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Introduction to Supply Chain Management

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Another definition is provided by the APICS Dictionary when it defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."

Supply Chain Management is the process of planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the customer's requirement as efficiently as possible. Supply Chain spans all movement and storage of raw materials, Work-in-process, inventory and finished goods from the point of origin to the point of consumption. • Supply chain is the system by which organizations source, make and deliver their products or services according to market demand. • Supply chain management operations and decisions are ultimately triggered by demand signals at the ultimate consumer level.

In other words Supply Chain Management is a set of approaches used to efficiently integrate;     Suppliers Manufacturers Warehouses Distribution centers

So that the product is produced and distributed  In the right quantities  To the right locations  And at the right time System-wide costs are minimized and, Service level requirements are satisfied

Supply Chain Management and Materials Management are competitive business edge today. A supply chain is a system of organizations, people, technologies, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end user. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable.

and finished goods from point of origin to point of consumption. but the entire team needs to make a coordinated effort to win the race. With competition growing by the day. manufacturing. Supply chain management is typically viewed to lie between fully vertically integrated firms. Therefore coordination between the various players in the chain is key in its effective management. Traditionally. Supply chain management (SCM) is management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. and those where each channel member operates independently. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. after product quality and manufacturing capabilities of any business firm. accounting for nearly 50 to 65 % of the total expenditure. The result of these factors is that there is not a single. materials form the largest single expenditure item. come into sharp focus. Supply chain management spans all movement and storage of raw materials. . Supply chain management is a strategy through which such an integration can be achieved. cost reduction in business operations and yet making available various products to customers. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. where the entire material flow is owned by a single firm. as per their requirement. Clearly. distribution. Importance of supply chain management need not be over emphasized as it has become the cutting edge of business. The relationships are the strongest between players who directly pass the baton.In many organizations. there is a need for a mechanism through which these different functions can be integrated together. integrated plan for the organization---there were as many plans as businesses. Cooper and Ellram [1993] compare supply chain management to a well-balanced and well-practiced relay team. marketing. Such a team is more competitive when each player knows how to be positioned for the hand-off. Maintaining a flawless supply chain across all its operations thus becomes absolutely necessary for any business. work-in-process inventory. and the purchasing organizations along the supply chain operated independently. planning. These organizations have their own objectives and these are often conflicting.

Thus the functions most often cited as planning to formally include in the Supply Chain Management department are: • Customer service performance monitoring • Order processing/customer service • Supply Chain Management budget forecasting On the other hand. then in 1997 Supply Chain Management has a firm hand on all aspects of physical distribution and materials management.Supply Chain Management Today If we take the view that Supply Chain Management is what Supply Chain Management people do. there are certain functions which some of us might feel logically belong to Supply Chain Management which companies feel are the proper domain of other departments. Most difficult to bring under the umbrella of Supply Chain Management are: • Third party invoice payment/audit • Sales forecasting • Master production planning . the Supply Chain Management department is expected to increase its range of responsibilities. Seventy-five percent or more of respondents included the following activities as part of their company's Supply Chain Management department functions: • Inventory management • Transportation service procurement • Materials handling • Inbound transportation • Transportation operations management • Warehousing management Moreover. most often in line with the thinking that sees the order fulfilment process as one coordinated set of activities.

packaging. transportation.“Integrated” Purchasing.Inventory Management Focus. ERP systems automate this activity with an integrated software application • 2000’s . Financials. Manufacturing.Operations Planning.Optimized “Value Network” with Real-Time Decision Support. In 1960’s the focus of Supply Chain Management was only on managing the inventory in the organization and controlling the cost of production. Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization. where the author established that success of industrial companies was intrinsically related to the “interactions between flows of information. • 1980’s . in his book Industrial Dynamics. • 1990’s . customer relationship management. material handling. . • 1960’s .SCM . during 1980’s the companies started focus on integrating the various activities like integration of information flow. Logistics. again during 1970’s the focus of the Supply Chain Management was merely on managing the material requirements with the help of two systems namely.MRP & BOM . after this initial effort to define the term. warehousing and oftentimes security.ERP . the extended network of supply chain management was used by the companies during the phase of 2000.MRPII. Nevertheless. production. • 1970’s . etc. Forrester. JIT . manpower and capital equipment”. materials. embracing finance/accounting.History/ origin of SCM The concept of Supply Chain Management (SCM) is fairly new in the business literature. manufacturing.Materials Management. Synchronized & Collaborative Extended Network. Cost Control. inventory. It was initially introduced in the 1960s by J. Order Entry. Information technology was used by the companies to integrate the various activities of the organization with the help of various software.W. sales and service. approximately 20 years passed before for the actual concept of “Supply Chain Management” to be addressed by scholars. MRP (material requirements planning) and BOM (bill of material).

taking assets off the balance sheet. accelerating cash-to-cash cycles. Supply Chain Management becomes a tool to help accomplish corporate strategic objectives.Objectives of Supply Chain Management Supply Chain Management is consists of all parties (Including Manufacturer. Warehouses. Suppliers. The main objectives of Supply chain management are to improve the overall organization performance and customer satisfaction by improving product or service delivery to consumer. The other objectives of supply chain management are:                    Replenishment of the Material or Product whenever required Cost Quality Improvement Shortening time to Order Faster Speed to Market Enhancing Customer Service Expanding Sales Revenue Reducing Inventory Cost Improving On-Time Delivery Reducing Order to Delivery Cycle Time Reducing Lead Time Reducing Transportation Cost Reducing Warehouse Cost Reducing / Rationalize Supplier Base Expanding Width / Depth of Distribution reducing working capital. Supply Chain Management involves Movement and Storage of all materials including Raw Material. Retailers and even customers) directly or indirectly involved in fulfillment of a customer. WIP (Work in Progress) and Finished Goods. Marketer. transporters. The fundamental objective of Supply Chain Management is to "add value" or to maximize the overall value generated. increasing inventory turns To look for Sources of Revenue and Cost .

With profit margins of only 3 to 4 percent. minimizing days of supply in inventory. Increasing inventory turns. According to A. and accelerating the cashto-cash cycle all are affected by supply chain execution. They include: * Profitable growth. the consultants point out. or outsourcing functions where it makes more economic sense. tighter cost control. points out." supporting after-sales service. and better customer service are just the beginning. there are millions of dollars there. "If you can cut the cash cycle down. * Fixed-capital efficiency. transfer pricing. inefficiencies in the supply chain can waste up to 25 percent of a company's operating costs. "Supply chain management [influences] plan-buy-make-move-and-sell.” If companies look at assets and sales locations." Enhanced revenues. As Richard Thompson. even a 5-percent reduction in supply-chain waste can double a company's profitability. more effective asset utilization. and taxes. "Everything is involved. a partner in Ernst & Young's supply chain practice. assuring that the company has the right number of warehouses in the right places. This refers to network optimization--for instance." he says. Supply chain management contributes to profitable growth by allowing assembly of "perfect orders. The bottom-line numbers give the answer. customs duties. . Thompson cites the case of a consumer products company that took 20 minutes to make a product and five and a half months to collect payment for it.T. managing receivables and payables. * Global tax minimization. * Working-capital reductions. Kearney's research. Thompson and his colleagues have identified five areas in which supply chain management can have a direct effect on corporate value. "There's a ton of money here." he says. supply chain management affects virtually every aspect of a company's business.Expected Results / Benefits (Where the Supply Chain Creates Value) Supply chain management's ability to affect profitability and shareholder value should come as no surprise. and getting involved in new product development.

. This largely focuses on day-to-day operations. and compressing order-cycle time. • A 27-percent decrease in cumulative cycle time. there has been found that the most commonly reported bottom line benefits are centered on reduced costs in such areas as inventory management. A study by the management consulting firm of A.* Cost minimization. In a separate study. and packaging. Thus. This is a resounding affirmation at the highest levels of supply-chain management's competitive potential. Specifically. Mercer found that close to half of all senior executives surveyed had specific supply-chain improvement projects among their top 10 corporate initiatives. The Kearney consultants found that supply-chain inefficiencies could waste as much as 25 percent of a company's operating costs. • A doubling of inventory turns coupled with a nine-fold reduction in out-of-stock rates. improved service through techniques like time-based delivery and make-to-order. which result from such supply-chain-related achievements as higher product availability and more customized products. transportation and warehousing.T. On a broader scale. and enhanced revenues. they outperform their counterparts along such key metrics as reducing operating costs. a 5-percent reduction in supply-chain waste could double a company's profitability. including: • A 50-percent inventory reduction. research conducted by Mercer Management Consulting reveals that organizations with the best supply chains typically excel in certain pivotal performance areas. Based on experience with companies participating in MIT's Integrated Supply Chain Management Program. assuming even a relatively low profit margin of 3 to 4 percent. • A 40-percent increase in on-time deliveries. The companies studied by Metz have recorded a number of impressive supplychain accomplishments. Kearney has come at the supply chain payback from another angle--the costs of not paying careful attention to the supply chain process. improving asset productivity. • A 17-percent revenue increase. but it also may involve making strategic choices about such issues as outsourcing and process design.

5. Sales and operations planning must span the entire chain to detect early warning signals of changing demand in ordering patterns. Strategically manage the sources of supply. . When consistently and comprehensively followed these seven principles bring a host of competitive advantages. 3. Andersen advises." then it needs a doctrine.Supply Chain Management principles If supply-chain management has become top management's new "religion. and so forth. product. Customize the Supply Chain Management network. or trade channel and then provided the same level of service to everyone within a segment. By working closely with their key suppliers to reduce the overall costs of owning materials and services. Listen to signals of market demand and plan accordingly. by contrast. Companies traditionally have grouped customers by industry. "Gain sharing" is in. Differentiate product closer to the customer. This demand-intensive approach leads to more consistent forecasts and optimal resource allocation. espousing what it calls the "Seven Principles" of supply-chain management. Companies today no longer can afford to stockpile inventory to compensate for possible forecasting errors. Effective supplychain management. groups customers by distinct service needs-regardless of industry--and then tailors services to those particular segments. Segment customers based on service needs. they need to postpone product differentiation in the manufacturing process closer to actual consumer demand. supply-chain management leaders enhance margins both for themselves and their suppliers. 2. customer promotions. Instead. Andersen Consulting has stepped forward to provide the needed guidance. 4. companies need to focus intensely on the service requirements and profitability of the customer segments identified. In designing their Supply Chain Management network. 1. The conventional approach of creating a "monolithic" Supply Chain Management network runs counter to successful supply-chain management. Beating multiple suppliers over the head for the lowest price is out.

7. They adopt measures that apply to every link in the supply chain. Instead of forcing into the market product that may or may not sell quickly (and thereby inviting high warehousing costs). and serve customers. quick response (QR). The principles are not easy to implement. and information. vendor managed inventory (VMI). It also should afford a clear view of the flow of products. The organizations that do persevere and build a successful supply chain have proved convincingly that you can please customers and enjoy growth by doing so. "The integrated planning process helps to find solutions that best match client’s requirements and the technical demands of the problem". The names by now have become part of the Supply Chain Management vernacular JIT manufacturing and distribution." . Importantly. information technology must support multiple levels of decision making. And by doing so. services. As one of the cornerstones of successful supply-chain management. finished product.6. because they run counter to ingrained functionally oriented thinking about how companies organize. leading companies have adopted a number of speed-to-market management techniques. These are the tools that help build a comprehensive supply-chain structure. these supply-chain leaders minimize the flow of raw materials. and more. To respond more accurately to actual customer demand and keep inventory to a minimum. they react to actual customer demand. engineering and IT systems and methods. these measurement systems embrace both service and financial metrics. they focus intensely on actual customer demand. such as each account's true profitability. efficient consumer response (ECR). Adopt channel-spanning performance measures. The only way to manage the growing complexity in international Supply Chain Management chains is through the integration of strategy. and packaging materials at every point in the pipeline. operate. Excellent supply-chain measurement systems do more than just monitor internal functions. For one. the Andersen consultants say. Develop a supply-chain-wide technology strategy.

sourcing planning. thus improving inventory visibility and the velocity of inventory movement. and strategic partnering as well as decisions on the number.  The operational level refers to day-to-day decisions such as daily production. short-dated inventory and avoiding more products to go short-dated. they reduce their ownership of raw materials sources and distribution channels. Benchmarking of all operations against competitors. The purpose of supply chain management is to improve trust and collaboration among supply chain partners. routing. certain aspects of the internal processing of materials into finished goods. demand planning. milestone payments. These include purchasing and production decisions.  The tactical level includes decisions that are typically updated anywhere between once every quarter and once every year. while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. production scheduling. outbound operations. As organizations strive to focus on core competencies and becoming more flexible.  The strategic level deals with decisions that have a long-lasting effect on the firm. lead time quotations. . and the movement of finished goods out of the organization and toward the end-consumer. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. and truck loading. inventory policies. what to make internally and what to outsource. location.Activities of supply chain management Supply chain management is a cross-function approach including managing the movement of raw materials into an organization. inbound operations. production operations. and capacity of warehouses and manufacturing plants and the flow of material through the logistics network along with the Information Technology chain operators. including the frequency with which customers are visited. order-promising. This includes decisions regarding product design. supplier selection. The effect is to increase the number of organizations involved in satisfying customer demand. Managing non-moving. and transportation strategies. product life cycle management.

says Youngberg. then work back from that. Morehouse says: Once the correct information is in hand.Application of Supply Chain Management in an organization How can Supply Chain Management (SCM) be applied to an organization? Domino Effect The most important thing is to first understand the customer's true needs. The process delivers an error free shipment. it offers the opportunity to identify bottlenecks that can slow down activities along the entire supply chain. A supply-chain analysis might discover that the seat supplier doesn't have the capability to produce and deliver seats in a variable colour sequence--jeopardising the car manufacturer's ability to offer its customers the kind of service it envisions. under a supply chain management philosophy. it may be helpful to think of the supply-chain dominoes falling backward. provides a direct quality feedback to the operator and allows you to manage each worker based on his or her individual performance = quality + output. Without that information." he explains. Youngberg gives the example of an automaker that wants to build individual cars to order for delivery within one week. such problems will affect delivery to the final customer. "It doesn't provide you with a competitive advantage. providing a higher service level or faster cycle time than is necessary. companies can design their supply-chain processes to provide what the customer really needs. much as a domino falling at the front of a line eventually causes the one at the end to topple. completed in one handling step. too. . but it saddles you with costs that may not [yield] you anything. Because SCM encompasses all processes involved in producing and delivering a product to the customer. In other words. Companies that want to improve their competitive position by reducing their order-to delivery cycle are looking to supply-chain management to help them achieve that goal. That is why it is important to first understand the customer's true needs. To obtain the greatest possible improvement in the total product cycle. all the way back to rawmaterials suppliers at the beginning of the production process. customer demand is what drives the activities required to fulfil that customer's demand. Inevitably. companies risk falling into the "wasted excellence" trap.

etc. grouping IT requirements into three distinct categories. Andersen Consulting stressed the importance of information technology. Rather. retailers.  Finally. suppliers.  First. Electronic data interchange. In developing its seven principles. requires much more than efficient operations. and third-party service options. the facilitator. warehouse-management software.) and public organizations that satisfy the following criteria:  Minimum Number of employees: 20 (at least 4 in management positions). enterprise-wide systems solutions.  Strong management commitment to new ways of working and innovation. on-board computers.) Achieving gains of the magnitude explained above. It demands both executive management-level commitment and superb execution at the operational level. it is the enabler. . services. there are the short-term systems that can handle routine day-to-day transactions like order processing and shipment scheduling. Conditions for implementation (infrastructures required etc. longer-range information systems must enable strategic analysis by providing modelling and other tools that synthesize data for use in high-level "what if" scenario planning. the linkage that connects the various components and partners of the supply chain into an integrated whole.Types of firms /organizations Supply Chain Management can be applied Supply Chain Management could by implemented to all firms (manufacturing firms. On the other hand. from a longer-term perspective. the technology must facilitate planning and decision making. satellite and cellular communications systems. and now the Internet…these are among the information enablers of successful supply-chain management. today's Supply Chain Management professionals must become conversant with information technology. It requires changing the process.  Then. These systems support such activities as demand planning and master production scheduling to optimally allocate resources. These forward-looking systems help managers evaluate distribution centers. IT is not a functional adjunct to supply-chain management.

in fact. (However. Given the dollars on the table. . it's not surprising that top management has become keenly interested in supply-chain management. these costs can approach 75 percent of the operating budget. service requirements they might have. SCM managers widely recognize the need to become even more conversant with information technology if they are to assume a future leadership position. warehouse processes should be defined on those principles. This provides feedback regarding performance not only on speed. Segmentation and integration of processes are keywords. but also on quality. • Total Quality Management requires a review of all processes. • Eliminate unnecessary handling. One recent study found that total supply-chain costs represent the majority share of operating expenses for most companies. Duration and implementation cost of Supply Chain Management Looked at from a cost standpoint. Have errors corrected immediately. there are exceptions) • Design the picking process with care and use automation where it supports people or helps to eliminate simple but unergonomic tasks. In some industries. Miebach SCM experienced through numerous warehouse optimization projects: ideally. A Mercer Management Consulting study conducted among senior corporate executives confirms the high-level interest.Regardless of their current knowledge level. provided equipment and the management of the operation. Handling product is the costly part. Close to one-half of the executives surveyed reported that the programs to improve the supply chain were among the top 10 percent of all companywide initiatives. SCM’s true potential becomes evident. An important finding from the 1996 Ohio State University Survey of Career Patterns in SCM underscores the point. • Human performance in picking is and will be unmatched for most products in most warehouse operations. Do not try to use one warehouse process for all order types whatever size. • Create processes that immediately alert operators about mistakes and don't carry mistakes through to a final quality check.

This approach:  Gives confidence in the recommended solution. and funds flow internally and externally. typically fall into these broad categories:  Designing the long-term supply-chain structure to position the company in the right roles in the right supply chains with the right customers and suppliers. information.IMPLEMENTATION PROCEDURE of SCM Subsequent actions to implement the supply-chain agenda. This ensures the provision of the most appropriate form of assistance.  Determines the associated cost and timescales.It's the study of the current and future needs of business and development of such solutions to meet these requirements. A recommendation follows with the most appropriate and cost effective solution. Consultancy approach is tailored to suit the particular requirements of a client's project. A Flexible Approach Specializes in the design.  Identifies a clear way forward. from a full traditional consultancy assignment.  Reinforcing the supply chain's functional foundation by improving quality and productivity within operational areas such as warehousing. to a placement working within a client's team. which Kearney says should be carried out by individual project teams. development and implementation of solutions to Supply Chain Management problems.  Strategic Analysis  Specification  Implementation a) Strategic Analysis: . . This normally involves the use of computer models to gain a full understanding of the key issues and to examine the practical alternatives. and fleet management.  Enables the next stage of the project to be planned.  Re-engineering supply-chain processes to streamline product. transportation.

generally. These areas must be addressed iteratively and. as they should be.  A clear specification of proposals. The framework below outlines the five key dimensions of Supply Chain Management through the implementation procedure that are required to achieve superior performance. equipment or buildings to be procured to meet the exact requirements of the solution. Work with the client on preparing any organisational changes and training to ensure a smooth start to the new operation. in a hierarchical fashion: 1. minimising the risk of unforeseen cost. the alignment of supply chain strategies with the overall business direction.Refers to responsibility for the tendering of equipment and supplier selection.In this stage.  Competitive equipment procurement. c) Implementation: . on all of the dimensions required for world-class performance. any recommendations have to include operational detail. Strategy--specifically. enabling systems.  Agreed implementation timescales.b) Specification: . This provides:  Correct logical emphasis on each aspect of the solution. Key decision points for managers here include:  What is required to align the supply chain with the business strategy?  What level of customer service must we provide to each customer segment to compete effectively?  Which channels of distribution best meet our goals and our customers' needs? . cost and quality. There has been found that many companies have not thought comprehensively about the design of their supply chains. their attempts to achieve excellence have been focused on perhaps one or two supply chain building blocks--and not. Contract Management through to completion to ensure that the project is progressed in accordance with the requirements of time. Often. contract negotiation and placement.  Finalised project cost budgets.

Questions to consider include:  What level of cross-functional integration is required to manage core processes effectively?  How can we leverage cross-company skills and abilities?  What performance-measurement and reporting structure can help us achieve our objectives? 5.. procurement. Pertinent questions include:      How must the physical network of plants and distribution be structured? Can we rationalise our current network? Can we use contract manufacturing or third-party logistics capabilities? What transportation services can best link together the network of facilities? Which activities should we outsource? 3. harmony. integrated demand planning. Organisation--providing the critical success factors of cohesion.g. Technology. Process--the drive to achieve functional excellence and integration across all major processes. dynamic deployment)?  How can we build linkages with our suppliers and customers? 4. cycle-time compression. Infrastructure. and integration across organisation entities. Managers must ask themselves the following:  What are the core supply chain processes driving the business?  How can we adapt best-in-class approaches to our core processes (e. which affects cost-service performance and establishes the boundaries within which the supply chain must operate. Companies should address the following points:  Do our IT platform and core applications software support world-class SCM?  Where will advanced decision-support capabilities have the greatest impact on business performance? .2. manufacturing. which empowers the supply chain to operate on a new level of performance and is creating clear competitive advantages for those companies able to harness it.

. The end result of this task is a unified commitment to a supply-chain strategy and a clear agenda to achieve that strategy.  Finally. What supply-chain factors and performance levels drive customer buying decisions? What would make one supply chain a winner over others?  Step three in the A. Kearney recommends creation of a supply-chain assessment team that works under the aegis of a companywide steering committee.T. and new technology will affect the desired supply-chain configuration. or other actions that could help narrow any gaps. The agenda-setting process proceeds along 4 key steps. .g.  Step two in the agenda-setting process is to create a vision of the desired supply chain. The evaluation begins with a comparison of business objectives against existing capabilities and performance. the team also works closely with management to assess the organisation’s readiness to pursue needed changes. Through a series of "visioneering" sessions that might also include key customers and suppliers. restructuring. step four prioritises the action items identified in the preceding step and then commits the appropriate resources.T. That exercise addresses such questions as. The team identifies possible re-engineering. To spearhead the effort. channel shifts. This exercise typically reveals where the existing supply chain can achieve immediate competitive advantage and where inefficiencies may be leaving the company vulnerable to the competition. Kearney has developed an instructive framework for establishing a strategic supply-chain agenda and then implementing it. What data are required to manage the core business processes outlined above?  How can we capitalise on advanced communications (e. At this stage. the team considers how such trends as globalisation.  The team's first task is to assess the supply-chain competitiveness of the organisation. intranets and the Internet) in managing the supply chain?  How can we leverage enhanced visibility of customer demand and other key operating parameters? From a different point of view the consulting firm of A. Kearney approach defines those actions required to close the gap between tomorrow's supply-chain vision and today's reality.

and transportation control.  Distribution Strategy: questions of operating control (centralized. push or hybrid). e. work-in-process (WIP) and finished goods. forecasts. to developing the most efficient and effective Logistics and SCM strategy. Trade-offs may increase the total cost if only one of the activities is optimized. including truckload. including demand signals.. delivery scheme. airfreight. direct store delivery (DSD). replenishment strategy (e. Less than truckload (LTL). location and network missions of suppliers. It is imperative to take a systems approach when planning logistical activities.. pool point shipping.  Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. The flow is bidirectional. decentralized or shared).g.  The Bullwhip effect: A problem frequently observed in unmanaged supply chain is the bullwhip effect. e. ocean freight. etc. closed loop shipping. production facilities. direct shipment. Supply chain execution means managing and coordinating the movement of materials. warehouses. transportation. inventory. This effect is an oscillation in the supply chain caused by demand variability. cross docking. pull.Problems addressed in Supply Chain Management Supply chain management must address the following problems:  Distribution Network Configuration: number. including trailer on flatcar (TOFC) and container on flatcar (COFC).g. . railroad. mode of transportation. intermodal transport.  Information: Integration of processes through the supply chain to share valuable information. information and funds across the supply chain. including raw materials. cross-docks and customers. potential collaboration.  Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain. distribution centers.  Inventory Management: Quantity and location of inventory. motor carrier.g. parcel.

Supply chain management of .