Undrstanding Supply Chain (1).pptx

UNDERSTANDING THE SUPPLY CHAIN Learning Objectives 1. Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm 2. Identify the three key supply chain decision phases and explain the significance of each one. 3. Describe the cycle and push/pull view...

UNDERSTANDING THE SUPPLY CHAIN Learning Objectives 1. Discuss the goal of a supply chain and explain the impact of supply chain decisions on the success of a firm 2. Identify the three key supply chain decision phases and explain the significance of each one. 3. Describe the cycle and push/pull views of a supply chain. 4. Classify the supply chain macro processes in a firm. WHAT IS A SUPPLY CHAIN? A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. Functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service. A supply chain is dynamic and involves the constant flow of information, product, and funds between different stages A typical supply chain may involve a variety of stages. These supply chain stages include: Customers Retailers Wholesalers/ distributors Manufacturers Component/raw material suppliers Each stage in a supply chain is connected through the flow of products, information, and funds. These flows often occur in both directions and may be managed by one of the stages or an intermediary. The appropriate design of the supply chain depends on both the customer's needs and the roles played by the stages involved. THE OBJECTIVE OF A SUPPLY CHAIN The objective of every supply chain should be to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in filling the customer's request. For most commercial supply chains, value will be strongly correlated with supply chain profitability (also known as supply chain surplus), the difference between the revenue generated from the customer and the overall cost across the supply chain The higher the supply chain profitability, the more successful is the supply chain. Supply chain success should be measured in terms of supply chain profitability and not in terms of the profits at an For any supply chain, there is only one source of revenue: the customer All flows of information, product, or funds generate costs within the supply chain. Thus, the appropriate management of these flows is a key to supply chain success. Effective supply chain management involves the management of supply chain assets and product, information, and fund flows to maximize total supply chain profitability. THE IMPORTANCE OF SUPPLY CHAIN DECISIONS There is a close connection between the design and management of supply chain flows (product, information, and funds) and the success of a supply chain. Supply chain design, planning and operation decisions play a significant role in the success or failure of a firm. ·