Chapter 1 What is a supply chain

Source of Revenue

Customer

Two views of supply chain

Cycle view Push/Pull View

Supply chain operation

Daily or weekly operational decisions

Sources of cost

Flows of information, products, or funds between the stages

Supply chain strategy or design

How to structure the supply chain over the next several years

ISCM

Internal Supply Chain Management

Cycle view

Processes in a supply chain are divided into series of cycles, each performed at the interfaces between two successive supply chain stages

Push/Pull View

Processes in a supply chain are divided into two categories depending on whether they are executed

Supply chain stages order

Supplier - Manufacturer - Distributor - Retailer - Customer (rev order works too)

SRM

Supplier Relationship Management

Each cycle has these 6 steps

Supplier stage markets the product, buyer stage places order, supplier stage receives order, supplier stage supplies order, buyer stage supplies order, buyer stage receives supply, buyer returns reverse flows to supplier or third party

Decision Phases of a supply chain

Supply chain strategy or design Supply chain planning Supply chain operation

Push/Pull Boundary

When the customer order arrives it switches form a push process to a pull process

Supply chain

all stages involved directly or indirectly in fulfilling a customer request like product development, marketing, operations, distribution, finance, customer service, etc. The set of all value adding activities that connect suppliers to customers Matching supply and demand

5 typical supply chain stages

customers, retailers, distributors, manufacturers, suppliers all stages may not be present in all supply chains (e.g., no retailer or distributor for Dell)

Supply chain planning

decisions over the next quarter or year

Push

execution is initiated in anticipation of customer orders (speculative)

Pull

execution is initiated in response to a customer order (reactive)

effective supply chain management

is the management of flows between and among supply chain stages

Objective of a supply chain

is to match supply to demand as effectively and efficiently as possible

Pull-based supply chain

production and distribution are demand driven sot hat they are coordinated with true customer demand rather than forecast demand -actions occur based on customer orders - a pull-based system leads to a decrease in lead-time, less inventory and reduced variability in the system

Push-based supply chain

products are pushed through the channel from the production side to the retailer -the manufacturer then bases demand forecasts on orders received (historically) from the retailer's warehouse -it takes much longer for a push-based supply chain to react to the changing market place

Cycle view

view picture on slide 14 for better understanding Customer Customer order cycle Retailer Replacement Cycle Distributor Manufacturing cycle Manufacturer Procurement cycle Supplier