchasingTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-17?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458PurchasingCostsasaPercentofSalesAllindustryAutomobileFoodLumberPaperPetroleumTransportation52%61%60%61%55%74%63%IndustryPercentofSalesTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-18?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458DollarsofAdditionalSalesNeededtoEqual1$SavedThroughPurchasingTransparencyMasterstoaccompTransparencyMasterstoaccompanyOperationsManagement,5E(Heizer&Render)11-19?1998byPrenticeHall,Inc.ASimon&SchusterCompanyUpperSaddleRiver,N.J.07458ObjectivesofthePurchasingFunctionHelpidentifytheproductsandservices thatcanbebestobtainedexternally; andDevelop,evaluate,anddeterminethe bestsupplier,price,anddeliveryfo
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