Supply Chain Management revolve around efficient integration between suppliers, manufacturers, warehouses, and stores. The challenge is on how to coordinate all the activities, in order to: * Improve performance
* Reduce cost
* Increase service level
* Reduce Bullwhip effect
* Better utilise resources
* Respond effectively to changes in market places
Not merely coordinating production, transportation and inventory, but also integrate front end to back end of SC. Various SC integration strategies:
* Push, pull, push–pull strategy.
* Matching products and industries with supply chain strategies. * Demand-driven supply chain strategies.
* The impact of the Internet on supply chain integration.
* Production and distribution decisions based on long-term forecasts. * Manufacturer demand forecasts based on orders received from the retailer’s warehouses., leading to: * Longer reaction time to changing marketplace
* Inability to meet changing demand patterns.
* Obsolescence of supply chain inventory as demand for certain products disappears. *
* Variability of orders received from retailers and suppliers are much larger than the variability in customer demand due to the bullwhip effect, this leads to: * Excessive inventories due to the need for large safety stocks * Larger and more variable production batches
* Unacceptable service levels
* Product obsolescence
* Bullwhip effect: occurs when the demand order variabilities in the supply chain are amplified as they moved up the supply chain , will leads to inefficient resource utilization because planning and managing are much more difficult.
* Push Based SC usually results in:
* Higher transportation costs
* Higher inventory levels and/or higher manufacturing costs * More emergency production changeovers