Introduction to the Supply Chain

List a few challenges of the Supply Chain Systems perspective.

- Metrics - How do we measure a system? - Politics and power of players - Who gains and loses influences, and what are the effects? - Visibility - How is the data stored and who has access? - Uncertainty - Variations in product demand, unreliable sourcing of raw materials, inconsistent transit lead times

How have supply chains become more complex in recent years?

- Number of Stock Keeping Units (SKUs) exploding - More demanding and diverging customers - New and merging channels where customers have various methods of sending and receiving flow

What happens to a product as it flows down the/various supply chain(s)?

As the product moves through the supply chain to the customer, its value increases.

How does logistics management differ from supply chain management?

Logistics management is about managing the efficient and effective flow of materials between parties. Supply chain management integrates supply and demand management within and across companies.

Supply Chain Operations Reference (SCOR) Model

Models the supply chain as a framework of four major operations: plan -> source -> make -> deliver.

Do the payments between firms along the supply chain contribute to the revenue gained?

No. Payments between parties along the supply chain are just fund exchanges between firms. These intra-supply chain payments are a function of power, market conditions, etc.

One of the key challenges to viewing the Supply Chain as a system is metrics. How do we measure a system?

Outcome or performance based logistics can look at the outcome of the process as the main metric - (Was the order fulfilled, what's on the shelf, etc. )

Systems Perspective

Stepping back to view the entire supply chain process to see how each component connects with the others. A supply chain can be thought of as a complex system with multiple objectives, conflicting constraints, and overlapping decision variables.

Supply chain management deals with the flows of what three things?

Supply chain management deals with the flows of physical product, information, and money.

Traditional Functional Roles Perspective

Supply chains are organized and divided based on several individual and functional roles within the firm. This includes divisions such as purchasing/procurement, inventory control, order processing, customer service, etc.

What is a tier in a supply chain? Why are they important?

Supply chains can be divided into 1st, 2nd, 3rd... tiers based on their degree of separation from a particular firm. While tier-1 suppliers touch and deal with the firm directly, the firm never communicates directly with 2nd or 3rd tier suppliers (or customers).

What is the primary purpose of the supply chain? How does this relate to revenue gained via the supply chain?

The primary purpose of the supply chain it to satisfy customer needs. This is important because the only source of revenue in the supply chain is the customer at the very end of the chain.

What is the profit or total value generated from a supply chain?

The total value generated from a supply chain is equal to what the customer pays for the product (revenue) minus the total effort expended to fulfill the order (manufacturer costs).

Macro Process or Software Perspective

This perspective divides the supply chain into three key areas of management: Supplier Relationship (sourcing and buying process between the supplier and the firm), Internal (planning and storage within the firm), and Customer Relationship (marketing and selling process between the firm and the customer).

Supply Chain Process View/Perspective

This perspective portrays the supply chain as a series of various cycles, or processes. There are four main cycles: Customer Order, Replenishment, Manufacturing and Procurement Cycles. Each cycle involves the flow of things (information, money, or product) between two parties.

supply chain

Two or more parties linked by a flow of resources (product, information, or money), that ultimately fulfills a customer request

downstream

Where the product flows from manufacturers down to the customers along the supply chain.

upstream

Where the product flows from the customer up to the manufacturer via the supply chain.

Stock Keeping Unit (SKU)

a unique identification number that defines an item for ordering or inventory tracking purposes. It also allows the item type to be distinguished from others based on its color, size, etc.

procurement

process where a firm obtains raw materials/product from a supplier and turns it into viable product