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Supply Chain Management

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Supply Chain Management
The nature of the supply chain

Learning Points
 Understand what a supply chain is
 Gain an appreciation of the behaviour of supply chains  Understand some of the issues with highly dispersed supply chains

Supply Chain Management concerns…
 The relationships and flows between different operations
 Links between value-adding upstream and downstream

processes  All issues concerning product / service delivery from raw materials to end user
 Purchasing / Procurement

 Physical Distribution / logistics
 Materials management and inventory control  Customer fulfilment - meeting the needs of the end customer

The next time you need milk…
 Think:  All you’ve had to do is go to the local shop. The milk is there to buy every time.  But somebody must have delivered that milk to the shop:  Starting from the beginning, someone must have raised a cow, got it pregnant, looked after the calf and milked the cow.  Then, someone would have transported the milk to a dairy, pasteurised it, bottled it and distributed it to your local shop.  Essentially, an lot of work must have taken place, across a network of firms – the supply chain, to deliver you a reliable supply of milk.

Supply Side
2nd tier Suppliers 1st tier Suppliers

Demand Side
1st tier Customers 2nd tier Customers

The Operation

Purchasing

Distribution Customer Fulfilment

Materials management

Supply Chain

Supply chain management is concerned with the flow of information as well as the flow of products and services

Supply Chain Performance Benefits

Benefits of looking at the whole supply chain:
• Puts the operation into its competitive context • Helps to identify the key players • Shifts emphasis to the long term • Sensitizes the operation to macro changes

Advantages of taking a whole supply chain perspective
Vertical integration
H ow much of the network should the operation seek to own?

Location of the operation
Where should the operation be



Links: Bullwhip Effect Example (P & G) Lee et al., 1997, Sloan Management Review

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