Ob Notes
Chapter 11: Supply Chain Management
Supply Chain – sequence of organizations – their facilities and activities – that are involved in producing and delivering a product
Supply Chain Management – collaboration and coordination of all components of the supply chain so that market demand is met as efficiently and effectively as possible
Outsourcing – buying goods or services instead of producing or providing them in-house
Factors that have made it desirable for organizations to actively manage their supply chains:
1. The need to improve operations
2. Increasing level of outsourcing
3. Increasing globalization
4. Increasing e-commerce
5. The need to manage inventories across the supply chain
Bullwhip Effect – demand variability is progressively larger moving backward through a supply chain
Supply Chain Activities
a) Strategic (Design) Activities
- long-term impacts on a supply chain
- goals and competitive characteristics such as quality, cost, variety (flexibility), timeliness (speed), customer service, and fill rate (% of demand filled from stock on hand) should be determined by the members of the supply chain
- products will be designed with these competitive characteristics in mind
- this involves determining the number, location, capacity, and process types of the facilities
b) Tactical (Planning) / Operational Activities
- production planning and control, including forecasting, purchasing, transportation of material, inventory control/warehousing, and scheduling of production and distribution/deliveries, movement of products (replenishment), and customer service
One important tactical/operational decision is where in the supply chain the inventory should be held:
1. Value of inventory increases as materials move down the supply chain toward the consumers
2. The nature of inventory becomes more specific as inventory moves down the supply chain
Risk Pooling – holding safety stocks in one central location rather than in multiple
Supply Chain – sequence of organizations – their facilities and activities – that are involved in producing and delivering a product
Supply Chain Management – collaboration and coordination of all components of the supply chain so that market demand is met as efficiently and effectively as possible
Outsourcing – buying goods or services instead of producing or providing them in-house
Factors that have made it desirable for organizations to actively manage their supply chains:
1. The need to improve operations
2. Increasing level of outsourcing
3. Increasing globalization
4. Increasing e-commerce
5. The need to manage inventories across the supply chain
Bullwhip Effect – demand variability is progressively larger moving backward through a supply chain
Supply Chain Activities
a) Strategic (Design) Activities
- long-term impacts on a supply chain
- goals and competitive characteristics such as quality, cost, variety (flexibility), timeliness (speed), customer service, and fill rate (% of demand filled from stock on hand) should be determined by the members of the supply chain
- products will be designed with these competitive characteristics in mind
- this involves determining the number, location, capacity, and process types of the facilities
b) Tactical (Planning) / Operational Activities
- production planning and control, including forecasting, purchasing, transportation of material, inventory control/warehousing, and scheduling of production and distribution/deliveries, movement of products (replenishment), and customer service
One important tactical/operational decision is where in the supply chain the inventory should be held:
1. Value of inventory increases as materials move down the supply chain toward the consumers
2. The nature of inventory becomes more specific as inventory moves down the supply chain
Risk Pooling – holding safety stocks in one central location rather than in multiple