Professional Documents
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Chapter 1
Chapter 1
An integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer (Cooper & Elram) A strategic concept that involves understanding and
Supply chain management is a set of approaches utilised to efficiently integrate suppliers, manufactures, warehouses, and stores, so that merchandise is produced and distribution at the right quantities, to the right locations, and at the right time, in order to minimise systemwide costs while satisfying service level requirements. The 4 PL is an integration that assembles the capital, technology and resources of its own organisation and other organisations to design, build and run supply chains.
DEVELOPMENT OF SCM
Fragmentation 1960 Evolving Integration 1980 Total Integration 2000
Demand forecasting Purchasing Requirements planning Production planning Manufacturing inventory Warehousing Materials handling Industrial packaging Finished goods inventory Distribution planning Order processing Transportation Customer service
Physical Distribution
TRADITIONAL Interrupted
Firm minimised Firm controlled
SUPPLY CHAIN
Pipeline Coordination
Seamless/visible
Landed cost Shared
Risk
Planning Interorganizational Relationship
Form focused
Firm oriented Firm focused on Low cost
Shared
Supply chain team approach Partnership focused On landed cost
Primary Activities
Most of companies are undergoing radical change due to host of interconnected factors:
Globalization
E-commerce
Delivery time
FAILURES OF S.C.M.
Personnel:
Products with seasonal demand require error free forecasting as there is no/little chance to recover that supply matches demand. For product with stable demand, impact of forecasting error is less significant. Above factors influence future demand. Relationship between factors and future demand be ascertained.
Production Rate: I.e. number of units completed per unit time. Workforce:The number of workers/units of capacity needed for production. Overtime: The amount of overtime production planned. Machine Capacity Level: Number of units of machine capacity needed for production. Subcontracting: The subcontracted capacity required over the planning horizon. Backlog: Demand not satisfied in the period in which it arises but carried over to future periods. Inventory on hand: Planned inventory carried over the various periods in the planning horizon.
Labour machine hours required per unit Inventory holding cost Constraints
Limits on overtime Limits on layoffs Limits on capital available Limits on stockouts & backlogs