A sequence of organizations—their facilities, functions, and activities—that are involved in producing and deliveriproduct ng a or service
Supply chain management is the strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management.
Logistics is the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information. Logistics management includes management of inbound and outbound transportation, material handling, warehousing, inventory, order fulfillment and distribution, third-party logistics, and reverse logistics (the return of goods from customers).
Key aspects relate to:
1. Determining the appropriate level of outsourcing.
2. Managing procurement.
3. Managing suppliers.
4. Managing customer relationships.
5. Being able to quickly identify problems and respond to them.
Logistics is the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information. Logistics management includes management of inbound and outbound transportation, material handling, warehousing, inventory, order fulfillment and distribution, third-party logistics, and reverse logistics (the return of goods from customers).
Risk Management and Resiliency
15.4 ERP AND SUPPLY CHAIN MANAGEMENT
ETHICS AND THE SUPPLY CHAIN
Every company should develop an ethical supply chain code to guide behavior. A code should cover behaviors that involve customers, suppliers, suppliers’ behaviors, contract negotiation, recruiting, and the environmental issues. Key steps companies can take to reduce the risk of damages due to unethical supplier behavior are to choose those that have a reputation for good ethical behavior; incorporate compliance with labor standards in supplier contracts; develop direct, long-term relationships with ethical suppliers; and address quickly any problems that occur
SMALL BUSINESSES
Strategic Responsibilities
Key Tactical and Operational Responsibilities
Purchasing Interfaces
Operations constitute the main source of requests for purchased materials, and close cooperation between these units and the purchasing department is vital if quality, quantity, and delivery goals are to be met.
Accounting is responsible for handling payments to suppliers and must be notified promptly when goods are received in order to take advantage of possible discounts.
Design and engineering usually prepare material specifications, which must be communicated to purchasing.
Receiving checks incoming shipments of purchased items to determine whether quality, quantity, and timing objectives have been met, and it moves the goods to temporary storage.
Suppliers or vendors work closely with purchasing to learn what materials will be purchased and what kinds of specifications will be required in terms of quality, quantity, and deliveries
Purchasing receives the requisition.
Purchasing selects a supplier
Monitoring orders.
Receiving orders.
Centralized purchasing
Decentralized purchasing
Overseeing the shipment of incoming and outgoing goods comes under the heading of traffic management . This function handles schedules and decisions on shipping method and times, taking into account costs of various alternatives, government regulations, the needs of the organization relative to quantities and timing, and external factors such as potential shipping delays or disruptions (e.g., highway construction, truckers’ strikes). Computer tracking of shipments often helps to maintain knowledge o
Radio frequency identification (RFID) is a technology that uses radio waves to identify objects, such as goods in supply chains. This is done through the use of an RFID tag that is attached to an object. The tag has an integrated circuit and an antenna that project information or other data to network-connected RFID readers using radio waves. RFID tags can be attached to pallets, cases, or individual items. They provide unique identification, enabling businesses to identify, track, monitor, or locate practically any object in the supply chain that is within range of a tag reader
RFID eliminates the need for manual counting and bar-code scanning of goods at receiving docks, in warehouses, and on retail shelves. This eliminates errors and greatly speeds up the process
Without careful management, demand variations can easily cause inventory fluctuations to get out of control. Variations in demand at the consumer end of a supply chain tend to ripple backwards through the chain. Moreover, periodic ordering and reaction to shortages can magnify variations, causing inventories to oscillate in increasingly larger swings. This is known as the bullwhip effect , because the pattern of demand variation is analogous to the motion of a bullwhip
in response to a slight jerking of the
Handle. Consequently, shortages and
surpluses occur throughout the chain,
resulting in higher costs and lower
customer satisfaction, unless
preventive action is taken.
Strategic sourcing is a systematic process for analyzing the purchase of products and services to reduce costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance
To be effective, organizations must adopt a systems approach to both the internal and external portions of their supply chains, being careful to make decisions that are consistent with optimizing the supply chain
. Lot size–inventory trade-off. Producing or ordering large lot sizes yields benefits in terms of quantity discounts and lower annual setup costs, but it increases the amount of safety stock carried by suppliers and, hence, the carrying cost. It also can create the bullwhip effect.
2. Inventory–transportation cost trade-off. Suppliers prefer to ship full truckloads instead of partial loads in order to spread shipping costs over as many units as possible. This leads to higher holding costs for customers
Lead time–transportation cost trade-off
Product variety–inventory trade-off
Cost–customer service trade-off.