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Definition
The process of planning, implementing, and controlling the flow and storage of goods, services and related information from their point of origin to point of consumption for the purpose of conforming to customer requirements.
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Term
Supply chain management (SCM) |
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Definition
u- a set of approaches utilized to integrate suppliers, manufacturers, warehouses and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, at the right time, in order to minimize systemwide costs while satisfying service level requirements.
- includes all movement and storage or raw materials, WIP, and finished goods form point of origin to point of consumption
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| An amry marches on its stomach |
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| includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, and customer service) |
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- includes movement of products, information, and funds from suppliers to manufacturers
- customer is an integral part of SC
- all stages may not be present in all supply chains |
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- SCM part of economy $1.2 Trillion (10% of GDP)
- includes Transportation (truck, rail, water, air, pipeline), Warehousing, Obsolescence, Depreciation, Insurance, Taxes, Interest, Administration
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| Surplus- difference btw what the final product is worth to the customer and the effort/costs the supply chain incurs by filling the customers request---> Maximize supply chain profit |
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Definition
u- Example: Dell receives $2000 from a customer for a computer (revenue)
u- Supply chain incurs costs (information, storage, transportation, components, assembly, etc.)
u- Difference between $2000 and the sum of all of these costs is the supply chain profit
u- Supply chain profitability is total profit to be shared across all stages of the supply chain
u- Supply chain success should be measured by total supply chain profitability, not profits at an individual stage
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| flows of information, products, or funds between stages of the supply chain |
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| supply chain design, planning, and operation decisions play a significant role in the success or failure of a firm |
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| Supply Chain Strategy or Design |
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Definition
- decisions about structure of SC and what processes each stage will perform
- locations and capacities of facilities
- outsource or make it in-house
- products to be made (or stored) at a single large location or at smaller various locations
- modes of transportation
- information systems (inhouse/purchase, eg ERP software)
- LONG TERM - trends, economy, and political environ. must be considered
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Term
Supply Chain Planning (Tactical)
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Definition
- MEDIUM TERM decisions that generally involve establishing a set of policies that govern short term policies
- tactical decisions are constrained by the supply configuration from strategic phase
- starts with a forecast of demand in the coming year
- time frame
- updated at least annually
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Term
| Supply chain planning decisions |
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Definition
Planning decisions:
- which markets will be supplied from which locations
- inventory policies, target inventory/production levels
- subcontracting, backup locations
- timing (and size) of market promotions and price
Considerations:
- demand uncertainty
- exchange rates
- competition over the time horizon
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Term
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Definition
- time horizon WEEKLY or DAILY
- supply chain configuration (strategic decisions) is fixed and operating policies are determined
- goal is to implement the operating policies as effectively as possible for incoming orders
- EX: prepare delivery schedules, weekly shift schedules, individual customer orders
- much less uncertainty due to short time horizon
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Term
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Definition
- processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of a supply chain
- on different between cycles is size of order
- another difference is in predictability of orders- orders in the procurement cycle are more predictable after manufacturing planning has been done.
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Definition
| - the processes are divided into two catergoies depending on whether they are executed in response to a customer order (pull) or in anticipation of customer orders (push) |
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- execution is initiated in anticipation of cusomter orders (speculative)
- involves procurement, manufacturing, and replenishment cycles |
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- execution is initiated in response to a customer order (reactive)
- customer order cycle |
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- separates push processes from pull processes (ex push paint base, pull paint color)
- pull processes are often constrained by inventory and capacity decsion that were made in the push phase |
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Term
Customer Relationship Management (CRM)
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Definition
- all processes that focus on the interface between the firm and its customers
- market
- price
- sell
- call center
- order management
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Term
| Internal Supply Chain Management |
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Definition
-Strategic Planning, Supply/Demand Planning, Fullfillment
- location and size of warehouses
- deciding which products to carry at warehouses
- inventory replenishment policies
- picking, packing, shipping orders
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| Supplier Relationship Management (SRM) |
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Definition
- all processes that focus on the interface between the firm and its suppliers
- select suppliers
- negotiate pricing and delivery terms
- buy
- design & supply collaboration
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- Founded as a direct sales manufacturer (PCs) in 1985
- In 1996 started selling PCs online
- In 1999 had three plants in the US, one in Ireland, one in Malaysia
- By 2002 had 280 retail stores in the US with no finished goods inventory in these stores
- By 2004 closed all retail stores and started selling through Best Buy and Circuit City.
- October 2007, bought by Acer.
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| W.W. Grainger and McMaster-Carr |
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Definition
- These industrial supply companies sell MRO (maintenance, repair, operations/overhaul) products
- Both have catalogs, web pages.
- Both offer several hundred thousand products
- Each stocks more than 100,000 products
- Neither of them manufactures any product
- Grainger also has several hundred stores besides having 9 DCs |
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- The largest auto manufacturer in the world
- Global strategy: Open manufacturing plants in every market it serves
- Prior to 1996 used specialized local factories for each market (Yaris, Corolla, Camry… etc)
- After the Asian financial crisis in 1996 redesigned its factories so that it can also export to markets that remain strong when the local market weakens. |
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- One of the pioneers of consumer e-business
- Based in Seattle, started by filling orders using books purchased from a distributor in response to customer orders
- USPS, UPS, FedEx
- Barnes & Noble => barnesandnoble.com
- Borders => borders.com => amazon.com.. Then in May, 2008, Borders discontinued its relationship with Amazon and launched a website of its own at borders.com |
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| - retailer and distributor |
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| - distributor and manufacturer |
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| - manufacturer and supplier |
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