Chapter 13-Supply Chain

Deliver

(or logistics) is where organizations coordinate the receipt of customer orders, develop a network of warehouses, select carriers to transport their products to their customers, and create an invoicing system to receive payments

Advantages of Push Model

The main advantages of this strategy include enabling long-term planning, readily available stock, economies of scale, wider audience reach, and allows for more planning and control. However, the main weakness of a push strategy is that it takes a long time to react to changes in the marketplace, and SPAM can be an issue. Also, you could have too little or too much inventory.

A Company and Its Dealers, Customers, or Suppliers:

This type of extranet centers on a single company.

Two Primary Sources of Problems Along the Supply Chain:

Uncertainties o The need to coordinate multiple activities, internal units, and business partners

Vertical Integration

a business strategy in which a company purchases its upstream suppliers to ensure that its essential supplies are available as soon as the company needs them

EDI

a communication standard that enables business partners to exchange routine documents, such as purchasing orders, electronically. EDI formats these documents according to agreed-upon standards (e.g., data formats). It then transmits messages over the Internet using a converter, called translator.

Industry Extranet

a network used for mission-critical business transactions by leading international organizations in aerospace, automotive, chemical, electronics, financial services, healthcare, logistics, manufacturing, transportation, and related industries

Just In time (JIT) Inventory

a strategy to minimize inventories deliver the precise number of parts, called work-in-process inventory, to be assembled into a finished product at precisely the right time

Tiers of Suppliers

a supplier may have one or more sub-suppliers, a sub-supplier may have its own sub-supplier(s), and so on. For an automobile manufacturer, for example, Tier 3 suppliers produce basic products such as glass, plastic, and rubber; Tier 2 suppliers use these inputs to make windshields, tires, and plastic moldings; and Tier 1 suppliers produce integrated components such as dashboards and seat assemblies.

bullwhip effect

erratic shifts in orders up and down the supply chain. Can cause too little or too much inventory. This is a major challenge.

Information Sharing

facilitated by electronic data interchange and extranets, it helps to improve demand forecasts

Distribution Portal

for a company's customers (downstream in the supply chain) automate the business processes involved in selling or distributing products from a single supplier to multiple buyers.

Procurment Portal

for a company's suppliers (upstream in the supply chain) this type of portal automates the business processes involved in purchasing or procuring products between a single buyer and multiple suppliers.

Pull Model

In this model, also known to avoid the uncertainties associated with the push model, many companies now employ the pull model of supply chain management, using Web-enabled information flows. In the pull model, also known as make-to-order, the production process begins with a customer order. Therefore, companies make only what customers want, a process closely aligned with mass customization. Better for high-end and specialized industries (IE. Custom made items).

EDI Benefits

Minimizes data entry errors Length of the message can be shorter Messages are secured Reduces cycle time Increases productivity Enhances customer service Minimizes paper usage and storage

Plan

Planning is the strategic component of SCM that involves developing a set of metrics (measurable deliverables) to monitor the organization's supply chain to ensure that it is efficient, and it delivers high quality and value to customers for the lowest cost

Supply Chain Management (SCM)

is the centralized management of the flow of goods and services and includes all processes that transform raw materials into final products. By managing the supply chain, companies can cut excess costs and deliver products to the consumer faster. SCM's are typically part of the inter-organizational information systems.

Sourcing

is the process of vetting, selecting, and managing suppliers who can provide the inputs an organization needs for day-to-day running. Sourcing is tasked with carrying out research, creating and executing strategy, defining quality and quantity metrics, and choosing suppliers that meet these criteria.

Extranets

link business partners over the Internet by providing them access to certain areas of each other's corporate intranetsOften linking business partners of the extranet in order to provide them access to your organizations intranet.

Source

organizations choose suppliers to deliver the goods and services they need to create their product or service.

Supply Chain

the flow of materials, information, money, and services from raw material suppliers, through factories and warehouses, to the end customers

Make

the manufacturing component in which managers schedule the activities necessary for production, testing, packaging, and preparation for delivery. This is the most metric-intensive part of the supply chain, where organizations measure quality levels, production output, and worker productivity

Three Segments of Supply Chain

upstream, internal, downstream

Upstream

where sourcing or procurement from external suppliers occurs.

Push Model

· : In this model, also known as make-to-stock, the production process begins with a forecast, which is simply an educated guess as to customer demand. Businesses push. Better for most consumer industry products (IE. Clothes and groceries).

Push Model

· In this model, also known as make-to-stock, the production process begins with a forecast, which is simply an educated guess as to customer demand. Businesses push. Better for most consumer industry products (IE. Clothes and groceries).

Supply Chain Management Systems

· a type of interorganizational information system (IOS) in which information flows among two or more organizations.

Information Flows

· data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data. Orders per store, etc.

Reverse Flows (or reverse logistics)

· returned products that are damaged, unwanted, or in need of recycling.

Supply chain visibility

· the ability of all organizations within a supply chain to access or view relevant data on purchased materials as these materials move through their suppliers' production processes and transportation networks to their receiving docks.

Material Flows

· the physical products, raw materials, supplies, and so forth that flow along the chain. Material flows also include the reverse flows. Computer chip manufacturing.

Inventory Velocity

· the speed at which a company can deliver products and services after receiving the materials required to make them. To increase customer satisfaction, organizations should work towards increasing velocity to deliver products more quickly.

Downstream

· where distribution takes place, frequently by external distributors. Retailers are primarily in this part of the SC.

internal

· where packaging, assembly, or manufacturing takes place.

Five Functions of Supply Chain management

Acquiring. Purchasing is the first role in supply chain management. ... Business operations. ... Transportation and logistics. ... Management of Resources. ... Workflow of Information.

EDI Disadvantages

Business processes sometimes must be restructured to fit EDI requirements Many EDI standards in use today

Five Components of Supply Chain Management

Component 1: Planning. Component 2: Sourcing. Component 3: Inventory. ... Component 4: Production and Transportation. ... Component 5: Return of Goods.

Demand Forecast

Demand for a product can be influenced by numerous factors such as competition, price, weather conditions, technological developments, overall economic conditions, and customers' general confidence.

Joint Ventures and Other Business Partnerships:

: In this type of extranet, business partners use the extranet as a vehicle for communication and collaboration.

Return

: a responsive and flexible network for receiving defective, returned, or excess products back from their customers, as well as for supporting customers who have problems with delivered products

vendor-managed inventory (VMI)

: occurs when the supplier, rather than the retailer, manages the entire inventory process for a particular product or group of product

Main advantage

: the pull approach enables supply chains to adapt to demand faster and allows for SKU and store differences. However, the pull approach is not without its weaknesses. A pull strategy faces difficulties as lead times begin to increase and demand changes regularly. Another major disadvantage to the pull system is that it is likely that a company will run into ordering dilemmas, such as a supplier not being able to get a shipment out on time. This leaves the company unable to fulfill the order and contributes to customer dissatisfaction