Supply-Chain Strategy - Review Notes

The idea of supply-chain management is to apply a total systems approach to managing the entire flow of information, materials, and services from raw-materials suppliers through factories and warehouses to the end customer. The focus is on those core activities that a business must operate each day to meet demand. The topic is popular because many companies are achieving competitive advantage by the way they configure and manage their supply chain operations. Dell Computer is a good example of effective supply chain management.

Because inventory at each stage of an operation ties up money, it is important that the operations at each stage are synchronized to minimize the size of buffer inventories. The efficiency of the supply chain can be measured based on the size of the inventory investment in the supply chain. Key measures to evaluate supply chain efficiency are inventory turnover and weeks-of-supply. Other measures include the cost of goods sold and the average aggregate inventory value.

Variability within the supply chain magnifies as we move from the customer to the producer in the supply chain. This bullwhip effect indicates a lack of synchronization among supply chain members. Programs like continuous replenishment smooth the flow of materials through the supply chain.

Other supply chain issues occur because of the length of the product life cycle, demand predictability, product variety, and market standards for lead times and service. Products may be either functional staples or primarily innovative and require different management methods.

Outsourcing is moving some of a firm's internal activities and decision responsibility to outside providers. Companies have a variety of reasons for outsourcing but primarily the reasons are to reduce costs and create a competitive advantage. One popular area to outsource is logistics. In determining the shipping mode for an item a key variable is the value density or value per unit of weight.

Chapter outline

Supply-Chain Strategy
Supply Chain Defined

Measuring Supply Chain Performance
Inventory Turnover Defined
Cost of Goods Sold Defined
Average Aggregate Inventory Value Defined
Weeks of Supply Defined

Supply Chain Design Strategy
Bullwhip Effect Defined
Functional Products Defined
Innovative Products Defined

Outsourcing Defined
Logistics Defined

Design For Logistics
Design for Logistics Defined

Value Density (Value per Unit of Weight)
Transportation Mode Defined
Value Density Defined

Global Sourcing

Mass Customization
Mass Customization Defined
Process Postponement Defined


Case: Pepe Jeans

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1 comment:

  1. Really useful stuff .Never had an idea about this, I was looking for information on Supply chain management services ..will look for more of such informative posts from your side.. Good job...Keep it up


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