CHAPTER 10 : EXTENDING THE ORGANIZATION-SUPPLY CHAIN MANAGEMENT

BASICS OF SUPPLY CHAIN


A supply chain:

=consists of all parties involved, directly or indirectly, in the procurement of a product or raw material.


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.


3 main links of supply chain :

1. Materials flow from suppliers and their upstream suppliers at all levels.
2. Transformation of materials into semi finished and finished products, or the organization's own production processes.
3. Distribution of products to customers and their downstream customers at all levels.

A TYPICAL SUPPLY CHAIN

5 Basic Supply Chain Management Activities:

1. PLAN = prepare to manage all resources required to meet demand.
2. SOURCE = build relationships with suppliers to procure raw materials.
3. MAKE = Manufacture products and create production schedules.
4. DELIVER = plan for transportation of goods to customers.
5. RETURN = support customers and product returns.

INFORMATION TECHNOLOGY'S ROLE IN THE SUPPLY CHAIN

Information technology's primary role in SCM is creating the integrations or tight process and information linkages between functions within a firm.

THE INTEGRATED SUPPLY CHAIN

Factors driving supply chain management :

1. 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
   = Demand planning software generates demand forecasts using statistical tools and forecasting techniques.
3. COMPETITION
   = Supply chain management software can be broken down into
      (1) supply chain planning software
      (2) supply chain execution software
   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 while reducing inventory.
   = Supply chain execution (SCE) software automates the different steps and stages of the supply chain.
4. SPEED
   = A company is able to satisfy continually changing customer requirements efficiently, accurately, and quickly.

SOFTWARE CORRELATION TO THE SUPPLY CHAIN

Supply Chain Management Success Factors
 There are three (3) :

Seven Principles of Supply Chain Management

Keys to SCM success :

1. Make the sale to suppliers
2. Wean employees off traditional business practices
3. Ensure the SCM system supports the organizational goals
4. Deploy in incremental phases and measure and communicate success
5. Be future oriented