Supply Chain Management Flashcards
What is supply chain management?
Refers to the design and management of seamless, value-adding processes across organisational boundaries and functions aimed at meeting the needs of the customer. Supply chain management includes purchasing, materials, and logistics management.
Where are the different places value can be added?
Value must be added along the line of the supply chain (some as costs) until the final product or service is delivered to the customers, satisfying their demand. If the value is added from the raw materials (supplier side), it is referred to as the upstream part of the supply chain. When the value is added from the producer (manufacturer or “focal firm” where most value is added), it is referred to as the downstream part of the supply chain. The downstream part is closer to the customer while the upstream part is closer to the raw materials.
How has the role of the purchasing function evolved within the supply chain?
The purchasing function plays an important role as a link between the internal and external supply chain and its role has changed from a pure support function to a strategic, value-adding tool in businesses. The purchasing function has become known as the supply function.
How has the focus of the Supply Chain Management (SCM) function shifted from operational and tactical to strategic over time?
The strategic role of purchasing is recognised by top management.
Purchasing is aligned with the attainment of organisational goals.
Suppliers and other functions of the organisation are involved in major purchasing decisions.
The organisation’s vision is to build long-term relationships with suppliers.
Learning the need for purchased materials: refers to the process of understanding and identifying the materials or resources that need to be acquired from external suppliers to support production or service.
Negotiating the best purchasing terms: refers to the process of discussing and reaching agreements with suppliers to secure favorable conditions for buying materials or services.
What is the new supply chain management approach?
Form alliances or partnerships with suppliers in the form of formal or informal agreements.
Integrate systems and processes to limit costs.
Reduce duplication and waste in the supply chain.
Find innovative ways to source raw materials or services.
Produce and deliver the final product or service to the final customer.
Describe the inter-rated macro-processes of the supply chain in an organisation.
Customer relationship management: refers to strategies, technologies, and practices used to manage and analyze interactions and relationships with customers. The goal is to improve customer satisfaction, loyalty, and retention. Collecting and analyzing customer information to understand their needs and behaviors. Providing responsive and effective service to address customer issues and inquiries.
Internal supply chain management: refers to the management of processes and resources within an organization that contribute to the production and delivery of goods or services. It focuses on optimizing operations across different departments to ensure efficient and effective internal processes. Maintaining and improving the quality of products or services throughout the internal processes.
Supplier relationship management: refers to the systematic approach to managing and optimizing interactions with suppliers to improve overall performance and value. Assessing supplier performance regularly to ensure they meet agreed-upon standards and expectations. Maintaining open and effective communication with suppliers to address issues and collaborate on improvements.
Discuss the principles of supply chain management that can alleviate the challenges with supply chain efficiency.
*Principle 1: segment consumers based on service needs. Involves dividing a market into distinct groups of consumers who have similar requirements or preferences for services. Understanding the specific service needs or problems faced by different groups of consumers.
*Principle 2: customise the logistics network to service requirements, considering the profitability of the customer segments. Designing and adjusting logistics operations to meet the specific needs of different customer segments
*Principle 3: understand the market needs and align demand planning across the supply chain to ensure consistent forecasts and optimal resource allocation.
*Principle 4: differentiate goods and services closer to the customer and speed conversation across the supply chain. Making adjustments or personalizations in locations closer to the customer. Accelerating the process of transforming raw materials into finished products and delivering them to customers.
Discuss the selection criteria which is used by organisation in selecting suppliers
Compliance (suppliers must comply with legal, regulatory, and industry-specific standards), documentation, attendance of information session, financial standing (the supplier’s financial health ensures they can sustain operations and fulfill long-term commitments), previous rejection on poor delivery (delivery schedules, lead times, and the supplier’s track record for meeting deadlines), supply interruptions (Response times, willingness to accommodate changes, and problem-solving capabilities).
Some companies adopt the lean or agile supply strategies. What is the major differences between the two approaches?
Lean Supply:
Low product variety and long life cycles
Lower profit margins
More predictable
Stable stock demand
Agile Supply:
High product variety and short-life cycle
Higher profit margins
Less predictable
Volatile stock demand
Identify the most important responsibility of purchasing in the Case Study
Finding and selecting suppliers, Selection criteria for suppliers, The exploratory stage or pre-evaluation phase, The evaluation and selection stage, The supplier management (maintenance) stage, Supplier accreditation, Quality – important determinant of supplier selection
