(1, 1) - An Introduction to Supply Chain Management

Question 1

Define ‘Supply Chain’

Answer 1

A chain of organisations, each supplying the next, starting with the extraction of raw materials (or origination of raw concepts), extending through to the final sale and delivery to the ultimate customer and finally the disposal.

Question 2

Define ‘Supply Network’

Answer 2

The complex web of all supply chains, fulfilling every supply requirement of a particular organisation.

Question 3

Define ‘Supply Chain Management’.

Answer 3

The total management of the supply network. It includes a clear procurement strategy, effective control systems and development of expertise. SCM represents and reflects an holistic approach to the operation of the organisation

Question 4

Why is the term supply chain used, what characteristics does the inter-linked chain illustrate?

Answer 4

• Mutual dependency, each link essential to its adjoining links and weak links could disrupt the chain.
• Each organisation adds value in turn
• The chain is continuous, with each link having its own upstream and downstream networks
• Linkage emphasises the importance of good working relationships between adjoining organisations.

Question 5

What supply chain strategies have originated from inter-organisational collaboration?

Answer 5

• Lean supply: eliminating or minimising waste in the supply chain
• Agile supply: collaborating to increase responsiveness
• Value engineering: critically analysing the value elements of a product design
• Partnering: working collaboratively to generate mutually beneficial continuous improvement

Question 6

What is supplier management and how does this link to supply chain management?

Answer 6

Supplier management refers to rationalising the supply base and managing the relationships with individual suppliers to add value. SCM is applying this to the whole supply network.

Question 7

What are the differences between a traditional approach and a supply chain thinking approach?

Answer 7

• Traditional approach key features: independence
• Supply chain key features: integration
• Independent of next link: Dependency
• Links are protective: End to end visibility
• Less certainty: More certainty
• High cost, low service: High service, low cost
• Unresponsive to change: Quicker response
• Fragmented internally: Joined up structures
• Blame culture: Gain culture
• Competing companies: Competing supply chains

Question 8

What is network sourcing and what characteristics does it have?

Answer 8

It is where supplier tiering is used and a collaborative approach is taken with the top tier suppliers in order to maximise value. Its characteristics include:
Long term relationships
- Reliance
- Collaboration
- Supplier innovation
- Supplier development

Question 9

What risks are associated with network sourcing?

Answer 9

• Suppliers become complacent and service levels slip
• Failure to work with newer more innovative suppliers
• Over-dependence on key suppliers leading to supply disruption risks
• Suppliers become dependent on you, making it more difficult to switch to an alternative

Question 10

When thinking about supply chain management, how can value be added by working on quality?

Answer 10

• Develop good relationships ensure that suppliers fully understand quality needs
• Keeping up to date with developments of your preferred suppliers to influence your product/service design
• Only selecting high quality suppliers by evaluating quality management and accreditations
• Monitoring and managing supplier quality performance and addressing quality issues immediately

Question 11

When thinking about supply chain management, how can value be added by working on cost reduction?

Answer 11

• Encouraging openness and trust, particularly at the planning stages to enable better demand forecasting
• Collaboratively using supply chain expertise on cost reduction programmes
• Seeking end to end supply chain cost reduction
• Encouraging whole-life contracting throughout the chain, to help drive cost down in ancillary areas such as training and disposal
• Exploiting good relationships to jointly seek areas of waste

Question 12

When thinking about supply chain management, how can value be added by reduced Time to Market (TTM)?

Answer 12

• Early supplier involvement (ESI) so efficient supply can be designed into the products and services
• Using suppliers willing to hold stocks of work in progress for late finishing; and willing to sacrifice economies of scale for flexibility.
• Sharing demand data through the chain, enabling sensitivity to changing and emerging customer demands

Question 13

How does effective Supply Chain Management support innovation?

Answer 13

• Faster and more effective product design and development, based on early supplier involvement and simultaneous engineering.
• Better access to market intelligence, which can be used to highlight technological developments and unmet market needs, which support and stimulate innovation.
• Providing incentives to supply chain partners to innovate by sharing the benefits

Question 14

How might a supply risk occur?

Answer 14

• Poor procurement practices: choosing weak suppliers
• Poor contract management: allowing standards to slip
• Disruption to deliveries: due to weather, congestion, political instability or industrial action
• Unforeseen increases in demand: which can’t be met
• Disasters: floods, fire, explosions which affect production / delivery

Question 15

How can Supply Chain Management be used to reduce risk and supply chain vulnerability?

Answer 15

• Improve supply continuity through close supply relationships
• Encourage collaborative risk identification, assessment and prioritisation.
• Create transparency for early warning of problems
• Simplify joint systems to reduce risks due to complexity
• Support suppliers at increased risk, by offering early payment terms