Supply Chain Management Study Guide

Chapter 1: Supply Chain Management: An Overview I. Forces of Change-Multiple forces of change are requiring organizations to be (a) nimble, & (b) responsive to their customers’ needs. 5 major forces are 1) Globalization. (Major issues to deal with include) More competition, More volatility/unpredictability in demand & supply, Shorter life cycles, Systems approach to “sourcing-to-delivery”, Potential “terrorism”/security. 2) Technology (primarily computing/info technology, Internet). Helped-Organizations transform their operations to a “lean” enterprise. 24/7 operations, Compress time & distance to improve overall supply chain efficiency., “Collaboration” through wide availability of information.(Examples: RFID, Kiosks, Product ID & tracking) 3) Organizational Consolidation/Power Shift (from supplier to retailer). Due to- Political/business transformation, Competition/customers gaining power, (Sharing of POS data, to help reduce “bullwhip” effect - characterized by higher inventories held by the “upstream” SC players/partners. Degree of uncertainty (in demand fluctuation) & long order intervals lead to higher levels of inventory) 4) Stronger Consumer (enlightened, more knowledgeable - reviews, access to info/internet, competition for customers) Internet offers 24/7 product access & comparison/variety shopping, Want variety availability all seasons, Want value (quality – very low tolerance for bad quality, price) 5) Government Policy/Regulation. Much deregulation (with some tightening-up) in-Transportation, Communications, Finance. II. The Supply Chain Concept- Started with the “physical distribution” /outbound logistics focus in the ‘60s. The ‘80s brought inbound logistics into the scope. >’90s, supply/value chain (3rd phase of development). Focus is on “integration” (systems approach - from suppliers’ supplier(s), to customers’ customer(s). Supply/value chain management is the creation, sustainment, and improvement of an