Consists of all parties involved, directly or indirectly, in the procurement of a product or raw material.
Supply chain management (SCM)
Involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
3 main links of supply chain
- Materials flow from suppliers and their upstream suppliers at all levels
-Transformation of materials into semifinished and finished products- the organization's own production processes
-Distribution of products to customers and downstream customers at all levels.
The five basic supply chain management components
Plan- Source- Make- Deliver- Return
The strategic portion of Supply Chain Management
A big piece of PLANNING is developing a set of metrics to monitor the supply chain
so that it is efficent, costs less, and delivers high quality and value to customers
Companies must carefully choose reliable suppliers that will deliver goods and services required for making products.
Companies must also develop a set of pricing, delivery, and payment processes with
SUPPLIERS and create metrics for monitoring and improving relationships.
This is a step where companies manufacture their products or services.
MAKE can include scheduling the activities necessary for
production, testing, packaging, and preparing for delivery.
This is by far the most metric-intensive portion of the supply chain, measuring quality levels, production output, and worker productivity.
This step is commonly referred to as LOGISTICS.
The set of processes that plans for an controls the efficient and effective tranportation and storage of supplies from suppliers to customers
During this step, 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.
The is typically the most problematic step in the supply chain.
Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products.
Information Technology's primary role in SCM
Creating the integrations or tight process and information and manufacturing, between functions within a firm-- such as marketing, sales, finance, manufacturing, and distribution-- and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers, and transportation providers across the supply chain.
Supply Chain Visibility
Is the ability to view all areas up and down the supply chain.
-Occurs when distorted product demand information passes form one entity to the next throughout the supply chain.
- When we dont meet the supply with the demand due to the delay of information from customer upstream to the suppliers.
Demand planning software
Generates demand forecasts using statistical tools and forecasting techniques
Supply Chain Planning (SCP) Software
Users advance mathematical algorithms to imporve the flow and efficiency of the supply chain while reducing inventory
Supply Chain Execution (SCE) Software
Automates the different steps and stages of the supply chain
First factor to Fostering Speed
Pleasing customers- serving the customer in the best most efficient way has become critical, and information about order status, product availability, delivery schedules, and invoices has become a necessary part of the total customer service experience
Second factor to fostering speed
Information is critical to managers' abilities to reduce inventory and human resource requirements to a competitive level
Third factor to fostering speed
Information Flows are essential to strategic planning for and deployment of resources
1st Principle of Supply Chain Management
Segement customers by service needs, regardless of industry, and then tailor services to those particular segments
2nd Principle of Supply Chain Management
Customize the logistics network and focus intensively on the service requirements and on the profitability of the preidentified customer segments
3rd Principle of Supply Chain Management
Listen to signals of market demand and plan accordingly. Planning must span the entire chain to detect signals of changing demand.
4th Principle of Supply Chain Management
Differentiate products closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting.
5th Principle of Supply Chain Management
Strategically manage sources of supply, by working with key suppliers to reduce overall costs of owning materials and services.
6th Principle of Supply Chain Management
Develop a supply chain information technology strategy that supports different levels of decision making and provides a clear view (visibility) of the flow of products, services, and information
7th Principle of Supply Chain Management
Adopt performance evaluation measures that apply to every link in the supply chain and measure true profitability at every stage
Companies using Supply Chain to Drive Operations
-Proctor and Gamble
-The Home Depot
- Marks & Spencer
Business grows 17% per year with a $40bullion revenue base
Supply chain best practices are turning ideas into profitable business
Proctor & Gamble
Consumer-driven supply chain is the defining architecture for large consumer companies. Best practices in product innovation and supply chain effectiveness are tops
Hardware supply chain product-development processes overhauled to the tune of 70% better, faster, and cheaper
Everyday low prices define the customer demand driving Wal-Mart's partner integrated supply chain
Lean is one of the top three best practices associated with benchmarked supply chain excellence
The Home Depot
Cutting-edge supply chain management improved logistics and innovative services
Marks & Spencer
A pioneer in the use of radio frequency identification (RFID) in stores, Marks & Spencer manages to grow and stay lean