Supply Chain Management_spring06

Supply Chain Management_spring06 - Supply Chain Management...

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Supply Chain Management Supply Chain Management
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What is a supply chain?
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Supply Chain Supplier Manufacture r Distributor Retailer Customers Mission impossible : Matching Supply and Demand
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Why so Difficult to Match Supply and Demand? Uncertainty in demand and/or supply Changing customer requirements Decreasing product life cycles Fragmentation of supply chain ownership Conflicting objectives in the supply chain Conflicting objectives even within a single firm – Marketing/Sales wants: more FGI inventory, fast delivery, many  package types, special wishes/promotions – Production wants: bigger batch size, depots at factory, latest ship date,  decrease changeovers, stable production plan – Distribution wants: full truckload, low depot costs, low distribution  costs, small # of SKUs, stable distribution plan
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Supply Chain Joke: Volvo In the mid-1990s, the Swedish car manufacturer found itself  with excessive stocks of green cars. To move them along,  the sales and marketing departments began offering  attractive special deals, so green cars started to sell. But  nobody had told the manufacturing department about the  promotions. It noted the increase in sales, read it as a sign  that consumers had started to like green, and ramped up  production.  Source: Chain reaction, The Economist, Jan 31, 2002
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Supply Chain Management Supply Chain Management is  the design and management of processes  across organizational boundaries  with the goal of matching supply and demand  in the most cost effective way.  Supply Demand
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Supply Chain Performance Measures u Cost u Total Supply Chain Cost is the sum of all supply chain costs for all products processed through a supply chain during a given period u Inventory Turnover is the ratio of the cost of goods sold to the value of average inventory. u Weeks of inventory is the ratio of average inventory to the average weekly sales u Customer Service u Average Response Time is the sum of delays of ordering, processing, and transportation between the time an order is placed at a customer zone and the time the order arrives at the customer zone
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What do these measures mean? Inventory Turnover : how often the company replenishes inventory. High value of inventory turnover means that the inventory was not sitting around a long time. Weeks of Supply : how many weeks worth of inventory does the company have on hand. High value of weeks of supply means that the firm has a lot of inventory sitting around.
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Product Flow and Supply Chain Cost vendors mfg. plants warehouses & distribution centers retailers customers Fixed Costs: equipment facility facility Facility equipment equipment management management Variable Costs: procurement handling inbound & finished storage transport goods production handling, packaging, storage Transport Costs: transport transport transport
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This note was uploaded on 09/29/2011 for the course MGT 3501 taught by Professor Chang during the Fall '10 term at Georgia Tech.

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Supply Chain Management_spring06 - Supply Chain Management...

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