Scribd
Upload
41 views

SCM Chapter 1

Uploaded by

olmezest
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
41 views

SCM Chapter 1

Uploaded by

olmezest
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 8

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer

request. The supply chain includes not only the manufacturer and suppliers, but also
transporters, warehouses, retailers, and even customers themselves. Within each
organization, such as a manufacturer, the supply chain includes all functions involved in
receiving and filling a customer request. These functions include, but are not limited to, new
product development, marketing, operations, distribution, finance, and customer service.

A typical supply chain integrates functions such as designing a product,


procuring needed raw materials and parts, estimating demand, planning the
product introduction, arranging supply, selecting sales channels, delivering
support and providing customers with visibility into orders.

Supply chain consists on the interaction of all parties involved in fulfilling a customer
request, while supply chain management (SCM) refers to the coordination and management
of activities involved in the production and delivery of products and services to fulfill
customers’ needs.
The objective of a supply chain is to obtain a high profitability, which will show how
successful a supply chain is. The higher the customer value (assets) and the lower the
supply chain cost, the better the supply chain is, this is why it is so important to correctly
manage it.
The term supply chain may also imply that only one player is involved at each stage. In
reality, a manufacturer may receive material from several suppliers and then supply several
distributors. Thus, most supply chains are actually networks. It may be more accurate to use
the term supply network or supply web to describe the structure of most supply chains, as
shown in Figure 1-2.

What is Supply Chain Management (SCM)


● Supply Chain Management (SCM): Is the design and management of flow of products,
information, and funds throughout the supply chain
○ Supply chain: Is the network of all entities in producing and delivering a finished product
to the customer.
○ Supply chain are under increasing financial pressure and stages that do not add value to
the supply chain are quickly bypassed or eliminated.
○ The terms supply chain are implies a linear chain of participants from suppliers to final
customer
■ Coordination: SCM involves coordinating the movements of goods and services through
the supply chain
■ Information sharing: SCM requires sharing relevant information among members of the
supply chain
■ Collaboration: SCM requires collaboration between supply chain members so that they
jointly plan, operate, and execute business decisions as one entity Managing
Flows through the SUpply Chain
● The first is a flow of product through the supply chain, from the beginning of the chain
through various stages of production to the final customer. However, goods also flow back
through the chain. This is in the form of returned products that are unacceptable to
customers
● The second flow through the supply chain is that of information that is shared between
members of the supply chain
● The third flow through the supply chain is that of funds in a simplified supply chain,
financial flow is often view as on directional, flowing, backward in supply chain as payment
for products and services received

1.4 Decision Phases in a Supply Chain Successful supply chain management requires
many decisions
1. Supply chain strategy or design
Corresponding to the strategic part of the decisions, since the long-term structure and
ways of working are established, defining processes and policies for several years.

Decisions about the structure of the supply chain and what processes each stage will
perform

• Strategic supply chain decisions – Locations and capacities of facilities – Products to be


made or stored at various locations – Modes of transportation – Information systems

• Supply chain design must support strategic objectives

• Supply chain design decisions are long-term and expensive to reverse – must take into
account market uncertainty

2. Supply chain planning


Corresponding to the tactical part of the decisions, in this phase the definition of: which
markets will be supplied, from which locations, the subcontracting of manufacturing, the
inventory policies to be followed and the timing and size of the marketing and price
promotions are made.

• Definition of a set of policies that govern short-term operations


• Fixed by the supply configuration from previous phase
• Starts with a forecast of demand in the coming year
• Planning decisions: – Which markets will be supplied from which locations – Planned
buildup of inventories – Subcontracting, backup locations – Inventory policies – Timing
and size of market promotions
• Must consider in planning decisions demand uncertainty, exchange rates, competition
over the time horizon

3. Supply chain operation


Corresponding to the operational part of the decisions, this focuses on working in the
short term with activities like the allocation of inventory to individual orders, set of dates
when an order needs to be filled, generating picklist at the warehouse, setting delivery
schedules for trucks, etc.

• Time horizon is weekly or daily


• Decisions regarding individual customer orders
• Supply chain configuration is fixed and operating policies are determined
• Goal is to implement the operating policies as effectively as possible
• Allocate orders to inventory or production, set order due dates, generate pick lists at a
warehouse, allocate an order to a particular shipment, set delivery schedules, place
replenishment orders
• Much less uncertainty (short time horizon)

1.5 Process Views of a Supply Chain A supply chain is a sequence of processes and flows
that take place within and between different stages and combine to fill a customer need for
a product.
There are two ways to view the processes performed in a supply chain.
1. Cycle view: The processes in a supply chain are divided into a series of cycles, each
performed at the interface between two successive stages of the supply chain.
2. Push/pull view: The processes in a supply chain are divided into two categories,
depending on whether they are executed in response to a customer order or in anticipation
of customer orders. Pull processes are initiated by a customer order, whereas push
processes are initiated and performed in anticipation of customer orders.
Cycle View of Supply Chain Processes Given the five stages of a supply chain as shown in
all supply chain processes can be broken down into the following four process cycles,
• Customer order cycle
• Replenishment cycle
• Manufacturing cycle
• Procurement cycle
Each cycle occurs at the interface between two successive stages of the supply chain. Not
every supply chain will have all four cycles clearly separated.
For example, a grocery supply chain in which a retailer stocks finished-goods inventories
and places replenishment orders with a distributor is likely to have all four cycles separated.
Dell, in contrast, bypasses the retailer and distributor when it sells servers directly to
customers.
starts with the supplier marketing the product to customers. A buyer then places an order
that is received by

Supply Chain Process Cycles

Each cycle consists of six sub processes, as shown in Figure 1-4. Each cycle the supplier.
The supplier supplies the order, which is received by the buyer. The buyer may return some
of the product or other recycled material to the supplier or a third party. The cycle of
activities then begins again. The sub processes in Figure 1-4 can be linked to the source,
make, deliver, and return processes in the supply chain operations reference (SCOR)
model.

Push/Pull View of Supply Chain Processes


All processes in a supply chain fall into one of two categories, depending on the timing of
their execution relative to end customer demand. With pull processes, execution is initiated
in response to a customer order. With push processes, execution is initiated in anticipation
of customer orders based on a forecast. Pull processes may also be referred to as reactive
processes because they react to customer demand. Push processes may also be referred
to as speculative processes because they respond to speculated (or forecasted), rather
than actual, demand. The push/pull boundary in a supply chain separates push processes
from pull processes.

Make-to-stock environment like that of L. L. Bean


The push/pull view and the cycle view.
L. L. Bean executes all processes in the customer order cycle after the customer order
arrives. All processes that are part of the customer order cycle are thus pull processes.
Order fulfillment takes place from product in inventory that is built up in anticipation of
customer orders. The goal of the replenishment cycle is to ensure product availability when
a customer order arrives. All processes in the replenishment cycle are performed in
anticipation of demand and are thus push processes. The same holds true for processes in
the manufacturing and procurement cycles. In fact, raw material such as fabric is often
purchased six to nine months before customer demand is expected. Manufacturing itself
begins three to six months before the point of sale. The processes in the L. L. Bean supply
chain break up into pull and push processes,

Ethan Allen makes customized furniture, such as sofas and chairs, for which customers
select the fabric and finish.
In this case, the arrival of a customer order triggers production of the product.
The manufacturing cycle is thus part of the customer order fulfillment process in the
customer order cycle.
There are effectively only two cycles in the Ethan Allen supply chain for customized
furniture:
(1) a customer order and manufacturing cycle and
(2) a procurement cycle
All processes in the customer order and manufacturing cycle at Ethan Allen are classified as
pull processes because they are initiated by customer order arrival. The company, however,
does not place component orders in response to a customer order. Inventory is replenished
in anticipation of customer demand. All processes in the procurement cycle for Ethan Allen
are thus classified as push processes, because they are in response to a forecast

Supply Chain Macro Processes in a Firm All supply chain processes discussed in the two
process views and throughout this book can be classified into the following three macro
processes, as shown in Figure 1-8:
1. Customer relationship management (CRM): all processes at the interface between the
firm and its customers
2. Internal supply chain management (ISCM): all processes that are internal to the firm
3. Supplier relationship management (SRM): all processes at the interface between the firm
and its suppliers

You might also like