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CHAPTER 11: SUPPLY CHAIN MANAGEMENT Teaching Notes It is important to emphasize that Supply Chain Management involves the entire range of production and distribution processes. Students need to understand the trade offs involved in supply chain function related to JIT, inventory management purchasing and delivery lead times and quality. Supply Chain Management requires a broad view of the entire flow from purchasing to final delivery to the customer. Supply Chain Management is becoming increasingly more important due to the following factors: 1. Implementation of JIT systems. 2. Emphasis in reduction in inventories. 3. Emphasis in reduced order cycles and reduced lead times. 4. Continuous and rapid change in products and product designs (shorter product life cycles). 5. Shorter product introduction and product development times. The importance of Supply Chain Management can not be underestimated because it ensures that the right materials are at the right place at the right time at a minimal cost and maximum quantity. In addition, supply chain management requires very careful coordination of activities between various business organizations on the chain. Integration of databases and sharing key pieces of information among the different business organizations on the supply chain not only provides timely and valuable information to companies on the supply chain, but also assists in improving the trust and the overall relationship between suppliers and their customers. The term supply chain management has emerged in the mid-1980s and gained popularity in the 1990s. In the new millennium, it is continuing to gain interest at a rapid rate. Even though the term, supply chain management (SCM) is fairly new, the concepts and problems involved in SCM are not. However, many of these problems and their solutions are integrated within and between firms in the context of managing the flow of products and related information. Thus, supply chain management involves efficient integration of suppliers, manufacturers, distributors and customers in the production and distribution of goods and services. Purchasing is the process of obtaining products, parts, supplies and materials from an outside source of supply. Recently, due to increased emphasis of outsourcing, the importance of purchasing has substantially increased. The purchasing function includes identifying the supply pool, negotiating prices and terms of the purchase, placing and receiving orders, quality assurance, material handling and storage of received shipments. One of the very important responsibilities of purchasers is communication and coordination with suppliers and possibly suppliers’ suppliers—especially in the areas of scheduling and forecasting to reduce the chance of excess inventories, stockouts and late deliveries. In addition, purchasing works closely with production planning and control and sales to ensure that the desired product is available at the right location at the right time in the right quantity. In order to eliminate confusion, it is a good idea to let the students know that there are alternative names
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This note was uploaded on 04/21/2011 for the course MGT 02 taught by Professor Gad during the Spring '11 term at Tanta University.

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