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1-IE324_Lecture_week1 - Supply Chain Management IE324...

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IE324 Lecture on SCM-I 11 Supply Chain Management
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IE324 Lecture on SCM-I 22 A Sample Configuration Supplier s Manufacturer s Warehouses and Distribution Centers Retailers
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IE324 Lecture on SCM-I 33 What is Supply Chain Management? SCM is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements. I several observations as follows:
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IE324 Lecture on SCM-I 44 Systems Approach SCM takes into account every facility that has an impact on cost and customer service The objective of SCM is to be efficient and cost-effective across the entire system total systemwide costs : distribution (from supplier to manufacturers, from manufacturers to warehouses, from warehouses to retailers), inventories (raw material, WIP, finished goods), manufacturing costs. In other courses –say IE323– the focus is on local minimization (inventory costs at a single location, or transportation costs from the plant to the retailers). Here we should think in terms of both the systemwide costs and service levels .
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IE324 Lecture on SCM-I 55 Integration Efficient integration of all parties involved in the supply chain. Integrated planning involves: Functional Integration (of purchasing, manufacturing, transportation, warehousing) Spatial Integration (across geographically dispersed vendors, facilities, markets) Hierarchical Planning (coherence and consistency among overlapping supply chain decisions at various levels of planning) Integrated Planning does not necessarily require centralized control.
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IE324 Lecture on SCM-I 66 Global optimization : Facilities in the supply chain have different, conflicting objectives: Manufacturers need to adjust to customer demand (flexibility) Suppliers would like to ship larger-steady quantities Warehouses and distribution centers would like to see smaller batches to reduce inventory Dynamic nature of the supply chain Customer demand and supplier capabilities change over time Relations in the chain evolve over time (highly specific, low volume production through customization, as customer’s power increases) Supply Chain Management is Difficult (finding the best systemwide solution)
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IE324 Lecture on SCM-I 77
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