SCS- chapter 1 notes
Supply Chain Management (SCM) - ANS-The process of proacticely managing the two-way flow
of goods, services, information and funds from raw materials through end users
First basic principle of SCM - ANS-1. Be customer centered- unhappy customers cost money
Second basic principle of SCM - ANS-2. Understand total cost to serve
total cost to serve - ANS-Understand the cost of distributing/ supplying all the way through the
SC. get every type of different product and customer.
Why is total cost to serve important? - ANS-Understanding costs at a very detailed level helps
you to look at product and customer profitability- 10% of products and customers are losing you
money!
What is a Pareto analysis- 80/20 - ANS-A method to segment customers and products
Third basic principle of SCM - ANS-Segment customers to provide the right level of service to
match willingness to pay
Why segment customers: - ANS-Group A customers typically represent 10-20% of most
profitable customers. Typically contribute 70-80% of total profits. Group B and C contribute
about 20-30% of profits
Supply Chain Management (SCM) - ANS-The process of proacticely managing the two-way flow
of goods, services, information and funds from raw materials through end users
First basic principle of SCM - ANS-1. Be customer centered- unhappy customers cost money
Second basic principle of SCM - ANS-2. Understand total cost to serve
total cost to serve - ANS-Understand the cost of distributing/ supplying all the way through the
SC. get every type of different product and customer.
Why is total cost to serve important? - ANS-Understanding costs at a very detailed level helps
you to look at product and customer profitability- 10% of products and customers are losing you
money!
What is a Pareto analysis- 80/20 - ANS-A method to segment customers and products
Third basic principle of SCM - ANS-Segment customers to provide the right level of service to
match willingness to pay
Why segment customers: - ANS-Group A customers typically represent 10-20% of most
profitable customers. Typically contribute 70-80% of total profits. Group B and C contribute
about 20-30% of profits
