Supply Chain and Supply Chain Management

A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. This network includes different activities, people, entities, information, and resources. The chain also represents a series of steps involved to get a product or service to the customer. The steps include

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What Is a Supply Chain?

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. Within each organization, such as a manu­facturer, the supply chain includes all functions involved in receiving and filling a

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The Objective of a Supply Chain

The objective of every supply chain should be to maximize the overall value generated. The value (also known as supply chain surplus) a supply chain generates is the difference between what the value of the final product is to the customer and the costs the entire supply chain incurs in filling the customer’s request.

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The Importance of Supply Chain Decisions

There is a close connection between the design and management of supply chain flows (product, information, and funds) and the success of a supply chain. Walmart, Amazon, and Seven-Eleven Japan are examples of companies that have built their success on superior design, planning, and operation of their supply chain. In contrast, the failure of

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Decision Phases in a Supply Chain

Successful supply chain management requires many decisions relating to the flow of informa­tion, product, and funds. Each decision should be made to raise the supply chain surplus. These decisions fall into three categories or phases, depending on the frequency of each decision and the time frame during which a decision phase has an impact.

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Process Views of a Supply Chain

A supply chain is a sequence of processes and flows that take place within and between different stages and combine to fill a customer need for a product. There are two ways to view the pro­cesses performed in a supply chain. Cycle View: The processes in a supply chain are divided into a series

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Examples of Supply Chains

In this section, we consider several supply chains and raise questions that must be answered dur­ing their design, planning, and operation phases. In later chapters, we discuss concepts and pres­ent methodologies that can be used to answer these questions. 1. Gateway and Apple: Two Different Journeys into Retailing Gateway was founded in 1985 as

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Competitive and Supply Chain Strategies

A company’s competitive strategy defines, relative to its competitors, the set of customer needs that it seeks to satisfy through its products and services. For example, Walmart aims to provide high availability of a variety of products of reasonable quality at low prices. Most products sold at Walmart are commonplace (everything from home appliances

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Achieving Strategic Fit by Supply Chain

Strategic fit requires that both the competitive and supply chain strategies of a company have aligned goals. It refers to consistency between the customer priorities that the competitive strat­egy hopes to satisfy and the supply chain capabilities that the supply chain strategy aims to build. For a company to achieve strategic fit, it must

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Expanding Strategic Scope in the Supply Chain

A key issue relating to strategic fit is the scope, in terms of supply chain stages, across which the strategic fit applies. Scope of strategic fit refers to the functions within the firm and stages across the supply chain that devise an integrated strategy with an aligned objective. At one extreme, every operation within

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Challenges to Achieving and Maintaining Strategic Fit in the Supply Chain

The key to achieving strategic fit is a company’s ability to find a balance between responsiveness and efficiency that best matches the needs of its target customers. In deciding where this balance should be located on the responsiveness spectrum, companies face many challenges. On one hand, these challenges have made it much more difficult

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Financial Measures of Supply Chain Performance

In Chapter 1, we discussed how growing the supply chain surplus is the ultimate goal of a supply chain. Our premise was that increasing the surplus allows for a growth of supply chain profitability, which facilitates an improvement in the financial performance of each member of the supply chain. In this section, we define

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Drivers of Supply Chain Performance

The strategic fit discussed in Chapter 2 requires that a company’s supply chain achieve the bal­ance between responsiveness and efficiency that best supports the company’s competitive strat­egy. A supply chain’s performance in terms of responsiveness and efficiency is based on the interaction between the following logistical and cross-functional drivers of supply chain perfor­mance: facilities,

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Framework for Structuring Drivers of Supply Chain Performance

We provide a visual framework for supply chain decision making in Figure 3-1. Most companies begin with a competitive strategy and then decide what their supply chain strategy ought to be. The supply chain strategy determines how the supply chain should perform with respect to effi­ciency and responsiveness. The supply chain must then use

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Facilities in the Supply Chain

In this section, we discuss the role that facilities play in the supply chain and critical facility- related decisions that supply chain managers need to make. 1. Role in the Supply Chain Firms can increase responsiveness by increasing the number of facilities, making them more flexible, or increasing capacity. Each of these actions, however,

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Inventory in the Supply Chain

In this section, we discuss the role that inventory plays in the supply chain and how managers use inventory to drive supply chain performance. 1. Role in the Supply Chain Inventory exists in the supply chain because of a mismatch between supply and demand. This mismatch is intentional at a steel manufacturer, where it

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Transportation in the Supply Chain

In this section, we discuss the role that transportation plays in the supply chain and key transpor­tation-related decisions that supply chain managers must make. 1. Role in the Supply Chain Transportation moves product between different stages in a supply chain and affects both responsiveness and efficiency. Faster transportation is more expensive but allows a

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Information in the Supply Chain

In this section, we discuss the role that information plays in the supply chain, as well as key information-related decisions that supply chain managers must make. 1. Role in the Supply Chain Good information can help improve the utilization of supply chain assets and the coordination of supply chain flows to increase responsiveness and

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Sourcing in the Supply Chain

In this section, we discuss the role that sourcing plays in the supply chain and key sourcing- related decisions that managers need to make. 1. Role in the Supply Chain Sourcing is the set of business processes required to purchase goods and services. Managers must first decide whether each task will be performed by

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Pricing in the Supply Chain

In this section, we discuss the role that pricing plays in the supply chain. 1. Role in the Supply Chain Pricing is the process by which a firm decides how much to charge customers for its goods and services. Pricing affects the customer segments that choose to buy the product, as well as influ­encing

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