Lecture 12

Contemporary
Management Concepts
and Techniques

Learning Objectives
Explain the concept of the following
contemporary management concepts that can
help increase both organizational efficiency
and effectiveness:
Supply chain management
Knowledge management
Business process reengineering

What Is a Supply Chain?

Flow of products and services from:

Raw materials manufacturers

Intermediate products manufacturers
End product manufacturers
Warehouses
Wholesalers and distributors, and
Retailers

Connected by transportation and storage activities

Integrated through information, planning, and
integration activities
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

The Logistics Network

Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

What Is Supply Chain Management?

Supply chain management is a set of approaches
utilized to efficiently integrate suppliers,
manufacturers, warehouses, and stores, so that
merchandise is produced and distributed at the right
quantities, to the right locations, and at the right
time, in order to minimize system wide costs while
satisfying service level requirements.

Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

Global Optimization
Difficult to find the globally optimal and integrated solution
because of the following factors
Geographically dispersed complex network
National Semiconductor: operation facilities in 5 countries;
customers over the world
Li & Fung network: globally dispersed manufacturing

Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

Global Optimization
Conflicting objectives of different facilities
Suppliers vs manufacturers
Manufacturers vs warehouses

Dynamic system
Ever changing customer demand
Matching demand-supply difficult

System variations over time

Demand and cost parameters vary over time
Hard to determine the most effective strategy
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

Key Activities
Distribution network configuration

Selection of warehouse locations and capacities

Determination of production levels
Transportation flows
Minimize costs in production, inventory and transportation

Inventory control
Decide at what point to reorder and how much
Minimize inventory costs

Production sourcing
Balance between transportation and manufacturing costs

Supply contracts
Pricing and volume discounts, delivery lead times, quality.
Identify pricing strategies that will benefit both parties
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

Key Activities
Distribution strategies
Centralization vs decentralization
The time for transportation by air

Supply chain integration and strategic partnering

Information sharing

Outsourcing and offshoring strategies

Decide what to manufacture internally and what to
outsource
If outsource is not the option, decide when it should move
facilities to overseas

Product design
Consider how the product design can reduce logistics costs
or supply chain lead time
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E. (2008) Designing and Managing the Supply Chain, Concepts,
Strategies and Case Studies, 3rd ed. New York, The McGraw-Hill Companies, Inc.

Knowledge Management
Knowledge management
The implementing of systems and practices to
increase the sharing of knowledge and
information throughout an organization. (Kinicki &
Williams, 2011)

Knowledge management system (KMS)

A company-specific information system that
allows employees to share their knowledge and
expertise and find others to help solve ongoing
problems. (Jones & George, 2013)
10

Knowledge
Knowledge can be developed after
the information is understood and relevant
patterns/meaning are identified, and
the company is able to make prediction and take
relevant action based on the understanding of the
information.

Knowledge provides guideline for action,

whereas information and data can merely
inform the fact.
11

Monitor Knowledge in its

Environment
Knowledge about suppliers and supplies

Availability, quality and price of raw materials

Capability of suppliers
Alternative suppliers
Substitutability

Knowledge about customers

Customer base
Segments characteristics
Tastes and preferences
Changes

Knowledge about regulations

Current regulations and companys compliance
Implications

12

Monitor Knowledge in its

Environment
Knowledge about technology and innovation
Key technologies relevant to and adopted by the
company
Types of technology missed in the company
Change in technologies

Knowledge about marketplace and competitors

Market share
Competitors activities and product offerings
Companys capability to deal with competition and
changing marketplace
13

Business Process Reengineering

The fundamental rethinking and radical
redesign of the business process to achieve
dramatic improvements in critical measures of
performance such as cost, quality, service, and
speed.
It boosts efficiency because it eliminates the
time devoted to activities that do not add
value.
Jones, G.R., and George, J.M. (2015) Essentials of Contemporary Management, 6th Ed., New York: The
McGraw-Hill Companies, Inc.

14

Ford Motors Old Process

Jones, G.R., and George, J.M. (2015) Essentials of Contemporary Management, 6th Ed., New York: The
McGraw-Hill Companies, Inc. Edited by Holly Ng

15

Ford Motors New Process

Jones, G.R., and George, J.M. (2015) Essentials of Contemporary Management, 6th Ed., New York: The
McGraw-Hill Companies, Inc. Edited by Holly Ng

16

Benefits of BPR at Ford Motor

Payment authorization can be done by receiving
dock with the use of technologies Eliminate
the need for an accounts payable department
Head count in their accounts payable department
has been cut by 95%
Amount of time wasted on unproductive
activities was reduced

Efficiency of the total organization was increased

Jones, G.R., and George, J.M. (2015) Essentials of Contemporary Management, 6th Ed., New York: The
McGraw-Hill Companies, Inc.

17

Reference
McGraw-Hill Education (2014). BUS10306
Management customized text, Chapter 12.