Chapter 1 - Introduction to Supply Chain Management
What is a Supply Chain?
- Any organization that offers a product/service has a supply chain
- Products and services are made from materials, equipment, labor, time, money, etc.
- Requires suppliers, manufacturers, and customers (the links in the supply chain)
- Chains can be very simple or complex
- Chains exist in organizations that are large/small, public/private, for-profit/non-profit
Structure of a Supply Chain
- Supply chain flows from suppliers to manufacturers to customers and back
- Chains are facilitated through the use of logistics (inbound/outbound transportation)
- Products and services only flow from suppliers to customers
- Payments and returns only flow from customers to suppliers
- Information flows both ways (requirements, orders, confirmations, ship, invoices, etc.)
- Every link is both a customer of their suppliers and a supplier to their customers
- Procurement and distribution from each link to the other
- Think of the flow of materials from start to end
- Simple supply chains may have goods go through separate, independent firms
- Complex chains may have many additional partners and steps in the chain
Candy Bar Supply Chain Example & Disruption Scenarios
- Suppliers take raw materials like sugarcane, cocoa beans, and polypropylene to make the
finished ingredients and packaging for a candy bar
- Manufacturer takes all those ingredients and puts together the candy bar to sell
- Customers are the wholesalers/distributors, retailers (stores), then to the consumers
- What if there is a shortage of cocoa beans?
- One of the suppliers can't make the chocolate and cocoa butter
- Other suppliers will keep sending the other ingredients
- Candy bar production stops, and the inventory of other ingredients builds up
- Need to cancel the orders for other ingredients until cocoa beans come back
- Disruption has now affected all suppliers
- Customers (retailers) still may have inventory from before to keep selling
- Total market stockout: retail inventory sells out too
- Disruption has now affected all customers
- Since all supply chain links are interconnected, a disruption will likely impact all
- A chain is only as strong as its weakest link
What is Supply Chain Management?
- SCM is the coordination of the network of trading partners who create a desired
product/service, then move it through the supply chain to customers, WHEN AND
WHERE THE CUSTOMER WANTS IT
What is a Supply Chain?
- Any organization that offers a product/service has a supply chain
- Products and services are made from materials, equipment, labor, time, money, etc.
- Requires suppliers, manufacturers, and customers (the links in the supply chain)
- Chains can be very simple or complex
- Chains exist in organizations that are large/small, public/private, for-profit/non-profit
Structure of a Supply Chain
- Supply chain flows from suppliers to manufacturers to customers and back
- Chains are facilitated through the use of logistics (inbound/outbound transportation)
- Products and services only flow from suppliers to customers
- Payments and returns only flow from customers to suppliers
- Information flows both ways (requirements, orders, confirmations, ship, invoices, etc.)
- Every link is both a customer of their suppliers and a supplier to their customers
- Procurement and distribution from each link to the other
- Think of the flow of materials from start to end
- Simple supply chains may have goods go through separate, independent firms
- Complex chains may have many additional partners and steps in the chain
Candy Bar Supply Chain Example & Disruption Scenarios
- Suppliers take raw materials like sugarcane, cocoa beans, and polypropylene to make the
finished ingredients and packaging for a candy bar
- Manufacturer takes all those ingredients and puts together the candy bar to sell
- Customers are the wholesalers/distributors, retailers (stores), then to the consumers
- What if there is a shortage of cocoa beans?
- One of the suppliers can't make the chocolate and cocoa butter
- Other suppliers will keep sending the other ingredients
- Candy bar production stops, and the inventory of other ingredients builds up
- Need to cancel the orders for other ingredients until cocoa beans come back
- Disruption has now affected all suppliers
- Customers (retailers) still may have inventory from before to keep selling
- Total market stockout: retail inventory sells out too
- Disruption has now affected all customers
- Since all supply chain links are interconnected, a disruption will likely impact all
- A chain is only as strong as its weakest link
What is Supply Chain Management?
- SCM is the coordination of the network of trading partners who create a desired
product/service, then move it through the supply chain to customers, WHEN AND
WHERE THE CUSTOMER WANTS IT
