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CHAPTER 10 EXTENDING THE ORGANIZATION - SUPPLY CHAIN MANAGEMENT, :arrow…
CHAPTER 10 EXTENDING THE ORGANIZATION - SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM)
involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
The supple chains has three main links
Materials flow from suppliers and their upstream suppliers at all levels
Transformation of materials into semi-finished and finished products, or the organization's own production process
Distribution of products to customers and their downstream customers at all levels
5 Basic SCM Components
1) Plan - A company must have a plan for managing all the resources that go toward meeting customer demand for products or services.
2) Source - Companies must carefully choose reliable suppliers that will deliver goods and services required for making products.
3) 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.
4) Deliver (logistic) - Companies must be able to receive orders from customers fulfill the orders via a network of warehouses, pick transportation companies to deliver the products, and implement a billing and invoicing system to facilitate payments.
5) 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.
Factors driving SCM
1) Visibility
- more visible models of different ways to do things in the supply chain have emerged. High visibility in the supply chain is changing industries
Supply chain visibility - the ability to view all areas up and down the supply chain
Bullwhip effect - occurs when distorted product demand information passes from one entity to the next throughout the supply chain.
2) Consumer behavior
- Companies can respond faster and more effectively to consumer demand demands through supply chain enhances.
Demand planning software - generates demand forecasts using statistical tools and forecasting techniques
3) Competition
- SCP and SCE both increase a company's ability to compete
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
4) Speed
- there are 3 factors:
Pleasing customers has become something of a corporate obsession.
Information is crucial to managers' abilities to reduce inventory and human resources requirements to a competitive level.
Information flows are essential to strategic planning for and deployment of resources.
Supply Chain Management Success Factors
There are 7 principles of SCM
SCM Success Factors
Make the sale to suppliers
Wean employees off traditional business practise
Ensure the SCM system supports the organizational goals
Deploy in incremental phases and measure and communicate successes
Be future oriented
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