Supply Chain Management Chapter 1 Review

What Is a Supply Chain?

All parties involved, directly or indirectly, in fulfilling a customer request. Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers. Within each organization, the supply chain includes all functions involved in receiving and fulfilling a customer request (new product development, marketing, operations, distribution, finance, customer service). Customer is an integral part of the supply chain. Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions. May be more accurate to use the term "supply network" or "supply web". Typical supply chain stages: customers, retailers, wholesalers, distributors, manufacturers, suppliers. All stages involved, directly or indirectly, in fulfilling a customer request.. Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers (internal and external). Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions (end to end).

Supply Chain Macro Processes: Customer Relationship Management (CRM)

All processes at the interface between the firm and its customers.

Supply Chain Macro Processes: Supplier Relationship Management (SRM)

All processes at the interface between the firm and its suppliers.

Supply Chain Macro Processes: Internal Supply Chain Management (ISCM)

All processes that are internal to the firm.

Supply Chain Surplus =

Customer Value - Supply Chain Cost

Supply Chain Strategy or Design

Decisions about allocation of resources. Strategic supply chain decisions (Outsource supply chain functions, Locations and capacities of facilities, Products to be made or stored at various locations, Modes of transportation, Information systems). Supply chain design decisions can be expensive to reverse - manage market uncertainty.

Supply Chain Planning

Definition of a set of policies that govern short-term operations. Fixed by the supply configuration from strategic phase. Goal is to maximize supply chain surplus given established constraints. Starts with a forecast of demand in the coming year. Planning decisions: Which markets will be supplied from which locations, Planned buildup of inventories, Subcontracting, Inventory policies, Timing and size of market promotions. Must consider demand uncertainty, exchange rates, competition over the time horizon in planning decisions.

Chapter 1 Summary

It is about meeting the Consumer needs. Must tie to the Corporate Strategy of where to play and how to win. Maximize internal and external forces to deliver best results; suppliers, enterprise and customers. Must be able to foresee and respond to future trends in consumer habits, technology, analytics, optimization opportunities to drive business growth.

Chapter 1 Key Point

Supply chain design, planning, and operation decisions play a significant role in the success or failure of a firm. To stay competitive, supply chains must adapt to changing technology and customer expectations.

Push/Pull View of Supply Chain Processes

Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand. Pull: execution is initiated in response to a customer order (reactive). Push: execution is initiated in anticipation of customer orders (speculative). Push/pull boundary separates push processes from pull processes.

Decision Phases in a Supply Chain

Supply chain strategy or design (How to structure the supply chain over the next several years). Supply chain planning (Decisions over the next quarter or year). Supply chain operation (Daily or weekly operational decisions).

Process Views of a Supply Chain: Cycle View

The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain.

Process of Views of a Supply Chain: Push/Pull View

The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders.

Supply Chain Operation

Time horizon is weekly or daily. Decisions regarding individual customer orders. Supply chain configuration is fixed and planning policies are defined. Goal is to handle incoming customer orders as effectively as possible. Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders. Much less uncertainty (short time horizon).

The Objective of a Supply Chain

Value added operation. Link internal and external partners to meet customer needs. Effective management of: supply chain assets and product, information, and fund flows to grow the total supply chain surplus. Support Corporate Where and How to Play strategies.