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"Supply Chain Management: A logistics Perspective" Summary Chapter 1

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Summary of Chapter 1 from the book “Supply Chain Management: A Logistics Perspective” 11th Edition. ISBN: 9780357442135

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Chapter 1
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January 22, 2022
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Samenvatting Chapter 1,2,3,5,9,13

Chapter 1 “Supply Chain Management: An Overview”

Learning Objectives:

• Explain how efficient and effective supply chains can improve customer
fulfillment and cash flow.

• Discuss the development and shaping of supply chains in leading
organizations and understand their contributions to their financial viability.

• Appreciate the important role of supply chain management among private as
well as public or nonprofit organizations.

• Understand the contributions of supply chain management to organizational
efficiency and effectiveness for competing successfully in the global
marketplace.

• Explain the benefits that can be achieved form implementing supply chain
best practices.

• Understand the major supply chain challenges and issues faced by
organizations currently and in the future.



1-1 Introduction

Logistics: The process of planning, implementing, and controlling the efficient and effective
flow and storage of raw materials, in process inventory, finished goods, related services and
information from point of origin to point of consumption for the purpose of conforming to
customer and organizational requirements.



1-2 Shaping the Supply Chains of the Twenty-First Century: Evolution and
Change

Five major external forces are driving the rate of change:

- Globalization
- Technology
- Organizational Consolidation

, - The Empowered Consumer
- Government Policy and Regulation
- (Energy & Sustainability)

1-2-1 Globalization

Globalization creates more economic and political risk, shorter product life cycle, and the
blurring of traditional organizational boundaries.

Inventory Management Challenges (Shorter product life cycle)

- Faster duplicability of products & services
- Faster reduction in demand
- Requirements of new pricing policies
- Higher risk of obsolescence

Longer and More Complex Supply Chain Challenges (Traditional Organizational
Boundaries)

- Growth and increased scope of outsourcing

1-2-2 Technology

Technology is a facilitator of internal process and supply chain transformation. It is also a
major force in changing the dynamics of the marketplace.

- The internet. “Connected” 24/7
- Social Networks. Impact on customer demand and the speed of information
transfers
- The Worlds “Knowledge Pool” Connection. Opportunities for collaboration
(outsourcing) in supply chains

1-2-3 Organization Consolidation and Power Shifts

During the 1980s and especially the 1990s, economic power and the driving force in supply
chains shift from product manufactures to the retail end of the supply chain.

More Collaboration Among Organizations in Supply Chains (Consolidation)
- Win-win, improved services such as:
o Scheduled deliveries
o “Rainbow” pallets
o Advance Shipment Notices (ASNs) shrink-wrapped pallets
- Sharing of point-of-sale date to mitigate “Bullwhip Effect”

“Rainbow” Pallets: Mixed arrays of products or stock-keeping units [SKUs]
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