SCM wk. 1-4

• Supply Chain includes all parties involved in fulfilling a customer’s request
• Supply Chain encompasses all functions involved in receiving and delivering to the customer
• Supply Chain is dynamic and flows constantly
• Supply Chain Stages:

  • Raw Materials
  • Manufacturing
  • Wholesalers / Distributors
  • Retailers
  • Customers
• Supply Chain Flow generates costs, proper management is a must:

  • Information Flow: transmission of data and information throughout the supply chain to coordinate and manage various activities
  • Product Flow: physical movement of goods or services from suppliers to customers
  • Financial Flow: the transfer of money and financial transactions between different parties in the supply chain
• Supply Chain Management involves the management of the entire manufacturing flow of products/services from raw materials to delivery of the finished product to the customer
• Value in Supply Chain:

  • It is the worth of the final product to the customers and the costs for it to be made
• Objective of Supply Chain Management:

  • Maximizing the overall generated value
• Commercial Supply Chain:

  • Value is strongly correlated with profitability (supply chain surplus)
  • The higher the profit, the more successful the supply chain is
  • There is only one source of revenue: the customers
• Effective Supply Chain Management involves the management of:

  • Supply Chain Assets
  • Product Information
  • Fund Flows
• Facilities in the Supply Chain are the actual physical locations
• Inventory in the Supply Chain encompasses all raw materials, work in process, and finished goods within the chain
• Transportation in the Supply Chain involves moving inventory from point to point and can be in-house or outsourced
• Information in the Supply Chain includes data processing/analysis, interpretation, and benchmarking
• Sourcing in the Supply Chain involves getting the right persons for the job
• Pricing in the Supply Chain determines how much a company will charge and can affect consumer behavior
• Distribution involves steps to move and store a product from the first to the last stage in the supply chain
• Distribution Management keeps distribution organized and customers satisfied
• Distribution Channels:

  • Direct Channel: Manufacturer - Customers
  • Indirect Channel: Manufacturer - Distributors - Wholesalers - Retailers - Customers
• Factors influencing distribution network design:

  1. Customer needs that are met

  2. Cost of meeting customer needs
• Evaluation of customer service impact and cost includes factors like response time, product variety, product availability, customer experience, time to market, order visibility, and returnability
• Change in distribution network design affects inventory, transportation, facilities and handling, and can lead to economies of scale
• Economies of Scale:

  • More production = Lower unit cost
• Distribution Network Designs:

  1. Manufacturer storage with direct shipping

  2. Manufacturer storage with direct shipping and in-transit merge

  3. Distributor storage with package carrier delivery

  4. Distributor storage with last-mile delivery

  5. Manufacturer/distributor storage with customer pickup

  6. Retail storage with customer pickup
• Direct Customer Shipping is better for a large variety of high-value, low-demand products with low inventory costs and high transportation costs
• Local Inventory is suitable for high-demand products with large transportation costs
• 1. E-Business Effects on the design of distribution networks include centralizing inventory, improving customer experience, increasing response time, reducing facility costs, and increasing transportation cost on low-value products