Supply Chain Management
- The average company spends nearly half of every dollar that it earns on production
- In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains
Basics of Supply Chain
- The supply chain has three main links:
- Materials flow from suppliers and their “upstream” suppliers at all levels
- Transformation of materials into semi finished and finished products through the organization’s own production process
- Distribution of products to customers and their “downstream” customers at all levels
- Organizations must embrace technologies that can effectively manage supply chains
- Aim:plan for managing all the resources that go toward meeting customer demand for products or services.
- Activity: develop a set of metrics to monitor the supply chain so that it is efficient, costs less, and delivers high quality and value to customers.
–choose reliable suppliers that will deliver goods and services required for making products.
–develop a set of pricing, delivery, and payment processes with suppliers and create metrics for monitoring and improving the relationships
- Activity: include scheduling the activities necessary for production, testing, packaging, and preparing for delivery.
- commonly referred to as logistics.
- Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers.
- Activity: companies must be able to receive orders from customers, fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.
- Activity: create a network for receiving defective and excess products and support customers who have problems with delivered products.
Information Technology’s Role in the Supply Chain
IT’s primary role is to create integrations or tight process and information linkages between functions within a firm
Factors Driving SCM
- Supply chain visibility–the ability to view all areas up and down the supply chain
- Bullwhip effect–occurs when distorted product demand information passes from one entity to the next throughout the supply chain
- Consumer Behavior
- Companies can respond faster and more effectively to consumer demands through supply chain enhances
- Demand planning software –generates demand forecasts using statistical tools and forecasting techniques
- Supply chain planning (SCP)software–uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain
- Supply chain execution (SCE) software –automates the different steps and stages of the supply chain
- SCP and SCE in the supply chain