Chapter 5 Managing supply chain relationships
Supply chains or networks and tiers of supply
Supply chain = a sequence of business and information processes that link suppliers of products or
services to operations, and which then link those operations through distribution channels to end
users
= logistic network
= suppliers, manufacturers, warehouses, distribution centers, end users, consumers
= all the materials and products that flow between these facilities (downstream)
= all the information that flows between these facilities (upstream & downstream)
= and sometimes products that go back (upstream) (= reverse logistics. Think of wrong
deliveries or web shops..)
Tier = intermediary organization in supply chains
A simple chain showing suppliers upstream and customers downstream. Note that the operation is
both a supplier and a customer (B2B)
Procurement: buying from and working with suppliers
Procurement system is concerned with ensuring the right suppliers are used and that the purchasing
process is itself controlled
Singel sourcing = one supplier advantages: higher level of product quality with less variability,
ability to establish a partnership relationship, makes engaging in new product or service
development easier, able to vary delivery schedules more easily as only one supplier to deal with,
oppurtunies to achieve cost savings by ordering in larger quantities, lower admnistration costs,
essential if volume and value of products are too small to divide between competitors
Supply chains or networks and tiers of supply
Supply chain = a sequence of business and information processes that link suppliers of products or
services to operations, and which then link those operations through distribution channels to end
users
= logistic network
= suppliers, manufacturers, warehouses, distribution centers, end users, consumers
= all the materials and products that flow between these facilities (downstream)
= all the information that flows between these facilities (upstream & downstream)
= and sometimes products that go back (upstream) (= reverse logistics. Think of wrong
deliveries or web shops..)
Tier = intermediary organization in supply chains
A simple chain showing suppliers upstream and customers downstream. Note that the operation is
both a supplier and a customer (B2B)
Procurement: buying from and working with suppliers
Procurement system is concerned with ensuring the right suppliers are used and that the purchasing
process is itself controlled
Singel sourcing = one supplier advantages: higher level of product quality with less variability,
ability to establish a partnership relationship, makes engaging in new product or service
development easier, able to vary delivery schedules more easily as only one supplier to deal with,
oppurtunies to achieve cost savings by ordering in larger quantities, lower admnistration costs,
essential if volume and value of products are too small to divide between competitors
