Understanding the Supply Chain Sunil Chopra

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CHAPTER ONE
Discussion Questions

1. Consider the purchase of a can of soda at a convenience store. Describe the various stages in the supply chain and the different flows involved.

When a customer purchases a can of soda at a convenience store, his purchase represents the end of a supply chain’s delivery of an item and the beginning of information regarding his purchase flowing in the opposite direction. The supply chain stages include customers, retailers, wholesalers/distributors, manufacturers, and component/raw material suppliers. A customer’s purchase moves product towards the customer and dollars and information towards the retailer.

The retailer places an order from the wholesaler/distributor to replenish stock, thereby moving information back up the supply chain while moving product down the supply chain. As the order is filled, the retailer will move dollars back up the supply chain.

The wholesaler/distributor transmits information and dollars to the manufacturer who produces product and ships it down the supply chain to the wholesaler. Finally (or initially, depending on your perspective) the manufacturer moves orders (information) and dollars towards suppliers in exchange for material flow into their production processes.

2. Why should a firm like Dell take into account total supply chain profitability when making decisions?

Dell realizes that their ultimate success lies with the success of their supply chain and its ability to generate supply chain surplus. If Dell was to view supply chain operations as a zero sum game, they would lose their competitive edge as their suppliers’ businesses struggled. Dell’s profit gained at the expense of their supply chain partners would be short lived. Just as a physical chain is only as strong as its weakest link, the supply chain can be successful only if all members cooperate and focus on a global optimum rather than many local optima....
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