Supply Chains

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Question #2-Define the supply chains for the following products from the first source of raw materials to the first customer. A) Big Mac, B) Gasoline, C) Automobile repair, D) A Text book.

Supply chain, its management, performance measures and improvement approaches. As an extension of the systems point of view, the system dynamics inherent in the supply chain are illustrated and the coordination in the supply chain is emphasized. Five areas where measurement of supply chain performance should be made are discussed. The five areas are on-time delivery, quality, time (business cycle) total delivered cost and flexibility. The first step in devising an effective supply chain is to consider the nature of demand for the product. For this many aspects are important: Product life cycle, demand predictability, product variety etc. But any product can be broadly classified into as either a Functional Product or an Innovative Product based on their demand patterns. Root cause for ineffectiveness of any supply chain is the mismatch between the type of product and the type of supply chain. Functional Products are generally staples or those generally bought from the grocery stores or retail outlets. They have stable demands are price variations do not affect the demand drastically. Such products have long life cycles but they invite competition and usually have low profit margins. The supply chain performs two different types of functions: 1) A physical function and 2) A market mediation function. The physical function deals with production for goods, movement of raw materials etc; while the market mediation function ensures that the variety of products reaching the marketplace match those that the consumers want to buy. Each of these functions incurs different costs. The physical costs include costs of production, inventory shortage and transportation while the market mediation costs arise when there is a mismatch between demand and supply. If supply > demand, the product has to be sold at a loss otherwise it results in loss of opportunities and dissatisfied customers. Supply chain management is planning, design and control of the flow of information and materials along the supply chain in order to meet customer requirements in an efficient manner, now and in the future. Demand management is managing the demand for goods or services along the supply chain. Therefore, demand management is complementary to supply chain management and controls the levels of demand on the system. Big-Mac – (1) Suppliers of beef, vegetables, bread (2) Factories and distribution centers, (3) The franchises that sell Big Mac, (4) The customers. Raw materials- The raw materials are the ingredients that will go into producing the finished product. For McDonald’s, these will include the buns, beef patties, paper cups, salad ingredients and packaging. These are delivered to the restaurants between 3 and 5 times a week. The raw materials arrive together on one heavy truck with three sections so that each product can be stored at a suitable temperature. The three sections are: frozen• chilled• ambient – which means foods that can be stored at room temperature. This applies to items such as coffee or sugar sachets. Work-in-progress (WIP) refers to stocks that are in the process of being made into finished product. A Big Mac consists of a bun, two beef patties, lettuce, cheese, pickles, onions, sauce and a small amount of seasoning. The restaurant will only combine these items just before the customer orders them so the Big Macs are hot and fresh when served. Finished products are goods that are ready for immediate sale to a customer. At any one time, a restaurant will have a range of products ready for sale. Many of these will include finished products like Filet-o-Fish, Big Macs and side salads. At McDonald’s, all raw materials, work-in-progress and finished products are handled on first In, First out (FIFO) basis. This means raw materials are used in...
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