5055-Week11_Lecture_SupplyChainManagemnt_Design2007 -...

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Lecture: Supply Chain Management Professor Forrer Supply chain management has evolved tremendously over the past fifty years. Today’s market is so competitive that your ability to control costs for supplies and materials can make a huge difference to your bottom line. To be successful, companies must pay attention to improving process design, operational flexibility, and product quality. A major step is to create strategic partnerships with key suppliers that mutually benefit both parties. The supply chain is long and each company in the link wants to maximize profits. However, there is only so much that can be charged to consumers for the final product and this causes retailers to be creative as they determine which products to sell. The supply chain begins with raw materials such as oil, wood, or food extracted from the ground and then sold to raw material manufacturers. The materials are then turned into goods that can be used by consumers such as sheet metal, lumber and consumable food. Manufacturers of components make items such as nuts and bolts to support the initial materials and finished product manufacturers such as Chrysler or Lockheed Martin finish the product for the consumer. It is then sold to wholesalers and shipped to retailers for purchase by consumers. Each link in the chain is responding to material purchase orders or specifications. This is usually tied to demand in the system for the finished product. Consumers buy products for a variety of reasons such as cost, quality, reputation, image, or reliability. Changes in the economy such as interest rates, consumer demand, or availability can positively or negatively affect the sale of products or services. Therefore, every company in the supply chain must be creative and innovative to make sure that they stay competitive. Retailers are constantly trying to eliminate or manage links of the chain to reduce costs. The reason this process is important to small businesses is because value-enhancing
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5055-Week11_Lecture_SupplyChainManagemnt_Design2007 -...

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