Professional Documents
Culture Documents
Table of Contents
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Forward
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Forward
Supply chain management (SCM) is an old and
established aspect of managing the operations of
a company and serving its market strategy. From
early Phoenician and Greek traders through the
exploration of the Silk Road and royally-chartered
trading monopolies in Britain, commerce up and
down the Mississippi, to the modern global process
of design, manufacture, and distribution of goods,
people have been concerned for millennia with solving
the problems of how to get and gather supplies, make
goods, and get them to people who would buy them.
However, the problems that SCM practitioners face
today are as easily solved by traditional methods and
tools as nuclear energy is controlled with the knowledge
of how to make a wheel round. A single product may
be the result of efforts on several continents, with
components scheduled to arrive just in time for
assembly, sometimes while other materials are still in
transit. The finished product might have to move over
rail, ship, airplane, truck, or any combination of these.
Gone are the days that most of the work happened
within a single facility, or at worst a few factories
close to each other. Supply chains can face disruption
by strikes, political unrest, adverse weather events,
accidents, or even the normal perturbations of
human endeavor. Improving supply chains to gain
efficiency becomes a complex series of trade-offs
and a complicated set of considerations.
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p.2
Schmidt, William; Raman, Ananth; When Supply-Chain Disruptions Matter; Harvard Business School; January 3, 2012;
http://www.hbs.edu/faculty/Publication%20Files/13-006_cff75cd2-952d-493d-89e7-d7043385eb64.pdf
2
Deloitte; 2009 Supply Chain Book of Metrics; http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/
us_consulting_scbenchmark2009supplychainbook_061410.pdf
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p.3
Munich RE; North America most affected by increase in weather-related natural catastrophes; http://www.munichre.com/en/media_relations/press_
releases/2012/2012_10_17_press_release.aspx
Cushman, John H.; Nike Pledges to End Child Labor And Apply U.S. Rules Abroad; May 13, 1998; The New York Times;
http://www.nytimes.com/1998/05/13/business/international-business-nike-pledges-to-end-child-labor-and-apply-us-rules-abroad.html
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Why GIS?
GIS is a critical tool for SCM professionals because it
manages massive amounts of location-based data to
produce information that helps executives to make
better choices. Often used in such diverse areas as
utilities planning, construction, government services,
and retail location planning, GIS is a superb technology
to apply to supply chain challenges.
What makes GIS so effective is that almost all types
of data have a spatial component. By using locational
data as a reference, SCM professionals with appropriate
training can track and manage both resources and
processes. The resources could include transportation
distribution points for trucks or ships; finished
goods, whether in a stationary location or vehicle;
and raw materials or components inventory. Processes
may include assembly, transportation routing,
merge in transit, demand or supply forecasting,
or manufacturing lines.
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Data-driven strategy
Companies often think that they effectively use data
because managers and executives look at numbers
in reports, charts, and graphs. They might adjust
operations based on what they learned or use the
derived information in formulating plans. Such
uses of data are perfectly valid and can be helpful.
But they do not represent data-driven strategy.
Data-driven decision making is not tacking data onto
the back end of the decision process as a checkor
a justification. Instead, managers take a step back
and evaluate assumptions, expectations, conditions,
challenges, and constraints, both internal and external.
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Primacy of location
Location is vital to decision making because it is the
great invisible common denominator. People buy
products and make choices at locations, whether
at home, work, or any other place. Companies buy
and sell in locations. They manufacture in locations.
Goods travel from one location to another; at any time
in transit, they are at a given location. Government
regulations vary by location, as do rents, taxes, and
other costs of doing business.
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Choosing data
Beyond choosing the mapping parameters, the SCM
professional who uses GIS for data-driven decisions
must carefully select all of the data that will be involved
in the spatial analysis. The task of finding the right data
is more difficult than it might seem.
The strength of GIS lies in its ability to show
relationships and patterns in data and in revealing
previously uncovered trends. For example, the number
of factors that could influence component or materials
inventory levels for a manufacturer can be enormous.
Here are just a few influencing constraints:
demand from customers
supply from vendors
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Data quality
product lifecycles
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Implementing GIS
Even after a company acquires the proper data and
SCM professionals obtain the necessary education,
it is still necessary to implement the corporate GIS
system. Notice the system is a corporate one and not
a supply chain tool only. For GIS to be successful in
SCM, it must extend beyond a single department.
On the technical side, that means integration.
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Operational control
Tactics and operational control come readily to a
discussion of GIS. That is particularly true for supply
chain management. A primary function of SCM is to
adjust and direct supply chain functions to keep the
flow of materials and goods moving as smoothly as
possible. But given the range of factors that can affect
a supply chain, changes in operational control will
likely need to happen with the cooperation and
assistance of other departments.
That should not be a surprise to SCM professionals.
They already understand the complexity of interactions
involved in a supply chain. Data integration only
underscores the tangled nature of decision making.
A GIS-driven supply chain action can actually become
a simultaneous operational change for multiple parts
of the business. This entails a level of cooperation that
can be difficult to achieve.
Strategy
While GIS implemented in SCM should bring a higher
level of cooperation in operations across the divisions
of a company, it has the potential to make an even
greater impact on broader strategic decisions. The
underlying issue of sub-optimization, in which one
part of a process or system gains efficiency at the
expense of overall operations, is a serious concern
that must be addressed.
Since SCM professionals use extensive sources of
information to improve supply chain operations,
they often encounter issues of how to balance
different aspects of the company. Those types of
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Contingency planning
Risk management
Business continuity
Business continuitythe robustness to continue
operations even in the face of major disruptions
has become another important undertaking for
companies in which the cost of down time can often be
measured in thousands of dollars or more per hour.
Many companies focus on the physical locations of
employees, facilities, and IT systems. But operations
also depend on the geographically disparate elements
of a supply chain. GIS can help SCM professionals adapt
the supply chain as necessary, choosing alternate routes
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Author Bios
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