Chapter 1

• Supply Chain

  System of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to customer
• Types of supply chain management

  • Service chains
  • Concentrated chains
  • Retail and distribution chains
  • Batch manufacturer chains
• Service chains


  Implement the mission statements of organisations, e.g. banks, hospitals, insurance companies etc. which are concerned with the delivery of services
• Concentrated chains


  Found in businesses with few customers and many suppliers who apply electronic data interchange systems and just-in-time deliveries, e.g. the automotive industry
• Retail and distribution chains


  Compromise of many customers but relatively few sellers -which apply vendor-managed inventory software
• Batch manufacturer chains


  Consist of many customers and suppliers with complicated relationship webs
• Supply chain management

  Managing upstream and downstream value-added flow of materials, final goods, and related information among suppliers, resellers and final consumers
• Five (5) components of supply chain management

  • Planning
  • Sourcing
  • Making
  • Delivering
  • Returning
• Elements of supply chain management

  • Purchasing
  • Operations
  • Distribution
  • Integration
• Current TRENDS in supply chain management

  • Reducing supply chain cost
  • Improved supply chain responsiveness
  • Greening of the supply chain
  • Expanding the supply chain
• Benefits of supply chain management approach

  • Enhanced product and service quality
  • Improved supply chain communication and collaboration
  • Reduced cost by eliminating waste activity
  • Faster lead time for product development and delivery-agile supply
  • Sharing demand forecasting and planning information enables just-in-time supply
  • Access to complementary resources and capabilities
  • Improved responsiveness to customer requirements
• Supply chain performance drivers

  • Facilities
  • Inventory
  • Information
  • Sourcing
  • Pricing
  • Transport
• Key functions of supply chain management

  • Procurement
  • Logistics
  • Service development
  • Customer service and order fulfilment
  • Client relationship management
  • Supply chain strategy
• Porter's value chain

  Composes of primary and secondary support activities that can lead to a competitive advantage when properly configured
• Difference between supply chain and value chain

  • Value chain focuses primarily on internal participants whereas supply chain focuses on both internal and external participants
  • Supply chain is a subset of value chain
  • All personnel within a firm are part of the value chain
  • At an organisational level the value chain is broader than the supply chain because it includes all the activities in the form of primary and support activities
• Primary Activities


  • Inbound logistics: processes that are involved in the receiving, storing, and internal distribution of the raw materials of a product or service
  • Production: all the activities that convert inputs of products and services into semi-finished or finished products
  • Outbound: all the activities that are related to delivering the products or services to customers
  • Marketing and sales: process related to putting the products and services to the market
  • Services: activities that maintain the value of the products and services to customers as soon as a relationship has developed based on the procurement
• Support activities

  • Firm infrastructure: support activities that enable the firm to maintain its daily operations
  • Human resources management: supports activities in which the development of the firm's workforce is the key element
  • Technology development: relates to the development of the products or services of the firm, both internally and externally
  • Procurement: support activities related to obtaining services or goods so that the firm can supply the customer
• Logistics management

  Logistics is that part of supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services and information to satisfy the customer
• Activities of the logistics system

  • Customer service
  • Demand forecasting
  • Packaging
  • Purchasing
  • Reverse logistics
  • Order processing
  • Materials handling
  • Warehousing and storage
• To archive logistical integration within the supply chain context, the following should be achieved

  • Responsiveness
  • Variance reduction
  • Inventory reduction
  • Consolidation
  • Quality
  • Life-cycle support
• Integrated logistics

  • Inventory
  • Transportation
  • Warehousing
  • Facility network
  • Order processing