SUPPLY [REQUIREMENT]
key issue in supply chain is:
i) Configuration of distribution network: This issue deals with the design of a distribution network to serve a specific market. This will consist of a set of warehouses and retail outlets, together with the manufacturing plant and supply sources,based on consideration of location and capacity of each of these elements.
ii) Inventory control: This is concerned with the levels of inventory tobe held at various points in the supply chain. Asinventory represents costs, the sensibleapproach is to hold as low an inventory aspossible but businesses are forced to holdinventories as a buffer to counter the affects of an uncertain demand
iii) Distribution strategy: The distribution strategy is concerned with the distribution of the firm's products. There are several strategies available such as the classical distribution strategy or direct shipping. Which one is the best suitable for the firm to achieve its supply chain and corporate goals?
iv) Supply chain integration and strategic partnering: This is concerned with the complex issue of strategic inter organizational partnership for achieving competitive advantage. This is about sharing of information and efficient use of the information for coordinating business processes to deliver a superior value to the customers.
v) Product design: This is concerned with the design of theproduct and its impact on total cost of theproduct. It is possible that the designdetermines the strategies to be followedregarding inventory or transportation. Thedesign may also determine the length of theproduct life cycle and the extent of uncertainty associated with demand for thisproduct.
vi) Customer value: The key issue is the definition of customer value in an age of increasing consumer power. How will supply chains will bedesigned to provide value to the customersand how will firms define value
Risk in supply chain
External risks:
i) demand risks - caused by unpredictable or misunderstood customer or end-customer demand
ii) supply risks - caused by any interruptions to the flow of product, whether raw material or parts, within your supply chain
iii) environmental risks - from outside the supply chain; usually related to economic, social, governmental, and climate factors, including the threat of terrorism
iv) business risks - caused by factors such as a supplier's financial or management stability, or purchase and sale of supplier companies
v) physical plant risks - caused by the condition of a supplier's physical facility and regulatory compliance.
Internal risks:
i) manufacturing risks - caused by disruptions of internal operations or processes
ii) business risks - caused by changes in key personnel, management, reporting structures or business processes, such as the way purchasers communicate to suppliers and customers
iii) planning and control risks - caused by inadequate assessment and planning, which amount to ineffective management
iv) mitigation and contingency risks - caused by not putting contingencies (or alternative solutions) in place in case something goes wrong
v) cultural risks - caused by a business's cultural tendency to hide or delay negative information.
The bullwhip effect is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.
bullwhip effect-result to logistics is bad because of:
lost sales
lost customer service
raw material cost increase
unnecessary adjusted capacity
long lead time
increase in shipping cost
quality decrease
excess inventories