All rights reserved. Key Concepts of Supply Chain Management 2. Supply Chain Operations: Planning and Sourcing 3. Supply Chain Operations: Making and Delivering 4. Metrics for Measuring Supply Chain Performance 6. Supply Chain Coordination 7.
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All rights reserved. Key Concepts of Supply Chain Management 2. Supply Chain Operations: Planning and Sourcing 3. Supply Chain Operations: Making and Delivering 4. Metrics for Measuring Supply Chain Performance 6. Supply Chain Coordination 7. Defining Supply Chain Opportunities 9. Creating Supply Chains for Competitive Advantage The book explains the essential concepts and practices and then shows examples of how to put them to use.
When you finish you will have a solid foundation in supply chain management to work from. The first three chapters give you a working understanding of the key principles and business operations that drive any supply chain.
The next three chapters present the techniques, technologies, and metrics to use to improve your internal operations and coordinate more effectively with your customers and suppliers in the supply chains your company is a part of. The last three chapters show you how to find supply chain opportunities and respond effectively to best capitalize on these opportunities.
Case studies are used to illustrate supply chain challenges and to present solutions for those challenges. These case studies and their solutions bring together the material presented in the rest of the book and show how it applies to real-world business situations. Supply chains encompass the companies and the business activities needed to design, make, deliver, and use a product or service. Businesses depend on their supply chains to provide them with what they need to survive and thrive.
Every business fits into one or more supply chains and has a role to play in each of them. The pace of change and the uncertainty about how markets will evolve has made it increasingly important for companies to be aware of the supply chains they participate in and to understand the roles that they play.
Those companies that learn how to build and participate in strong supply chains will have a substantial competitive advantage in their markets.
Nothing Entirely New Just a Significant Evolution The practice of supply chain management is guided by some basic underlying concepts that have not changed much over the centuries.
Unless the soldiers are fed, the army cannot move. This has many analogies in business. Lambert, Douglas M. Stock, and Lisa M. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves. If this is what a supply chain is then we can define supply chain management as the things we do to influence the behavior of the supply chain and get the results we want.
Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith, and Zach G. There is a difference between the concept of supply chain management and the traditional concept of logistics. Logistics typically refers to activities that occur within the boundaries of a single organization and supply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management.
Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service. In the wider view of supply chain thinking, these additional activities are now seen as part of the work needed to fulfill customer requests.
Supply chain management views the supply chain and the organizations in it as a single entity. It brings a systems approach to understanding and managing the different activities needed to coordinate the flow of products and services to best serve the ultimate customer.
This systems approach provides the framework in which to best respond to business requirements that otherwise would seem to be in conflict with each other. Taken individually, different supply chain requirements often have conflicting needs. For instance, the requirement of maintaining high levels of customer service calls for maintaining high levels of inventory, but then the requirement to operate efficiently calls for reducing inventory levels.
It is only when these requirements are seen together as parts of a larger picture that ways can be found to effectively balance their different demands. Effective supply chain management requires simultaneous improvements in both customer service levels and the internal operating efficiencies of the companies in the supply chain.
Internal efficiency for organizations in a supply chain means that these organizations get an attractive rate of return on their investments in inventory and other assets and that they find ways to lower their operating and sales expenses. There is a basic pattern to the practice of supply chain management. Each supply chain has its own unique set of market demands and operating challenges and yet the issues remain essentially the same in every case.
Companies in any supply chain must make decisions individually and collectively regarding their actions in five areas: 1. Production—What products does the market want?
How much of which products should be produced and by when? This activity includes the creation of master production schedules that take into account plant capacities, workload balancing, quality control, and equipment maintenance. Inventory—What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semifinished, or finished goods?
The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain. However, holding inventory can be expensive, so what are the optimal inventory levels and reorder points?
Location—Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory? Should existing facilities be used or new ones built? Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer. Transportation—How should inventory be moved from one supply chain location to another?
Air-freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty.
This uncertainty must be compensated for by stocking higher levels of inventory. When is it better to use which mode of transportation? Information—How much data should be collected and how much information should be shared? Timely and accurate information holds the promise of better coordination and better decision making.
With good information, people can make effective decisions about what to produce and how much, about where to locate inventory, and how best to transport it. Who a company is and what it can do is shaped by its supply chain and by the markets it serves.
The Goal explores the issues and provides answers to the problem of optimizing operations in any business system, whether it be manufacturing, mortgage loan processing, or supply chain management. Supply Chain Management, 6th Edition is an in-depth presentation of the concepts and techniques of the profession. Much of the material presented in this chapter and in the next two chapters can be found in greater detail in these two books. For those who think that his greatness was only due to his ability to dream up bold moves and cut a dashing figure in the saddle, think again.
Alexander was a master of supply chain management and he could not have succeeded otherwise. The authors from Greek and Roman times who recorded his deeds had little to say about something so apparently unglamorous as how he secured supplies for his army.
Yet, from these same sources, many small details can be pieced together to show the overall supply chain picture and how Alexander managed it. The only way to transport large amounts of material over long distances was by oceangoing ships or by barges on rivers and canals.
Once away from rivers and seacoasts, an army had to be able to live off the land over which it traveled. Diminishing returns set in quickly when using pack animals and carts to haul supplies, because the animals themselves had to eat and would soon consume all the food and water they were hauling unless they could graze along the way.
The army had a logistics structure that was fundamentally different from other armies of the time. In other armies the number of support people and camp followers was often as large as the number of actual fighting soldiers, because armies traveled with huge numbers of carts and pack animals to carry their equipment and provisions, as well as the people needed to tend them.
In the Macedonian army the use of carts was severely restricted. Soldiers were trained to carry their own equipment and provisions. Other contemporary armies did not require their soldiers to carry such heavy burdens but they paid for this because the resulting baggage trains reduced their speed and mobility.
It was capable of making lightning strikes against an opponent, often before they were even aware of what was happening. Because the army was able to move quickly and suddenly, Alexander could use this capability to devise strategies and employ tactics that allowed him to surprise and overwhelm enemies that were numerically much larger. The picture that emerges of how Alexander managed his supply chain is an interesting one.
For instance, time and again the historical sources mention that before he entered a new territory, he would receive the surrender of its ruler and arrange in advance with local officials for the supplies his army would need. If a region did not surrender to him in advance, Alexander would not commit his entire army to a campaign in that land.
He would not risk putting his army in a situation where it could be crippled or destroyed by a lack of provisions. Instead, he would gather intelligence about the routes, the resources, and the climate of the region and then set off with a small, light force to surprise his opponent.
The main army would remain behind at a well-stocked base until Alexander secured adequate supplies for it to follow. Whenever the army set up a new base it looked for an area that provided easy access to a navigable river or a seaport.
The army always stayed in its winter camp until the first spring harvest of the new year so that food supplies would be available. Alexander learned how to formulate strategies and use tactics that built upon the unique strengths his logistics and supply chain capabilities gave him, and he wisely took measures to compensate for the limitations of his supply chain. Depending on the market being served, sales or throughput occur for different reasons.
In some markets, customers value and will pay for high levels of service. In other markets customers seek simply the lowest price for an item. As we saw in the previous section, there are five areas where companies can make decisions that will define their supply chain capabilities: production; inventory; location; transportation; and information.
Chopra and Meindl define these areas as performance drivers that can be managed to produce the capabilities needed for a given supply chain. Effective supply chain management calls first for an understanding of each driver and how it operates.
MichaelHugos, Agile Systems Architect, Published Supply Chain Author
Essentials of Supply Chain Management (eBook, PDF)
Essentials of Supply Chain Management