Supply Chain Management Flashcards
Supply chain management
Supply chain management is the management of the interconnection of organisations that relate to each other through upstream and downstream linkages between the processes that produce value to the ultimate consumer in the form of products and service
Not just about operations functions, but several, working together as a chain to transport inputs to outputs
SCM Objectives
- Every link should add value to the end user
- Every link will want to make a margin for their value added
SCM Activities
2 main activities;
Supply side- purchasing/procurement and supply management
Demand side- physical distribution and logistics management
Purchasing/procurement: make or buy, supplier selection, sourcing strategy, supplier development
Physical distribution and logistics: depot location, routing, OR techniques to minimise transport costs
Supply Network
-Supplier network is a view of the linkage of all the operations that are responsible for transporting inputs to outputs
-Chain of interlinked operations functions
-Movement of goods/services and information from source to the end consumer
Helps us consider the competitiveness;
- Buyer/ supplier power relationships often influenced by market conditions
- How suppliers influence each other
Helps identify significant links in the network
- identify value adding techniques
- value stream mapping
Focuses on long-term issues
- Risk: if we know particular areas can cause disruption, can make contingency plans
- Sustainability
Sourcing strategies
Strategies depends on;
- importance of the good /service to the firm
- competitiveness of the supply marketplace
- value of the good/service
Market complexity
- anything which determines the availability and the price of the item
- Porter’s 5 forces
Kraljic’s matrix
Bottleneck - low value, quite rare, few suppliers
Critical - High value, quite rare, few suppliers
Routine - low value, easy to buy, multiple suppliers
Leverage - High value, easy to buy, suppliers available
Supply configurations
Single sourcing
- one supplier
- single sourcing most common in items difficult to source - bottleneck, critical items
- adv - allows for close relationship, source of competitive advantage
- dis - requires considerable amount of investment, risk of opportunism, high switching costs
Multiple sourcing
- more than one supplier used to source a particular items
- most common for items that exist in market place with high degree of competition
- advantages - low switching costs, significant price reductions
- dis - adversarial
Delegated sourcing
- Giving a key supplier the responsibility of managing and delivering entire sub assembly instead of single part
- Tiered systems
- Can exist in all sourcing strategies expect routine items
- adv - only have to work with one supplier
- dis - risk of creating mega suppliers
Supply chain fit
- Appropriate fit between the type of product you produce and the supply chain to produce it
- Efficient supply chains are more suited to functional products
- Response supply chains are more suited to innovative products
Make / Buy decision
- Choice depends on the implications on business strategy
- Few general rules exist when deciding on wether or not to outsource; is it our core activity? Does the company have specialised knowledge? IS the operations superior to competitors? IS the operation likely to improve?
Outsourcing and Offshoring
Outsource - domestic supplier delivers products and services
Offshore outsource - overseas supplier delivers products and service
Domestic operations - Company produces product/service domestically
Offshore operations - Company overseas’s operation delivers products
Disintermediation
Reduction in the use of intermediaries in a supply chain
Location decision
Has direct implications;
Spatially variable costs are usually dependent on supply side factors
Customer service/revenue usually depends on demand-side factors
Supply side influences; labour cost, land cost, energy cost, transportation cost
Demand side; labour skills, suitability of site, image of locations, convenience for customers
Supplier selection
- Traditionally, buyers would obtain three bids and then choose lowest
- Suppliers need to be evaluated on multiple weight criteria
- 3 types of purchase that will affect the amount of information available:
1. Straight rebuy or routine purchase - extensive information concerning specs and suppliers will exist
- Often will involve placing an order with existing g contracts
2. Modify rebuy - new product from known suppliers or existing purchase from new suppliers
- Moderate uncertainty regarding specs and maybe suppliers
3. New buy - entirely new product, no previous experience
- no known supplier
Selection process
- Initial supplier qualification
- Agree measurement criteria
- Obtain relavent information
- Make selection
