Course Notes Operations Management Supply Chain Management

12: Supply Chain Management

Charles E. Oyibo

Introduction

A supply chain is a sequence of organizations--their facilities, functions, and activities--that are involved in producing and delivering a product or service. The sequence begins with the basic supplier of raw materials and extends all the way to the final consumer. There are two kinds of movement in these systems: the physical movement of material, generally downstream--in the direction of the chain, and exchange of information, which moves in both directions along the chain.\

Value Chains, Supply Chains, and Demand Chains

Supply chains are often referred to as value chains, a term that reflects the concept that value is added as goods and services progress through the chain. Moreover, for each organization, the value chain has two components: the supply component (which starts at the beginning of the chain and stops with the internal operations of the organization) and the demand component (which starts where the organizations output is delivered to its immediate customer and ends with the final customer in the chain; the demand chain is the sales and distribution portion of the value chain with respect to the organization in question).

The Need for Supply Chain Management

1. The need to improve operations
2. Increasing levels of outsourcing
3. Increasing transportation costs
4. Competitive pressures
5. Increasing globalization
6. Increasing importance of e-commerce
7. The complexity of the supply chains
8. The need to manage inventories

Logistics

Logistics refers to the movement of materials and information within a facility and to incoming and outgoing shipment of goods and materials. The following are considerations under the umbrella of logistics:

Top of page

Contact Information

Page Last Updated: Wednesday December 8, 2004 6:33 PM