IS312 - CH13 - Supply Chain Mgt

Two Primary Sources of Problems Along the Supply Chain

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

Electronic Data Interchange (EDI)

-communication standard -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.

3 Flows in Supply Chain

1) Material Flows: the physical products, raw materials, supplies, also include the reverse flows. --Reverse Flows (or reverse logistics): returned products that are damaged, unwanted, or in need of recycling. 2) Information Flows: data related to demand, shipments, orders, returns, and schedules, as well as changes in any of these data. 3) Financial Flows: involve money transfers, payments, credit card information and authorization, payment schedules, e-payments, and credit-related data.

5 Basic Components of SCM

1) Plan - strategic component, create metrics, 2) Source 3) Make -metric-intensive 4) Deliver - logistics 5) Return

3 Segments of Supply Chain

1) Upstream: where sourcing or procurement from external suppliers occurs. TIERED 2) Internal: where packaging, assembly, or MANUFACTURING takes place. 3) Downstream: where distribution takes place, frequently by external distributors, end customer

EDI Disadvantage

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

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

2 types of portals

Procurement 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. 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.

Supply Tiers

The higher the number, the farther upstream in the SC

Solutions to problems in SC

Vertical Integration Just-In-Time Inventory Information Sharing Vendor-Managed Inventory (VMI)

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.

Inventory Velocity

speed at which a company can deliver products/services after receiving the materials required to make them.

Supply Chain

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