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Supply Chain Essay

1621 words - 7 pages

SUPPLY CHAIN MANAGEMENT
Objective • Maximise the overall value generated – is the difference between what the final product is worth to the customer and the effort the supply chains expends in filling the request of the customer • Supply chain profitability is the difference between the revenue generated from the customer and the overall cost across the supply chain • It is the total profit to be shared across all supply chain stages • Supply chain success is measured in terms of supply chain profitability and not in terms of the profits at an individual stage • Revenue is from customer – positive cash flow • All other cash flows are simply fund exchanges that occur within the supply chain ...view middle of the document...

The competitive strategy and all functional strategies must fit together to form a coordinated overall strategy 2. Different functions in a company must appropriately structure their process and resources to be able to execute these strategies successfully • Basic steps to achieve strategic fit 1. Understanding the customer, and supply chain uncertainty 2. Understanding the supply chain capabilities 3. Achieving strategic fit • Understanding Uncertainty the Customer and Supply Chain

• To understand the customer, a company must identify the needs of the customer segment being served • Customer demand from different segments may vary along several attributes: 1. The quantity of the product needed in each lot 2. The response time that customers are willing to tolerate 3. The variety of products needed 4. The service level required 5. The price of the product 6. The desired rate of innovation in the product

Implied Demand Uncertainty
• Demand uncertainty reflects the uncertainty of customer demand for product • Implied demand uncertainty is the uncertainty in meeting a portion of customer demand and it is the uncertainty the supply chain faces. • It is mainly due to the attributes the customer desires Illustration As a supply chain raises its service level, it must be able to meet a higher and higher percentage of actual demand, forcing it to prepare for rare surges in demand. Thus raising the service level increases the implied demand uncertainty even though the product’s underlying demand uncertainty does not change. • Product demand uncertainty and various customer needs that the supply chain tries to fill affect implied demand uncertainty • The following customer needs increases implied demand uncertainty – Range quantity required increases – Lead time decreases – Variety of products required increases – Number of channels through which product may be acquired increases – Rate of innovation increases – Required service level...

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