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Understanding The Supply Chain
Understanding The Supply Chain
Understanding
the Supply
Chain
1-1
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
Traditional View: Logistics in the
US Economy (2006, 2007)
Freight Transportation $809, $856 Billion
Inventory Expense $446, $487 Billion
Administrative Expense $50, $54 Billion
Total Logistics Costs $1.31, $1.4 Trillion
Logistics Related Activity 10%, 10.1% of GNP
Source: 18th and 19th Annual State of Logistics Report – Logistics Magazine
Profit
Profit 4%
Logistics
Cost
Logistics Cost 21% Marketing
Cost
Chemical
Plastic Tenneco
manufacturer
Producer Packaging
(e.g. Oil Company)
Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g. Oil Company)
Information
Product
Customer
Funds
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. 1-21
Cycle View of a Supply Chain
Each cycle occurs at the interface between two successive
stages
Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Cycle view clearly defines processes involved and the
owners of each process. Specifies the roles and
responsibilities of each member and the desired outcome
of each process.
Customer
Order Arrives