A supply chain is a sequence of firms that perform activities required to create and deliver the goods and services

to consumers and industrial users. SCM is the integration of all activities associated with the flow and transmission of goods and information from the raw material stage, all the way to the end user in order to achieve competitive advantage. 3 decision stages of SCM SC Strategy / Design – Long term. Low forecast quality SC planning – Months-Year. Forecast quality better SC operation – Hours days – High forecast qual

Process view of sc Cycle View‐ The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive phases of a supply chain. • Push/Pull View: In this case Pull processes are initiated by a customer order, whereas push processes are initiated & performed in anticipation of customer orders. Cycles – Customer order, replenishment, Manufacturing, Procurement. Push – in anticipation of order Pull – In response to order. Pull – No economies of scale, can have long lead times Measuring supply chain reliability – Perfect order fulfillment rate Responsiveness – Order fulfillment cycle time Flexibility - # days required to overcome random bigass order Costs - % of COGS Asset management – Cash cycle time.

A company’s supply chain has 6 drivers Facilities Inventory Transportation Information

Sourcing Pricing Ordering cost = (D/Q)S Holding cost =(Q/2)H Optimal quantity = When both equal = Q = sqrt (2DS/H) Total cost = ordering cost plus holding cost Optimal reorder point = (total demand/365 )*Lead time in days for new order

High value High risk – Strategic Look at strategic sourcing Integral products difficult to change suppliers Low value Low risk – Non critical items Low value High risk – Bottleneck Few suppliers, high cost when problems occur High value low risk – Leverage Generic stuff, competitive market, use volumes to reduce price

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