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Basics of SCM
What is a supply chain?
Referred as the network of entities involved in different activities of procurement,
processing and distribution
They are then delivered to the different kinds of customers through a distribution network
Bullwhip effect occurs when distorted product demand information passes from one
entity to the next throughout the supply chain
Organizations use these four drivers to support either a supply chian strategy focusing on
efficiency or a supply chain strategy focusing on effectiveness.
EFFICIENCY VS EFFECTIVENESS
Efficiency relates to the performance of the system including throughput time, speed,
cost, etc
Effectiveness - quality of output from the system e.g. customer satisfaction, service level,
etc
1. Facilities driver
Facility relates to processing (transforming inventory into another product) and
storing the inventory before shipping it to the next facility
Three primary facilities components:
1. Location
2. Capacity
3. Operational design
2. Inventory Driver
Inventory offsets discrepancies between supply and demand
Two primary inventory components:
1. Cycle inventory average inventory held
2. Safety inventory excess inventory held
3. Transportation driver
Transportation moves inventories between the different stages in the supply chain
Value chain analysis Views a firm as a series of business processes that add value to the
product or service. Companies need to analyze the value chain and then identify which
supply chain drivers & strategies need to be improved.