David Jacoby (2010)
The first question that is likely to pop up in the reader's mind is “Why a review on a book on Supply Chain Management?” Actually, Supply Chain Management pervades all sectors and is a buzzword in the industry today. Hence this book review. The book under review is not academic in style or content, it is ideal for corporates, entrepreneurs, professionals, students and anyone who is interested in understanding what “Supply Chain Management” is all about.
Since the term 'supply chain management' contains the word 'supply', many people believe that supply chain management (SCM) deals with procuring or purchasing raw materials from suppliers. This notion may partly be true, but, in sooth, SCM encompasses the entire process of procuring raw material from the supplier's supplier to manufacturing and distributing goods to the customer's customer. SCM encompasses Material requirements planning, Manufacturing resource planning, warehouse management systems, transportation management systems, advanced planning and scheduling, enterprise resource planning, customer relationship management, supplier relationship management and product life-cycle management. The objective of MRP I (Material Requirements Planning) is to calculate the requirements of material through the application of a bill of material (or bill of recipes), inventory and a master production schedule. The objective of MRP II (Manufacturing Resource Planning) is to plan resources for all production activities which includes materials, labour and machine usage. ERP (Enterprise Resource Planning) implies computerisation of MRP I and MRP II. With the rapid advancements in technology such as Global Positioning Systems (GPS) on delivery trucks which provide real-time access to the status of in-transit inventory, Electronic Data Interchange (EDI), E-payments, sales force automation software, the internet which has added a new marketing channel altogether (it is said that the internet is the shortest distance between two points), companies using data warehousing and data mining to gather their consumers' tastes, preference and understand their buying pattern and behaviour, just-in-time inventory, just-in-time delivery, it has become all the more imperative to understand the intricacies of SCM.
The term supply chain management entered the public domain when consultant Keith Oliver, of strategy consulting firm Booz Allen Hamilton used it in an interview with Financial Times in 1982. Today, SCM has become a management buzzword. Several professional associations such as The Association for Manufacturing Excellence (AME), The Association for Operations Management (APICS), Council of Supply Chain Management Professionals (CSCMP), International Warehouse Logistics Association (IWLA) have developed certification programs in SCM.
The book titled “Guide to Supply Chain Management” contains thirteen exhilarating chapters. The first chapter looks into production scheduling the way it was practised before the Industrial Revolution to the form it is has taken today. The author has prolifically brought out the effect of mass production, labour and unionisation, deregulation, globalisation, customisation, personalization, individual auto-replenishment. The chapter has four illustrations that describe the flow from the first supplier (who might usually be a farmer or extractor) to the end-customer. The second chapter explores the bullwhip effect and extends the 'Chaos theory' propounded by Henri Poincare in 1890; and the seminal work of Edward Lorenz 'Predictability: Does the Flap of a Butterfly's Wings in Brazil Set Off a Tornado in Texas?” The third chapter provides a splendid insight into transportation, logistics, purchasing, manufacturing, customer service, operations management, supply chain, supply chain management, the four principles of supply chain management (efficiency, reliability, flexibility, innovation), supply chain professional and four supply chain strategies.
The fourth chapter examines the necessity of providing value-added services due to shorter product life-cycles and competition which is turning fiercer day by day. The chapter then delves into the primary benefit of SCM which results in an improvement in the economic value added (EVA). The latter part of the chapter covers SCM practices being followed in Vietnam, Thailand and China. The fifth chapter is devoted to the difference between supply chain management and supply chain strategy; and the four generic supply chain strategies (rationalisation, synchronisation, customisation and innovation). The sixth chapter explains the elements of rationalisation strategy, strategic sourcing and outsourcing, lean manufacturing, the 5S (for sort, sequence, shine, standardise and sustain) approach and Total Quality Management. The seventh chapter provides a brilliant exposition of the Toyota production system, make-to-order (MTO) model, classifying, measuring and monitoring risk. The eight chapter is devoted to avoiding commoditisation through customisation and the seven production process models. The ninth chapter articulates a strategy for creating dynamic supply chains. The tenth chapter relates organising to SCM and builds a supply chain organisation maturity model. The eleventh chapter explains the components which are required for making a SCM system IT capable. An adage goes, “you get what you measure”. The twelfth chapter explains various metrics (including a few which are unique to a few of the world's leading companies) for measuring supply chain processes. The thirteenth chapter looks into the challenges to the SCM. The chapter provides many leads to concepts which can be extended to provide a complete face-lift to the existing SCM systems.
This book effectively distils the essential supply chain concepts into a convenient reference which can be easily understood. The author has addressed service industries as well as manufacturing and materials-based industries from the new as well as the old economy. It is a treasure-house of case studies, data analysis and examples drawn from a number of companies around the globe. The book can be very helpful to management students as well as practitioners as it provides examples from the practices at Tesco – a UK retailer, MTR Foods India, Dell, FedEx, Honda, Nokia, Starbucks, US online movie distributor Netflix, Spanish clothing retailer Zara, New York City Housing Authority, Quatar Fuel, French cosmetics company L'Oreal and several other leading companies.