OS - SUPPLY CHAIN MANAGEMENT

Question 1

WHAT IS A SUPPLY CHAIN

Answer 1

A supply chain refers to the linkages between a business and its main suppliers of inputs such as raw materials, equipment and information

Question 2

SUPPLY CHAIN MANAGEMENT

Answer 2

o Supply chain management involves the activities to coordinate and intergrade this flow of supplies through the operations processes

Question 3

WHY IS THIS IMPORTANT

Answer 3

o The supply chain is often referred to as the value chain because at each stage greater value is added to achieve profit
o Better coordination and integration of this process
will reduce costs and shorten the length of the chain
which will result in reduced final costs for the businesses
AND a lower price for consumers.

Question 4

HOW CAN A BUSINESSES DO THIS?

Answer 4

There are three areas where the supply chain can be better managed:
 Sourcing
 Logistics
 E-commerce

Question 5

SOURCING

Answer 5

o Sourcing relates to the purchasing of inputs and the way which this is done can be adapted and altered.
a) A business could rationalise its suppliers by reducing the number of suppliers in order to achieve economies of scale and efficiency of processing.

b) Another sourcing strategy a business may be to
implement backwards vertical integration.
o This is when a business merges or takes over a business
that supplies it with inputs i.e. the previous link in the supply chain.
This would guarantee supply, its cost and quality.

c) A further way of minimising costs or controlling the supply chain is through global sourcing.
o Globalisation has allowed businesses to source inputs from overseas from a range of suppliers who offer specialised inputs, higher quality, lowest cost or proximity to consumers.

Question 6

LOGISTICS

Answer 6

Logistics refers to movement and handling of inputs and the distribution of outputs.
It involves consideration of:
 The type of transport used
o The storing and warehousing of materials
 Materials, handling and packaging

o Effective logistics strategies involve low cost transportation options such as containers and pallets with quick service response times.
o By maintaining large storage and distribution centres to consolidate orders and dispatch goods to their stores speedily, businesses meet demand and at the same time reduce the cost of distribution and transportation.

Question 7

E - COMMERCE

Answer 7

o e-Commerce (electronic commerce) is the buying and selling of information, goods and services via the digital space.
o It can be defined as B2C (business to consumer) and B2B (business to business)
o e-Commerce can be used to shorten the supply chain OR allow more rapid response to meet demands and needs.