scm, objective, proces view & importance of flow

8/11/2019 SCM, Objective, Proces View & Importance of Flow

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What is a supply chain?

Here is this book’s explanation of “supply chain”:

“A supply chain consists of all stages involved, directly or indirectly, in

fullling a customer reuest! "he supply chain not only includes themanufacturer and suppliers, but also transporters #arehouses,retailers, and customers themselves!A supply chain is dynamic and involves the constant $o# ofinformation, production and funds bet#een di%erent stages! &achstage of the supply chain performs di%erent processes and interacts#ith other stages of the supply chain!”

A typical supply chain may involve a variety of stages such as:

• 'ustomers

• (etailers

• )holesalers*distributors• +anufacturers

• 'omponent*ra# material suppliers!

ome supply chain has all the stages but some has less according tothe business’s environment! &ach stage could be a market or ahierarchy -please reference the rst class material.! /n /nternet supplychain management, the designer must analy0e the business’senvironment identies these stages and types!

The Objective of a Supply Chain

/n a supply chain, each stage generates some value! And the ob1ectiveof every supply chain is to maximi0e the overall value generated! "hevalue a supply chain generates is the di%erence bet#een #hat the nalproduct is #orth to the customer and the e%ort the supply chainexpends in lling the customer’s reuest!

upply chain protability is the total prot to be shared across allsupply chain stages not the single stage’s maximum prot! )e mustconsider the entire chain’s prot! "he higher the supply chain

protability, the more successful the supply chain!

/’m emphasi0ing this one more time “upply chain managementinvolves the management of $o#s bet#een and among stages in asupply chain to maximi0e total protability”!

Decision Phases in a Supply Chain



A upply chain needs three phases to build! "hese phases arestrategy or design phase, planning phase, and operation phase!

2. upply chain strategy or design!/n this phase, #e must consider ho# to structure the supply

chain! 3ocation, capacities of production and #arehousing facilities #illbe considered in this phase too!

4. upply chain planning/n this phase, companies dene a set of operating policies that

govern short5term operations! "hey collect data and produce marketand inventory level forecast! And they decide #hether they needsubcontract some of manufacturing or not in this phase!

6. upply chain operation/n this phase companies make decisions regarding individual

customer orders! "hen, allocate individual orders to inventory orproduction! And they also manage shipments, delivery and schedulesof trucks!

Process View of a Supply Chain

A supply chain is a seuence of processes -please reference the rstclass material. and $o#s that take place #ithin and bet#een di%erentsupply chain stages and combine to ll a customer need for a product! "here are di%erent vie#s of this process:

'ycle vie#: "he processes in a supply chain are divided into a seriesof cycles, each performed at the interface bet#een t#o successivestages of a supply chain!

'ycle 7ie# of upply 'hain 8rocess has follo#ing cycles

• 'ustomer order cycle

• (eplenishment cycle -at retailer*distributor.

• +anufacturing cycle -distributor*manufacturer.

• 8rocurement cycle -manufacturer*supplier .

"he information $o#s from top to bottom and the products $o# frombottom to top!



/n the customer order cycle, there are processes performing customerorder cycle!



'ustomer 9rder 'ycle

(eplenishment 'ycle



+anufacturing 'ycle

8rocurement 'ycle

4. 8ush*8ull vie#: "he processes in a supply chain are divided intot#o categories depending on #hether they are executed in response toa customer order or in anticipation of customer orders! 8ull processesare initiated by a customer order, and push processes are initiated and

performed in anticipation of customer orders! "he pull process #orks#ell #ith a custom ordering as the push process #orks #ell #ith massproduction!

ome supply chain has both push and pull in its chain and #e canidentify this push*pull process boundary!



Here is an example of 33 eans supply chain! "he customer order cycleis a pull process and replenishment, manufacturing and procurementcycles are push process!

"he ;ell 'omputer’s upply 'hain &xample

/n this company, the customer order and manufacturing cycles are pullprocess and only the procurement cycle is push process!

The !portance of Supply Chain "lows



"here is a close connection bet#een the design and management ofsupply chain $o#s and the success of a supply chain!

e!g!. ;ell has only 2< days of inventory contrast to other pc makers of=< to 2<< days! "he success of the ;ell supply chain is facilitated by

sophisticated information exchange! -'ustomi0ed #eb pages. andoutsourcing!

;ell 'omputer’s upply 'hain tages

scm, objective, proces view & importance of flow

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