SUPPLY CHAIN MANAGEMENT
DEFINING SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM.
1. Plan—This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service.
2. Source— Companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes ...view middle of the document...
But even as companies are rapidly adopting supply chain management strategies in an effort to keep up, many still lag when it comes to measuring how well they are doing, and balancing the trade-offs involved in keeping service levels high and costs low."They put all of their eggs with one supplier that had the best product at the lowest price"Tokyo, and indeed much of eastern Japan, is an epicenter of high-tech manufacturing. But dozens of suppliers in other industries are located in the region as well, and the loss of their production may have far-reaching effects in many economic sectors for years to come. The recent Tsunami disaster is causing many companies to rethink their supply chain strategies, which suddenly seem extremely fragile. About 22 percent of the world's 300 mm silicon wafer supply came from the Shin-Etsu Handotai's Shirakawa plant in Fukushima prefecture, and 60 percent of critical auto parts were in the same area. The area is also a primary supplier of lithium battery chemicals, flash memory, and anisotropic conductive film used in LCD flat panel displays.In the race to provide better quality at lower prices, manufacturers picked very narrow, optimized supply chains, they put all of their eggs with one supplier that had the best product at the lowest price. |
SUPPLY CHAIN DESIGN
Supply chain design attempts to create the appropriate supply chain for the company’s operating environment. This dissertation addresses two problems that are relevant to supply chain design. The first problem addresses how to configure a new product’s supply chain. The second problem addresses part selection for multigenerational products. This would increase the current period’s costs but allow the company to forgo a development cycle in the next period and gain cost efficiencies by exploiting the higher volume from two generations of demand.
Synchronizing supply and demand, ensuring that logistics are cost-effective, and optimizing inventory are problems as old as human commerce. What has changed, needless to say, is the complexity and scope of that Commerce and global trade growth. While the recent recession clearly dampened that growth, there is every expectation that, as with previous recessions, the current recovery will signal a return to a similar relative rate of growth for global trade.
Risk has increased significantly as the scope and importance of supply chain software has grown. A study by Vinod R. Singhal and Kevin B. Hendricks, professors at the Georgia Institute of Technology and the University of Western Ontario, respectively, describe an industry rife with supply chain “glitches,” problems that not only result in operational problems within customers’ supply chains but also result in lower stock prices and lost value for the companies that experienced these supply chain problems.
OUTSOURCING AND GLOBAL SOURCING