lecture 1 Flashcards
what is supply chain management
Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service level requirements
Other definitions of supply chain managements
The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer
Managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer
The goods services continuum
many firms offer a combination of goods and services
Products are supported by services such as warranties and training
services are enhanced through the inclusion of products
Pure goods - core goods - core services - pure services
key observations of supply chain management
every facility that impacts costs needs to be considered (suppliers suppliers and customers customers)
Efficiently (use least resources) and effectiveness (get max value) throughout the system is required
(increases pressure for sustainability, increased risks/disruptions require agility and resilience
Multiple levels of activity based on frequency, time frame of impact and uncertainty
strategic - tactical - operational
what activities constitute scm
planning (processes needed to operate an existing supply chain strategically)
sourcing (selecting of suppliers)
making (major product is produced or the service is provided
delivering (logistics process)
Returning (receiing worn out, defective, and excess products)
characteristics of early supply chains
Geographical proximity
Integrated ownership structure
Why?
transportation slow and costly
Communication and information exchange challenges
todays supply chain characteristics
fragmented supply chains
SKU proliferation
The magnitued of supply chain management
US companies spend more than 1 trillion dollars in supply related activities (10-15% of gross domestic product)
Transportation 58 %
Inventory 38%
Management 4%
A typical box of cerial spends 104 days getting from factory to supermarket
A typical new car spends 15 days traveling from the factory to the dealership and stays there for 60 days
Food travels 1500 miles between origin and destination in iowa (USA)
multiple inter-related sources of uncertainty
lead times
transportation times
natural disasters
supplier bankruptcy
supply chain risk
is the likelihood of a disruption that would impact the ability of a company to continuously supply products or services
Supply chain coordination risks are associated with the day-to-day management of the supply chain
Disruption risks are caused by natural or manmade disasters
Risk management framework
1) Identify the sources of potential disruptions
2) assess the potential impact of the risk
3) develop plans to mitigate the risk
(Contingency planning, insurance, redundancy (e.g. multiple suppliers))
goal of supply chain management
maximize customer service level
Minimize cost
SCM is not strictly a cost reduction paradigm
Sustainability
the ability to meet current resource needs without compromising the ability of future generations to meet their needs
The tripple bottom line
Economic prosperity
Social responsibility
Environmental stewardship
Airborne fulfillment centers (AFC)
Amazon patent: for storing and deploying packages
Goal: support same day or even same hour fulfillment
