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Supply Chain Management

Supply Chain Management

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Published by Balraj Samant

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Categories:Types, Business/Law
Published by: Balraj Samant on Jun 16, 2012
Copyright:Attribution Non-commercial

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11/23/2013

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SUPPLY CHAIN MANAGEMENT: CONCEPTS, TECHNIQUES AND PRACTICES - Enhancing Value Through Collaboration© World Scientific Publishing Co. Pte. Ltd.http://www.worldscibooks.com/business/6273.html
3
Chapter 1
Supply Chain Management:An Evolutionary View
1.1 Overview of Supply Chain Management
A
Supply Chain
encompasses all activities in fulfilling customerdemands and requests as shown in Figure 1.1. These activities areassociated with the flow and transformation of goods from the rawmaterials stage, through to the end user, as well as the associatedinformation and funds flows. There are four stages in a supply chain: thesupply network, the internal supply chain (which are manufacturingplants), distribution systems, and the end users. Moving up and downthe stages are the four flows: material flow, service flow, informationflow and funds flow. E-procurement links the supply network andmanufacturing plant, e-distribution links the manufacturing plant and thedistribution network, and e-commerce links the distribution network andthe end users.The supply chain begins with a
need 
for a computer. In this example,a customer places an order for a Dell computer through the Internet.Since Dell does not have distribution centers or distributors, this ordertriggers the production at Dell’s manufacturing center, which is the nextstage in the supply chain. Microprocessors used in the computer maycome from AMD and a complementary product like a monitor may comefrom Sony. Dell receives such parts and components from thesesuppliers, who belong to the up-stream stage in the supply chain. Aftercompleting the order according to the customer’s specification, Dellthen sends the computer directly to the users through UPS, a thirdparty logistics provider. This responsive supply chain is illustrated in
 
SUPPLY CHAIN MANAGEMENT: CONCEPTS, TECHNIQUES AND PRACTICES - Enhancing Value Through Collaboration© World Scientific Publishing Co. Pte. Ltd.http://www.worldscibooks.com/business/6273.html
4
Supply Chain Management: Concepts, Techniques, and Practices
Figure 1.1. In this supply chain, Dell Computer is the captain of thechain; the company selects suppliers, forges partnerships with othermembers of the supply chain, fulfills orders from customers and followsup the business transaction with services.Now, consider a case of purchasing a pack of Perdue chicken breastat Sam’s Club. When customers buy trays of chicken breast at Sam’sClub, the demand is satisfied from inventory that is stocked in a Sam’sClub distribution center. Production at a Perdue Farms manufacturingfacility is based on forecasted demand using historical sales data. PerdueFarms runs a vertical supply chain starting from the eggs, to the grainsthat feed chicks proceeding to manufacturing, packaging, and delivery.Packaging materials come from suppliers. This is an efficient supplychain and is illustrated in Figure 1.1.These two different types of supply chain, responsive supply chainand efficient supply chain, will be discussed in detail in Section 1.4.Figure 1.1. Supply chain in e-business environment
 
A virtual organization: shared data, information, and knowledge
 
SUPPLY CHAIN MANAGEMENT: CONCEPTS, TECHNIQUES AND PRACTICES - Enhancing Value Through Collaboration© World Scientific Publishing Co. Pte. Ltd.http://www.worldscibooks.com/business/6273.html
Introduction to Supply Chain Management 
5
Supply Chain Management
is a set of synchronized decisions andactivities utilized to efficiently integrate suppliers, manufacturers,warehouses, transporters, retailers, and customers so that the rightproduct or service is distributed at the right quantities, to the rightlocations, and at the right time, in order to minimize system-wide costswhile satisfying customer service level requirements. The objective of Supply Chain Management (SCM) is to achieve sustainable competitiveadvantage.A company’s supply chain in an e-Biz environment can be verycomplicated. Figure 1.1 illustrates a simplified supply chain becausemany companies have hundreds and thousands of supplies and customers.The supply chain in Figure 1.1 includes internal supply chain functions,an upstream supplier network, and a downstream distribution network.Logistic function facilitates the physical flow of material from the rawmaterial producer to the manufacturer, to the distributor, and finally, tothe end user.The
internal supply chain
of the focal manufacturing company in themiddle of Figure 1.1 includes sourcing, production, and distribution.
Sourcing
or purchasing of the company is responsible for selectingsuppliers, negotiating contracts, formulating purchasing process, andprocessing order.
Production
is responsible for transforming rawmaterials, parts or components to a product.
Distribution
is responsiblefor managing the flow of material and finished goods inventory from themanufacturer to customer. Enterprise Resource Planning systems (ERP)integrate the entire company’s information system, process and store data,cut across functional areas, business units, and product lines to assistmanagers make business decisions. As an IT infrastructure, ERPinfluences the way companies manage their daily operations andfacilitates the flow of information among all supply chain processes of afirm.The
 supplier network
on the left-hand side of Figure 1.1 consists of all organizations that provide materials or services, either directly orindirectly. For example, a computer manufacturer’s supplier network includes all the firms that provide items ranging from such raw materialsas plastics, computer chips, to subassemblies like hard drives andmotherboards. A supplier of motherboard, for example, may have its

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