While yesterday’s supply chains were focused on the availability, movement and cost of physical assets, today’s supply chains are about the management of data, services and products bundled into solutions. Modern supply chain management systems are about much more than just where and when. Supply chain management affects product and service quality, delivery, costs, customer experience and ultimately, profitability. Show
As recently as 2017, a typical supply chain accessed 50 times more data than just five years earlier. However, less than a quarter of this data is being analyzed. That means the value of critical, time-sensitive data — such as information about weather, sudden labor shortages, political unrest and microbursts in demand — can be lost. Modern supply chains take advantage of massive amounts of data generated by the chain process and are curated by analytical experts and data scientists. Future supply chain leaders and the Enterprise Resource Planning (ERP) systems they manage will likely focus on optimizing the usefulness of this data — analyzing it in real time with minimal latency.
Supply chain management refers to the coordination of activities and involved in making and moving a product. The supply chain is the network of businesses and business processes involved the creation and selling of a product, from suppliers that procure raw materials through retail outlets and customers. The upstream portion of the supply chain includes the organization's suppliers and the processes for managing relationships with them. The downstream portion consists of the organizations and processes for distributing and delivering products to the final customers. The manufacturer also has internal supply chain processes for transforming the materials and services furnished by suppliers into finished goods and for managing materials and inventory. Figure 9-2
Inefficiencies in the supply chain, such as parts shortages, underutilized plant capacity, excessive inventory, or runaway transportation costs, are caused by inaccurate or untimely information and can waste as much as 25% of operating costs. Uncertainties also arise because many events cannot be foreseen�product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns. More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect, in which information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain. With perfect information about demand and production, a firm can implement an effective just-in-time strategy, delivering goods in the right amount and as they are needed. Figure 9-3
Supply chain software can be classified as either:
Before the Internet, supply chain coordination was hampered by the difficulties of making information flow smoothly among disparate internal supply chain systems. Today, using intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules. The Internet provides a standard set of tools that are used by companies all over the world to coordinate global supply chains that include participants from many countries Figure 9-4
Earlier supply chain management systems were driven by a push-based model (also known as build-to-stock) in which production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customers. With Web-based tools, supply chain management follows a pull-based model (or demand-driven model or build-to-order), in which actual customer orders or purchases trigger events in the supply chain. Figure 9-5
Internet technology also makes it possible to move from sequential supply chains, where information and materials flow sequentially from company to company, to concurrent supply chains, where information flows in many directions simultaneously among members of a supply chain network. Ultimately, the Internet could create a "digital logistics nervous system" throughout the supply chain to permit simultaneous, multidirectional communication of information about participants' inventories, orders, and capacities. Figure 9-6
The business value of supply chain management systems includes:
Which of the following is not a component of a supply chain?Sales is not one of the five basic components of supply chain management.
Which one of the following options best describes the correct flow in a supply chain?Which of the following best describes supply chain execution systems? Supply chain execution systems manage the flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.
Which of the following reasons accounts for the importance of supply chain management?Reduce Operating Costs
Decreases Production Cost – Manufacturers depend on supply chains to reliably deliver materials to assembly plants to avoid material shortages that would shutdown production.
Which of the following are critical in developing a strategy for supply chain management?Key Takeaways
The five most critical elements of SCM are developing a strategy, sourcing raw materials, production, distribution, and returns.
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