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MD 021 - Management and Operations Supply-Chain Management Outline

Definitions Developing the supply chain Strategic management of the supply chain


Supply Chain The interconnected set of linkages bet een suppliers of materials and services that spans the transformation of ra materials into products and services and delivers them to a firm!s customers

Supply Chain Management Synchroni"ing a firm!s functions and those of its suppliers to match the flo of materials# services# and information ith customer demand

Developing the Supply Chain Make vs. Buy $ros &ncreased control over price# 'uality# etc( )conomies of combined operations $roprietary products protected -o capital costs Speciali"ation %ompetition &ncreased fle+ibility %ons %apital costs *educed fle+ibility to change partners *educed volume fle+ibility .nfavorable allocation of product -ack of control over price# 'uality# etc( Transaction costs



Developing the Supply Chain Supplier Relations Competitive Orientation The vie that negotiations bet een buyer and seller is a "ero-sum game( Often used hen a firm represents a significant share of the supplier!s sales or many substitutes are available( )+ample0 1alMart Cooperative Orientation The vie that the buyer and seller are partners( &ncludes sole sourcing( Often used ith strategically important and2or high value-added components( )+ample0 McDonald!s Mixed strategy Seeks to combine the advantages of the competitive orientation 3e(g( lo prices4 ith the cooperative orientation 3e(g( fe suppliers4( )+ample0 Dell %omputer

Strategic Management of the Supply Chain Efficient Supply Chains The purpose of efficient supply chains is to coordinate the flo of materials and services so as to minimi"e inventories and ma+imi"e the efficiency of the manufacturers and service providers in the chain( )fficient supply chains ork best hen demand is predictable and products2services are stable( )+amples of competitive priorities0 lo cost# consistent 'uality# on-time delivery( Responsive Supply Chains The purpose of responsive supply chains is to react 'uickly to market demands by positioning inventories and capacities in order to hedge against uncertainties in demand( *esponsive supply chains ork best hen demand is unpredictable# ne product introduction is fre'uent# and product variety is high( )+amples of competitive priorities0 development speed# fast delivery# customi"ation# volume fle+ibility# high-performance design 'uality(