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technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value
biological and political regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of everdecreasing size and ever more remote geographical locations, and finally reaching the consumer.
management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology. In essence, supply chain management integrates supply and demand management within and across companies.
components of an extended value chain--from suppliers, through manufacturing and distribution chain, and to the consumers.
SCM information systems use technology to more effectively manage supply chains
Parts
Labor Overhead Management Marketing Total Cost
$5,000
4000 2000
3000 $14,000
Manufacturer
Distributor
Retailer
Customer
$48.50
Manufacturer
Retailer
Customer
$40.34
Manufacturer
Customer
$20.45
Network Infrastructure
Wide Area Network
Internet (for E-commerce: B2B, B2C)
coordinated supply chain Information must have the following characteristics to be useful: Accurate Accessible in a timely manner Information must be of the right kind Information provides the basis for supply chain management decisions Inventory Transportation Facility
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stockout costs, ordering costs Transportation: costs, customer locations, shipment sizes Facility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.
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Information technology (IT) Hardware and software used throughout the supply chain to gather and analyze information Captures and delivers information needed to make good decisions Effective use of IT in the supply chain can have a
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supply chain allows managers to make decisions that take into account all stages of the supply chain Allows performance to be optimized for the entire supply chain, not just for one stage leads to higher performance for each individual firm in the supply chain
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Selling
Order management Call/Service center
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Demand Planning
Supply Planning Fulfillment Field Service
enterprise and suppliers that are upstream in the supply chain Key processes:
Design Collaboration Source Negotiate Buy Supply Collaboration
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will continue to drive the evolution of enterprise software Software focused on the macro processes will become a larger share of the total enterprise software market and the firms producing this software will become more successful Functionality, the ability to integrate across macro processes, and the strength of their ecosystems, will be keys to success
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issues:
Planning Vendor selection Manufacturing Logistics Customer relationship
mathematical models to predict inventory levels based on the efficient flow of resources into the supply chain Supply Chain Execution software (SCE): is used to automate different steps in the supply chain such as automatically sending purchase orders to vendors when inventories reach specified levels
The Supply Chain Cockpit (SCC) Demand Planning (DP) Supply Network Planning (SND)
SAP R/3
SCM
ERP
CRM
Broader SCM
tremendous amount of information Businesses realized that much of the information they needed to run an e-business stock levels at various warehouses, cost of parts, projected shipping dates could already be found in their ERP system databases A major part of the online efforts of many e-businesses involved adding Web access to an existing ERP system
ERP system is to outsource it Some businesses choose to outsource not only the installation but also the ERP system software
transactions and the creation of an integrated method of storing and viewing data across the enterprise Real value of the TMF exists only if decision making is improved The extent to which the TMF enables integration across the three macro processes determines its value
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(TCP/IP) for the internal communications Extranet is to use Internet technology and protocol for the internal and suppliers communications