Quality in Logistics and Supply Chain Management Lecture 1: Introduction to SCM
2 Outline Supply Chain Management SCM Challenges in Today’s Global Economy Magnitude of Supply Chain Costs Topics Covered
What Is a Supply Chain? •Flow of productsand servicesfrom raw materials manufacturers; intermediate products manufacturers; end product manufacturers; wholesalers and distributors and; retailers •Connected by transportationand storageactivities •Integrated through information, planning, and coordination activities 3
Source Supplier Supplier Distributor Distributor Retailer End-User Converter Converter Consumers Information Flow Funds/Demand Flow Value-Added Services Material Flow Reuse/Maintenance/After Sales Service Flow What Is a Supply Chain? 4
Supply Chain for a Car Components Raw material suppliers. For instance, suppliers for steel, rubber, plastics, etc. Parts suppliers. For instance, suppliers for engines, steering wheels, seats, and electronic components, etc. Automobile manufacturer. For instance, Ford. Automobile dealers. For instance, Hayward Ford. 5
Supply Chain for a Consumer Mortgage The supply chain for a consumer mortgage offered by a bank may involve various components. Marketing companies that handle solicitation to potential customers. Credit reporting agencies that evaluate potential customers. The bank that extends the mortgage loans. Mortgage brokers through which the loans are distributed. 7
Product vs. Service Supply Chain There are a number of differences between the two types of supply chains. For instance: In a product supply chain, there is both a flow of information and physical products. In a service supply chain, it is primarily information. Contrary to a service supply chain, transportation and inventory are major cost components in a product supply chain. Services typically cannot be held in inventory, so matching capacity with demand is frequently more important in a service supply chain. In a service supply chain, the (explicit) cost of information is higher than in a product supply chain. 8
Supply Chain Goals & Strategies All companies involved in the supply chain want to maximize their respective profits by increasing revenue and decreasing cost. However, companies may employ different strategies in order to achieve this goal. Some of them focus on customer satisfaction and quick delivery, while others may be more concerned about minimizing inventory holding costs. 9
Supply Chain for a Car Typically, the automobile dealer would like to offer a variety of car colors and configurations to accommodate different customer preferences, and meanwhile have a short delivery lead time from the manufacturer.
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