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Chapter 2 Supply Chain Management Strategy and Design - Coggle Diagram
Chapter 2
Supply Chain Management Strategy and Design
Supply Chains
•All facilities, functions, and activities associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows
• An integrated group of processes to “source,” “make,” and “deliver” products
Supply Chain for Service Providers
More difficult than manufacturing
Does not focus on the flow of physical goods
Focuses on human resources and support services
More compact and less extended
Value Chains
Value Chain
•every step from raw materials to the eventual end user
•ultimate goal is delivery of maximum value to the end user
Supply chain
•activities that get raw materials and subassemblies into manufacturing operation
•ultimate goal is same as that of value chain
Demand chain
•increase value for any part or all of chain
Terms are used interchangeably
Value
•creation of value for customer is important aspect of supply chain management
Supply Chain Management (SCM)
•Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs
•Keys to effective SCM
•information
•communication
•cooperation
•trust
Supply Chain Uncertainty and Inventory
A major objective of SCM:
•respond to uncertainty in customer demand without creating costly excess inventory
Negative effects of uncertainty
•lateness
•incomplete orders
Inventory
•insurance against supply chain uncertainty
Bullwhip Effect
• Occurs when slight demand variability is magnified as information moves back upstream
Risk Pooling
•Risks are aggregated to reduce the impact of individual risks
• Reduce parts and product variability, thereby reducing the number of product components
• Combine inventories from
multiple locations into one
• Create flexible capacity
“Green” Supply Chains
•Sustainability
•Meeting present needs without compromising the ability of future generations to meet their needs
•Sustaining human and social resources
•It can be cost effective and profitable
Sustainability and Quality Management
•Improving fuel efficiency of vehicles
•Reducing waste through quality programs helps achieve sustainability goals
•Eco-friendly packing materials
•Telecommuting
Information Technology: A Supply Chain Enabler
Information links all aspects of supply chain
E-business
replacement of
physical business processes with electronic ones
Electronic data
interchange (EDI)
a computer-to-
computer exchange of business documents
Bar code and
point-of-sale
data creates an
instantaneous computer record of a sale
Business & Supply Chain Management
•Savings due to lower transaction costs
•Reduction of intermediary roles
•Shorter supply chain response times
•Wider presence and increased visibility
•Improved service
Electronic Data Interchange
•Computer-to-computer exchange of documents in a standard format
•Purchasing, shipping and receiving
•Improve customer service
•Reduce paperwork
Bar Codes
•Automated data collection system
•Bar code contains identifying information
•Provide instantaneous tracking information
•Checkout scanners create point- of-sale data
Radio Frequency Identification (RFID)
•Use radio waves to transfer data from chip to a reader
•Provides complete visibility of product location
•Continuous inventory monitoring
•Reduce labor to manage inventory
Reduce inventory costs
SCM Software
Enterprise resource planning (ERP)
•software that integrates the components of a company by sharing and organizing information and data