MITESD_273JF09_lec01

MITESD_273JF09_lec01 - Introduction to Supply Chain...

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Unformatted text preview: Introduction to Supply Chain Managemen Supply Chain Management David Simchi-Levi Professor of Engineering Systems Massachusetts Institute of Technology 1 Sources: Plants vendors ports Regional warehouses: Stocking points Field warehouses: Stocking points Customers demand centers sinks Transportation costs Transportation costs Inventory & warehousing costs Inventory & warehousing costs Production/purchase costs Supply Image by MIT OpenCourseWare. Supply Chain Management • Definition: Supply Chain Management is primarily concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time, and so as to minimize total system cost subject to satisfying service requirements service requirements. • Notice: – Who is involved – Cost and Service Level – It is all about integration ©Copyright 2003 D. Simchi-Levi Conflicting Objectives in the Supply Chain 1 Purchasing 1. Purchasing • Stable volume requirements • Flexible delivery time • Little variation in mix • Large quantities 2. Manufacturing 2. Manufacturing • Long run production • High quality • High productivity • Low production cost ©Copyright 2003 D. Simchi-Levi 2 Order Size Conflicting Objectives in the Supply Chain 3 Warehousing 3. Warehousing • Low inventory • Reduced transportation costs • Quick replenishment capability 4. Customers • Short order lead time Short order lead time • High in stock • Enormous variety of products • Low prices ©Copyright 2003 D. Simchi-Levi The Dynamics of the Supply Chain Customer Demand Retailer Orders Distributor Orders Production Plan Time Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998 ©Copyright 2003 D. Simchi-Levi 3 Order Size The Dynamics of the Supply Chain Customer Demand Production Plan Time Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998 ©Copyright 2003 D. Simchi-Levi Today’s Supply Chain Challenges • Global supply chain with long lead times • Rising and shifting customer expectations • Increase in labor costs in developing countries Increase in labor costs in developing countries • Increase in logistics costs 8 4 Increase in Logistics Costs...
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This note was uploaded on 12/06/2011 for the course ESD 15.763j taught by Professor Davidsimchi-levi during the Spring '05 term at MIT.

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MITESD_273JF09_lec01 - Introduction to Supply Chain...

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