Key Ideas
- A supply chain, or value chain, is the network of business organizations
that comprise all of the material, processing facilities and other activities
involved in bringing a product or service to the final customer.
- Every business organization has both an internal and an external supply
chain. The internal supply chain consists of all in-house activities related
to processing and delivering a product or service.
- The current interest in supply chains is due to a variety of factors. Among
them are, increased competitive pressures, increased levels of outsourcing,
and the desire to reduce costs, speed delivery and attain a competitive edge.
The Internet is also a factor for many organizations, offering opportunities
for buying and selling and exchanging information.
- Among the elements of supply chain management are customers, forecasting,
product and service design, processing, inventory, purchasing, suppliers,
location and logistics.
- Logistics is concerned not only with the movement of materials, but also
with the movement of information in a supply chain.
- Electronic data interchange (EDI) offers opportunities for increased productivity,
reduction of paperwork, reduction of lead times, improved control operations
and reduction in clerical labor.
- E-commerce has many potential benefits for business organizations, including
global presence, improved competitiveness, the ability to collect information
about customer preferences, shortened response times, and cost savings.
- Successful supply chain management requires integration of all aspects of
a supply chain. This, in turn, requires goal sharing among supply-chain partners
that will lead to cooperation in planning, coordinating and sharing information.
- Successful supply chain management begins by developing strategic objectives
and tactics.
- Performance drivers of supply chain management include quality, cost, flexibility,
information, inventory velocity and customer service.
- Challenges to successfully implementing a supply chain include barriers
to the integration of separate organizations, getting top management "on
board," dealing with trade offs, small businesses, variability and uncertainty
and long lead times.
- Supply chain management offers the potential for competitive advantage, reduced costs, and increased productivity by integrating and streamlining a supply chain.