1、Unit Seven Supply Chain Unit Seven Supply Chain ManagementManagementPre-reading Discussion v 1.What is a supply chain?v 2.What is supply chain management(SCM)?v 3.Why is supply chain management important to a company?Introductionv 1One of the most significant changes of modern business management is
2、 that individual businesses no longer compete as sole entities,but rather as supply chains.Business management has entered the era of internet work competition.Instead of brand versus brand or store versus store,it is now suppliers-brand-store versus suppliersbrandstore,or supply chain versus supply
3、 chain.In this competitive environment,the final success of the single business will depend on managements ability to integrate the companys network of business relationships.(Christopher,1998)What Is a Supply Chain?v 2A supply chain is a network of retailers,distributors,transporters,storage facili
4、ties and suppliers that participate in the production,delivery and sale of a product to the consumer.The supply chain is typically made up of multiple companies who coordinate activities to set themselves apart from the competition.v 3A supply chain has three key parts:supply,manufacture and distrib
5、ution.Supply focuses on the raw materials supplied to manufacturing,including how,when and from what location.Manufacture focuses on converting these raw materials into finished products.Distribution focuses on ensuring these products reaching the consumers through an organized network of distributo
6、rs,warehouses and retailers.Supply Chain Participantsv 4In fact,the participants of a supply chain include all companies or organizations with whom the focal company has business relationship directly or indirectly through its suppliers or end users.In any given supply chain,there is some combinatio
7、n of companies who perform different functions.There are companies that are suppliers,manufacturers,distributors or wholesalers,retailers,and companies or individuals who are the customers,or the final consumers of a product.Whats more,there will be other companies that are service providers that pr
8、ovide a range of needed services.However,the basic participants of a supply chain can be summarized as:v 5Suppliers:They are organizations that provide goods and/or services to a purchasing organization(a manufacturer or a distributor).v 6Manufacturers(producers):They are the companies that make a p
9、roduct.This includes companies that are producers of raw materials and companies that are producers of finished goods.Producers can also create products that are intangible items such as music,entertainment,software and design.v 7Distributors:They are companies that take inventory in bulk from produ
10、cers and deliver the products to customers.Distributors are also known as wholesalers.They typically sell to other businesses and they sell products in larger quantities than an individual consumer would usually buy.A distributor v is typically an organization that buys from producers and sells to c
11、onsumers.In addition to product promotion and sales,other functions the distributor performs are inventory management,warehouse operation,product transportation as well as customer support and post-sales service.v 8Retailers:They are companies that stock inventory and sell in small quantities to the
12、 general public.This organization also closely follows the preferences and demands of the customers that it sells to.It advertises to its customers and often uses some combination of price,product selection,service and convenience as the primary draw to attract customers for the products it sells.v
13、9Customers:They are organizations that purchase and use a product.A customer organization may purchase a product in order to transfer it intov another product that they in turn sell to other customers.Or a customer may be the final end user of a product who buys the product in order to consume it.v
14、10 Service providers:They are organizations that provide services to producers,distributors,retailers and customers.Service providers have developed special expertise and skills that focus on a particular activity needed by a supply chain.Some common service providers in any supply chain are provide
15、rs of transportation services and warehousing services.Service providers deliver services such as making loans,which is financial service.Some provide product design,market research and advertising.Still other service v providers offer information technology and data collection services.What Is Supp
16、ly Chain Management?v 11Generally speaking,the management of multiple relationships across the supply chain is referred to as“supply chain management”.Supply chain management is the process of planning,implementing and controlling the operations of the supply chain with the purpose to satisfy custom
17、ers requirements as efficiently as possible.v 12There is a difference between the concept of supply chain management and the traditional concept of logistics.Logistics typically refers to activities that occur within a single organization and supply chain refers to networks of companies that work to
18、gether and coordinate their actions to deliver a product to market.Traditional logistics also focuses its attention on activities such as procurement,v distribution,maintenance and inventory management.Supply chain management includes all of traditional logistics and also includes activities such as
19、 marketing,new product development,finance and customer service.v 13 Effective supply chain service management requires improvements in both customer service levels and the internal operating efficiencies of the companies.Customer service mostly means that the company provides good service to meet t
20、he customers needs.Internal efficiency for organizations in a supply chain means that these organizations can get a higher profit on their investments and that they can lower their operating and sales expenses.v 14There is a basic pattern to the practice of supply chain management.Each supply chain
21、has its own unique way of management.Companies in any supply chain must make decisions regarding their actions in five areas:v 15 Production:What products does the market want?How many of which products should be produced and by when?v 16 Inventory:What inventory should be stocked at each stage in a
22、 supply chain?How much inventory should be held as raw materials,semi-finished or finished goods?v 17 Location:Where should facilities for production and inventory storage be located?Where are the most efficient locations for production and for storage of inventory?Should existing facilities be v us
23、ed or new ones be built?Once these decisions are made,they determine the possible paths available for the product to flow through delivery to the final consumers.v 18 Transportation:How should inventory be moved from one supply chain location to another?Air freight and truck delivery are generally f
24、ast and reliable but they are expensive.Shipping by sea or rail is much less expensive but usually involves longer delivery time and more uncertainty.That when is suitable to use what kind of transportation method is also a question.v 19Information:How much data should be collected and how much info
25、rmation should be shared?Timely and correct information holds the promise of better v coordination and better decision making.With good information,people can make effective decisions about what to produce and how many,about where to locate inventory and how to transport it.v 20 According to all the
26、se analyses,we can make the following definition that supply chain management is the coordination of production,inventory,location and transportation among the participants in a supply chain to achieve efficiency for the market being served.(Michael Hugos,2003)The goal of supply chain management is to increase sales of goods and services to the customers while at the same time reducing both inventory and operating expenses.
