- The average company spends nearly half of every dollar that it earns on production
- In the past, companies focused primarily on manufacturing and quality improvements to influence their supply chains
- The supply chain has three main links.
T 2. Transformation
of materials into semi-finished products, or the organization’s own production
processes
3. Distribution of products to customers and their
downstream customers at all levels
Basic of Supply Chain
VISIBILITY
- Supply chain visibility - the ability to view all areas up and down the supply chain
- Bullwhip effect - occurs when distorted product demand information passes from one entity to the next throughout the supply chain
- Companies can respond faster and more effectively to consumer demands through supply chain enhances
- Demand planning software - generates demand forecast using statistical tools and forecasting tecniques
- Supply chain planning (SCP) software - uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain
- Supply chain execution (SCE) software - automates the different steps and stages of the supply chain
Supply Chain Management Success Factors
- SCM industry best practices include:
- Make the sale to suppliers
- Wean employees off traditional business practices
- Ensure the SCM system supports the organizational goals
- Deploy in incremental phases and measure and communicate success
- Be future oriented
SCM Success Stories
- Numerous decision support systems (DSSs) are being built to assist decision makers in the design and operation of integrated supply chains
- DSSs allow managers to examine performance and relationships over the supply chain and among:
- Manufacturers
- Distributors
- Other factors that optimize supply chain performance
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