Effective Supply Chain Management

  • Davis T
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S upply chain management is a frequently encoun-tered phrase these days, as managers strive to im-prove factory performance. The trouble is that all too often the real meaning is lost. Instead, a casual ob-server might interpret the activities at the factory as evi-dence of an intensive effort to improve supplier manage-ment. Good supplier management, while praiseworthy, does not constitute good supply chain management without a concurrent effort to manage the rest of the aspects of de-livering products to customers. In this article, I will pre-sent a complete supply chain management methodolo-gy. This approach, developed at Hewlett-Packard, will enable a manufacturing operation to better manage its supply chain, ultimately improving customer satisfac-tion levels while reducing overall costs. Hewlett-Packard has successfully used this methodolo-gy and is making efforts to implement the practice of good supply chain management at all its divisions. HP identified the need to improve its process for manufactur-ing and delivering products to customers as profit mar-gins suffered pressure from increasing competition. Other factors have contributed to a renewed focus, namely: • More instances of multisite manufacturing, where sev-eral independent entities are involved in the production and delivery process; • Increasingly cut-throat marketing channels, such as in-dependent computer dealers; • The maturation of the world economy, with heighten-ing demand for " local " products; • Competitive pressures to provide exceptional customer service, including quick, reliable delivery. HP's methodology has led to major changes in the way it does business. In the process, though, we have also discovered some appealing side effects. The proper execution of this methodology leads to improved team-work and cooperation among employees, especially those normally separated by either business function or geography. We've also discovered that this methodology leads to greatly improved customer focus, in addition to better relationships with suppliers. In the following pages, I will introduce HP's methodol-ogy. First, I will identify the problems inherent in supply chain management. Then, I will describe some key insights and briefly describe an analytical tool that we have devel-oped to support a rational analysis of real supply chains. Finally, I will close with representative case studies describ-ing HP successes with " real " supply chain management.

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  • Tom Davis

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