Professional Documents
Culture Documents
Management)
Monday, 5 December 2016
8:54 PM
What is Supply Chain Management?
Supply Network
o All the operations that were linked together so as to provide goods and
services through to the end customers
Supply Chain
o Strands of linked operations under an organization
1 Speed
Two Meanings
1 How fast customers can be served
2 The time taken for goods and services to move through
the chain
1 Dependability
Dependability of throughput time
Often measured as 'on-time, in full
1 Flexibility
The chain's ability to cope with changes and disturbances
'Supply Chain Agility'
1 Cost
The supply chain as a whole incurs costs that derive from each
operation in a chain doing business with each other
Cost of finding the appropriate suppliers, setting up
contractual agreements, monitoring supply performance,
transporting products between operations, holding
inventories, etc.
Supplier Selection
o Choosing appropriate suppliers should involve trading off alternative
attributes
o Choosing suppliers should involve evaluating the relative importance of all
these factors
o Multi Sourcing
Source each individual product or service from more than one supplier
Pros:
Purchaser can drop the price down by competitive tendering
Can switch sources in case of supply failure
Wide sources of knowledge and expertise to tap
Cons:
Difficult to encourage commitment by supplier
Less easy to develop effective SQA
More effort needed to communicate
Suppliers are less likely to invest in new processes
More difficult to obtain scale economics
Benefits of E-Procurement
1 Convenient and Efficient Electronic Ordering (It's easier to
buy from them)
2 Shorter Requisition and Fulfillment Cycles (It's faster to
buy from them)
3 Centralized Spending Controls (It's easier to keep track of
what you are buying from them)
4 Standardized Global IT Catalogue (Its less confusing to buy
from them)
Electronic Marketplaces
Also known as Infomediaries/ Cybermediaries
An information system that allows buyers and sellers to exchange
information about prices and product/service offerings
Global Sourcing
Global Sourcing
The process of identifying, evaluating, negotiating, and configuring
supply across multiple geographies.
3 Purchase Price
The total price which includes transaction and other costs
related to the product/service delivered
5 Transportation Costs
Transportation and freight costs
Costs of moving products or services from where they are
produced to where they are required
Advantages:
Maintain competition between alternative suppliers
Suppliers can gain natural economies of scale
Enables suppliers to offer products and services at a lower
prices (economies of scale)
Innovations can be exploited no matter where they originate
Help operations concentrate on core activities
Disadvantages
Supply Uncertainties
Choosing who to buy from takes time and effort
Strategic risks
Over reliance on outsourcing can hollow out the companies.
Leaving it with no internal capabilities
Virtual Operations
An extreme form of outsourcing
Rely on a network of suppliers who can provide products and services
on demand.
A network may be formed only for one project and then disbanded
once the project ends
Advantages:
Virtual operations are flexible and the risks of investing are far
lower than in a conventional operation
Disadvantages
Has no solid base of resources
May find it difficult to hold onto and develop a unique core
of technical expertise
Resources will also be available to the competition
Partnership Operations
Relatively enduring inter-firm cooperative agreements, involving
flows and linkages that use resources and/or governance
structure from autonomous organizations, for the joint
accomplishment of individual goals linked to the corporate
mission of each sponsoring firm.
Bullwhip Effect
Used to describe how a small disturbance at the downstream and of a
supply chain causes increasingly large disturbances, errors,
inaccuracies and volatility as it works its way upstream.
Bullwhip Effect can be reduced by information sharing, aligning
planning and control decisions. Improving flow efficiency and allowing
better forecasting
1 Benchmarking Performance
Performance metrics in the SCOR model are also structured
by level, as is process analysis.
Level 1 Metrics
Yardsticks by which an organization can measure how
successful it is in achieving its desired positioning
within the competitive environment, as measured bu
the performance of a particular supply chain
Channel Alignment
The adjustment of scheduling, material movements, stock levels, pricing
and other sales strategies so as to bring all the operations in the chain
into line with each other.
Operational Efficiency
The efforts that each operation in the chain can make to
1. Reduce its own complexity
2. Reduce the cost of doing business with other operations in the supply
chain
3. Increase throughput time