Chapter 4: Supply Chain Management

Supply Chain
-A supply chain is the network of all the activities involved in delivering a finished product/service to the consumer
-A supply chain network organization, which is virtually formed by separate firms, each retaining its own authority in major budgeting and pricing matters, to function as integral parts of a greater organization.
Supply Chain Map
Supply Chain Map
Components of a Supply Chain
-External Suppliers
(-Tier 1 supplier supplies directly to the processor
-Tier 2 supplier supplies directly to tier 1
-Tier 3 supplier supplies directly to tier 2)
-Internal Functions
-External Distributors
Internal Functions
Processing functions, purchasing, planning, quality assurance, shipping
External Distributors
Transport finished products to appropriate locations
Supply Chain Management (SCM)
Supply Chain Management is the vital business function that coordinates all of the network links, which entails:
-Coordinates movement of goods through supply chain from suppliers to manufacturers to distributors to the final customers
-Promotes information sharing along chain like forecasts, sales data, & promotions; reduce bullwhip effects
SCM and firm performance
Based on a survey of 209 large, global organizations, a report by PwC and MIT forum for SC innovation reveals that 60 percent of companies surveyed experienced their key performance indicators dropping by 3 percent due to a supply chain disruption in the past year (2012).
Logistics Management
Activities involved in obtaining, and distributing materials and products in the proper place and in proper quantities, which includes:
-Traffic Management
-Distribution Management
Traffic Management
-Responsible for arranging the method of shipment for both incoming and outgoing products or materials
-Selecting and monitoring carriers (e.g. truck/ railroad/…)
Distribution Management
-Responsible for movement of materials from the manufacturer to the customers
-The packaging, storing, and handling of products at receiving docks, warehouses, and retail outlets.
Issues affecting SCM
-Information technology
(The Internet, Web, Electronic Data Interchange (EDI), intranets and extranets, bar code scanners, and point-of-sales (POS) demand information)
-E-commerce and E-business
-Consumer Expectations and Competition (power shifted to the consumer)
-Globalization (capitalize on emerging markets)
-Government Regulations and E-Commerce (issues of internet government regulations)
-Environment Implications of E-commerce (recycling, sustainable eco-efficiency, and waste minimization)
Global SCM Factors
-Geographically dispersed members
-Forecasting accuracy
-Exchange rates
-Infrastructure issues
-Product proliferation
Insource
Processes or activities that are completed in-house
Outsource
Processes or activities that are completed by other supply chain members