supply chain-1

supply chain
all parties involved, directly or indirectly, in fulfilling customer request.
players of supply chain
manufacturers, suppliers, transporters, warehouses, retailers, customers
things that flow through a supply chain
information, products, funds- both directions
stages of supply chain
customers, retailers, wholesalers/distributers, manufacturers, raw material suppliers
objective of supply chain
maximize overall value generated- supply chain surplus
supply chain surplus and equation
difference between the value of the final product to the customer and the cost the supply chain incurs by filling that request. surplus= customer value- supply chain cost
customer value
vary for each customer, estimated by the max amount customer is willing to pay for it
consumer surplus
difference between the value of product (max willing) and the actual price
supply chain profitability
difference between rev generated fro customer and overall cost across supply chain- total profit to be shared across all supply chain stages
supply chain success should be measured in terms of
supply chain profitability and not in terms of profits at an individual stage
source of revenue
effective supply chain management
management of supply chain assets and product, information and fund flows to max total supply chain surplus
three decisions that play a significant role in success/ failure of chain
strategy/design, planning, operation
supply chain strategy/design
decides chain configuration, how recourses will be allocated, what process each stage will perform. decisions on whether or not to outsource, location and capacities of production and facilities, products to be manufactured or stored, modes of transportation, type of information system. made for the long term- expensive to change
supply chain strategy/design example: pepsi
pepsi deciding to purchase its bottlers to be fully integrated
supply chain planning decision length
quarter to a year and strategy is fixed and provides constraints
supply chain planning goal
max supply chain surplus that can be generated over the planning horizon given constraints from strategy
supply chain planning process
start with forecast of demand and other factors (cost/ prices in other markets) makes decision regarding which markets will be supplied from which locations, subcontracting of manufacturing, inventory policies, timing and size of marketing and price promotions
things to include in supply chain planning
uncertainty of demand, exchange rates, competition. incorporate any flexibility from strategy into chain to optimize performance. define a set of operating policies that govern short term operations
supply chain operation time horizon
weekly/daily. strategy is fixed and planning policies are defined
supply chain operation phase
making decisions regarding individual customer orders- allocate inventory or production, set dates for order to be filled, allocate order to particular mode and shipment, set delivery schedules of trucks, place replenishment orders
supply chain operation has less uncertainty about demand info
goal of supply chain operation
exploit the reduction of uncertainty and optimize performance
two ways to view process performed in supply chain
cycle view, push pull view
what is the cycle process of supply chain
processes are divided into a series of cycles, each performed at the interface between two successive stages of supply chain
process: cycle; 4 cycles
customer order, replenishment, manufacturing, procurement
process: cycle order
supplier: procurement, manufacturer: manufacturing, distributer: replenishment, retailer: customer order, customer
process: cycle – six sub processes
supplier marketing product to customer, buyer places order that is received by supplier, supplier supplies order, order received by buyer, buyer can return some of the product to supplier or 3rd party.
process: cycle example- amazon
when amazon orders books from distributor to replenish inventory- inventory cycle. amazon is buyer and distributor is supplier
process: cycle goal of buyer
ensure product availability to achieve economies of scale in ordering. works to reduce the cost of the receiving process
process: cycle goal of supplier
forecast customer order and reduce cost of receiving order- works to fill order on time and improve efficiency of process.
process: cycle demand
customer order cycle- demand is external to supply chain and is uncertain. all others- order placement is uncertain but can be projected based on policies (tire manufacturer can predict demand precicely once production schedule is known)
process: cycle: scale of an order
moving from customer to supplier, size of each order increases
process: cycle why is it useful
clearly specifies roles of each member in chain, forces a designer to consider the infrastructure required to support these process- useful when setting up information systems to support operations
process: push can be referred to as
speculative processes
process: make to stock
pull: customer order. push: procurement, manufacturing, replenishment (because all processes in cycles are performed in anticipation of demand)
process: push pull usefulness
when considering strategic decisions related to supply chain design
process: push pull goal
to identify an appropriate push/ pull boundary
supply chain macro processes
supply chain macro processes: CRM
customer relationship management: all processes that focus on the interface between firm and its customers
supply chain macro processes: ISCM
internal supply chain management- all processes that are internal to the firm
supply chain macro processes: SRM
supplier relationship management: all processes that focus on the interface between firms and its suppliers
supply chain macro processes: CRM roles
generate customer demand, facilitate the placement and tracking of orders. processes: marketing, pricing, sales, order management.
supply chain macro processes: ISCM roles
fulfill demand generated by CRM processes in a timely manner at lowest cost. planning of internal production, storage capacity, preparation of demand and supply plans, fulfillment of actual orders
supply chain macro processes: SRM roles
arrange for and manage supply sources for goods. evaluation and selection of suppliers, negotiating supply terms, communication regarding products and orders with suppliers
firms should structure a supply chain organization that mirrors the.. and ensures good… and… among the owners of processes that interact with one another.
macro processes, communication, coordination

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