Date:

Topic Subject

CHAP 2: INTRODUCTION
SUPPLY CHAIN MANAGEMENT
TO SCM

Essential Questions:

Main Ideas Notes

1. Components of demand

 Average for the period: This is the sum of the demand values
divided by the sample size
 A trend: This is a straight line fitted to the data. A trend exists
when there is a long-term increase or decrease in the data.
Sometimes we will refer to a trend as “changing direction”,
when it might go from an increasing trend to a decreasing trend
 Sesonal element: This is period-by-period variations in demand.
Occurs when a time series is affected by seasonal factors such
as the time of the year or the day of the week. Seasonality is
always of a fixed and known frequency
 Cyclical: These are more difficult to determine because the time
span may be unknown or the cause of the cycle may not be
considered. A cycle occurs when the data exhibit rises and falls
I. PART 1: DEMAND
that are not of a fixed frequency. These fluctuations are usually
FORCASTING
due to economic conditions, and are often related to the
“business cycle”
 Random Variation: These are caused by chance events.
 Autocorrelation: This denotes the persistence of occurrence. It
measures the linear relationship between lagged values of a
time series
2. The role of forecasting
 Forecasting provides an estimate of future demand, the basis
for planning and sound business
 Having accurate demand forecasts allows the purchasing
department to order the right amount of parts and
materials, the operations department to produce the right
quantity of products, and the logistics department to
deliver a correctly sized order

The total value generated = [What customer pays] – [Total effort

 expended to fulfill]

3. The different Logistic vs SCM

Logistics
Managing flow of items,
information, cash and ideas
SCM
Managing a network consisting
of suppliers, manufacturers,
distributors and customers

4. Differences between services and goods

intangible process that cannot be

Service weighed or measured
requires some degree of
interaction with the custome
inherently heterogeneous and can
produce unpredictable outcome
perishable and time dependent,
and unlike goods, they can’t be
stored
- Four features of Services:
 Supporting facility (location, decoration, layout, architectural
appropriateness, supporting equipment)
 Facilitating goods (variety, consistency, quantity of the
physical goods that go with the service; for example, the food
items that accompany a meal service)
 Explicit services (training of service personnel, consistency of
service performance, availability and access to the service, and
comprehensiveness of the service)
  Implicit services (attitude of the servers, atmosphere, waiting
time, status, privacy and security, and convenience)

5. Efficiency, effectiveness, and value

A ratio of the actual output of a process

Efficiency relative to some standard. Also, being
“efficient” means doing something at the
lowest possible cost
Effectiveness Doing the things that will create the most
value for the customer
Value The attractiveness of a product relative to its
price.
6. Current issues in supply chain management
 Coordinating the relationships between mutually supportive
but separate organizations
 Optimizing global supplier, production, and distribution
networks.
 Managing customer touch points.
 Raising senior management awareness of SCM as a significant
competitive weapon
7. The Major Challenges

 Variable demand of product

Uncertainty (shorter lifecycles)
 Variable manufacturing yield
 Unreliable sourcing of raw
materials
 Inconsistent transit lead times

Increased  Exploding number of Stock Keeping

complexity Units (SKUs)
 Higher and diverging customer
demands
 New & merging channels (Omni-
Channel)

Global operations

Summary