SUPPLY CHAIN MANAGEMENT
✱ The average company spends nearly half of every dollar that it earns on production
✱ In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains
BASICS OF SUPPLY CHAIN
✱ The supply chain has three main links :
- Materials flow from suppliers and their ''upstream'' suppliers at all levels
- Transformation of materials into semi finished and finished products through the organization's own production process
- Distribution of products to customers and their ''downstream'' customers at all levels
BASICS of SUPPLY CHAIN
✱ Plan
- A company must have a plan for managing all the resources that go toward meeting customer demand for products or services
✱ Source
- Companies must carefully choose reliable suppliers that will deliver goods and services required for making products
✱ Make
- This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging and preparing for delivery
✱ Deliver (Logistic)
- Companies must be able to receive orders from customers, fulfill orders via a network of warehouse, pick transportation companies to deliver system to facilitate payments.
✱ Return
- This is typically the most problematic step in the supply chain. Companies must create
a network for receiving defective and excess products and support customers who have problems with delivered products.
VISIBILITY
✱ Visibility - more visible models of different ways to do things in the supply chain have emerged. High visibility in the supply chain is charging industries, as Wal-Mart demonstrated
✱ Supply Chain Visibility - the ability to view all areas up and down the supply chain
✱ Bullwhip effect - occurs when distorted product demand information passes form one entity to the next throughout the supply chain
✱ supply chain visibility allows organizations to eliminate the bullwhip effect
- retailers order diapers from distributors when their inventory level falls below a certain level, they might order a few extra just to be safe
✱ companies can respond faster and more effectively to consumer demands through supply chain enhances
✱ Demand planning software - generates demand forecasts using statistical tools and forecasting techniques
✱ Supply Chain Planning (SCP) Software - uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain
✱ Supply Chain Execution (SCE) Software - automates the different steps and stages of the supply chain
Supply Chain Management Success Factors
✱ SCM industry best practices include :
- Make the sale to suppliers
- Wean employees off traditional business practices
- Ensure the SCM system supports the organizational goals
- Deploy in incremental phases and measure and communicate success
- Be future oriented
SCM Success Stories
✱ Numerous decision support systems (DSSs) are being to assist decision makers in the design and operation of integrated supply chains
✱ DSSs allow managers to examine performance and relationship over the supply chain and among :
- Suppliers
- Manufacturers
- Distributors
- Other factors that optimize supply chain performance
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