scm-introduction [compatibility mode]
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Introduction to
Supply Chain
Management
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What Is a Supply Chain?
Flow of products and services from: Raw materials manufacturers Intermediate products manufacturers End product manufacturers Wholesalers and distributors and Retailers
Connected by transportation and storageactivities
Integrated through information, planning,and integration activities
Cost and service levels
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Two Other Formal Definitions
The design and management of seamless, value-added process across organizational boundariesto meet the real needs of the end customer
Institute for Supply Management
Managing supply and demand, sourcing rawmaterials and parts, manufacturing and assembly,warehousing and inventory tracking, order entryand order management, distribution across allchannels, and delivery to the customer
The Supply Chain Council
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PC Industry Supply ChainTracing back the screen you stare at for the bulk of your
time.
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Source
Supplier
Supplier
Distributor
Distributor
Retailer
End-User
Converter
Converter Consumers
Information Flow
Funds/Demand Flow
Value-Added Services
Material Flow
Reuse/Maintenance/After Sales Service Flow
SCM Definition
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Key Observations
Every facility that impacts costs need to beconsidered
Suppliers suppliers
Customers customers
Efficiency and cost-effectiveness throughout thesystem is required
System level approach
Multiple levels of activities Strategic Tactical Operational
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Other Related Observations
Supply chain strategy linked to theDevelopment Chain
Challenging to minimize system costs andmaximize system service levels
Inherent presence of uncertainty and risk
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1.2 The Development Chain
FIGURE 1-2: The enterprise development and supply chain
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1.3 Global Optimization
Geographically dispersed complexnetwork
Conflicting objectives of different facilities
Dynamic system Variations over time
Matching demand-supply difficult
Different levels of inventory and backorders Recent developments have increased
risks Lean production/Off-shoring/Outsourcing
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Global Apparel Value ChainTracing back the dress you are wearing
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QC & Shipping
[Hong Kong]
Product Design
[Hong Kong]
Zippers+
[Japan+]
Stitching
[Indonesia]
Weaving
[Taiwan]
Yarn Spinning
[Korea]
An Illustration: How Li & Fung Limited Might Make a Dress
Globally Dispersed Manufacturing
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1.4 Uncertainty and Risk FactorsMatching Supply and Demand a Major
Challenge
REASONS EXAMPLES
Raw material shortagesInternal and supplier partsshortagesProductivity inefficiencies
Boeing Aircrafts inventory write-down of $2.6 billion
Sales and earnings shortfallLarger than anticipated inventories
Sales at U.S. Surgical Corporationdeclined 25 percent, resulting in aloss of $22 million
Stiff competition
General slowdown in the PCmarket
Intel reported a 38 percent declinein quarterly profit
Higher than expected orders fornew products over existingproducts
EMC Corp. missed its revenueguidance of $2.66 billion for thesecond quarter of 2006 by around
$100 million
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