TERM PAPER on
SUPPLY CHAIN MANAGEMENT
AND OUTSOUTRCING OF
What is supply chain management?
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer Main characteristics of supply chain management?
* Many Suppliers -the supplier respond to the demands & specifications of a “request for quotation” with the other usually going to the low bidder. This approach holds the supplier responsible for maintaining the necessary technology, expertise, & forecasting abilities, as well as cost, quality &delivery competencies. * Few Suppliers- implies that rather than looking for short-term attributes, such as low cost, a buyer is better off forming a long-term relationships with a few dedicated suppliers. * Vertical Integration- developing the ability to produce goods or services previously purchased or actually buying a supplier or distributor 2 types of Vertical Integration-
1. Backward integration-suggest firms to purchase its suppliers. 2. Forward integration-suggests that manufacturer of components make the finished product. VI can yield: cost reduction, quality adherence, timely delivery. * Keirestu networks- a Japanese term to describe suppliers who become part of a company coalition * Virtual companies- companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies.
Advantage of Virtual Companies
* Include specializes management expertise
* Low capital investment
* Flexibility &speed w/c results to efficiency.
Traditional example of VO: apparel business
Contemporary example of VO: semiconductor industry
ESSENTIALS O F SUPPLY CHAIN MANAGEMENT
There is a basic pattern to the practice of supply chain management. Each supply chain has its own unique set of market demands and operating challenges and yet the issues remain essentially the same in every case. Companies in any supply chain must make decisions individually and collectively regarding their actions in five areas: 1. Production—What products does the market want? How much of which products should be produced and by when? This activity includes the creation of master production schedules that take into account plant capacities, workload balancing, and quality control and equipment maintenance. 2. Inventory—what inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semi-finished, or finished goods? The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain. However, holding inventory can be expensive, so what are the optimal inventory levels and reorder points? 3. Location—Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory? Should existing facilities be used or new ones built? Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer. 4. Transportation—How should inventory be moved from one supply chain location to another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty. This uncertainty must be compensated for by stocking higher levels of inventory. When is it better to use which mode of transportation? 5. Information—How much data should be collected and how much information should be shared? Timely and accurate information holds the promise...