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Supply chain

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.

Bullwhip effect

-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
-Wal-Mart stores
-Toyota Motor
-The Home Depot
-Best Buy
- 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

Wal-Mart Stores

Everyday low prices define the customer demand driving Wal-Mart's partner integrated supply chain

Toyota Motor

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

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