Chapter 10 – Extending the Organization – Supply Chain Management
BASICS OF SUPPLY CHAIN
SCM – the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability
The supply chain has three main links.
1. Materials flows from suppliers and their upstream suppliers at all levels
2. Transformation of materials into semi-finished products, or the organization’s own production processes
3. Distribution of products to customers and their downstream customers at all levels
INFORMATION TECHNOLOGY’S ROLE IN THE SUPPLY CHAIN
- To create the integrations or tight process and information linkages between functions within a firm such as marketing, sales, finance, manufacturing, and distribution – and between firms, which allow the smooth, synchronized flow of both information and product between customers, suppliers and transportation providers across the supply chain
Visibility
- ABILITY TO VIEW ALL AREAS UP AND DOWN THE SUPPLY CHAIN
- BULL WHIP EFFECT OCCURS WHEN DISTORTED PRODUCT DEMAND INFORMATION PASSES FROM ONE ENTITY TO THE NEXT THROUGH THE SUPPLY CHAIN
- INFORMATION TECHNOLOGY ALLOWS ADDITIONAL VISIBILITY IN THE SUPPLY CHAIN.
Consumer behavior
- DEMAND PLANNING SOFTWARE GENERATES DEMAND FORECAST USING STATITICAL TOOLS AND FORECASTING TECHNIQUES
Competition
- SUPPLY CHAIN PLANNING SOFTWARE, uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory. SCP depends entirely on information for its accuracy.
- Supply chain execution (SCE) software automates the different steps and stages of the supply chain. This could be as simple as electronically routing orders from a manufacturer to a supplier
Speed
- NEW FORM OF SERVE, TELECOMMUNICATION ENABLING COMPANIES TO PERFORM ACTIVITIES THAT WERE ONCE NEVER THOUGHT POSSIBLE.
- ABILITY TO SATISFY CONTINUALLY CHANGING CUSTOMER REQUIREMENT EFFICIENCY, ACCURATELY AND QUICKLY.
SUPPLY CHAIN MANAGEMENT SUCCESS FACTOR
· To succeed in today’s competitive markets, companies must align their supply chain with the demands of the markets they serve.
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