Characteristic of Effective Supply Chain Management

3155 Words Apr 19th, 2011 13 Pages
TITLE: CHARACTERISTICS OF EFFECTIVE SUPPLY CHAIN MANAGEMENT

Table of Content

Executive Summary 1

Introduction 2

Effective Distribution Networks 4

Effective Network Design 5

Effective Global Supply Chain Networks 5

Planned Demand and Supply 7

Managed Uncertainty (Safety Inventories) 7

Optimal Product Availability 7

Designed and Planned Transportation network (Logistics Management) 7
Managed Cross-Functional Drivers 8
Managed Prices and Revenue streams 8

Information Management in a Supply Chain 8
Supply Chains must be Coordinated Throughout
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For instance, Dell chose to distribute straight to the company with great success and cost savings and then later changed their plan to include selling through Wal-Mart when the time called for it. Gateway however, decided to open their own stores but didn’t sell their product from it. This led to the failure of Gateway. Poor distribution network designs can hurt customer satisfaction and increase costs hurting the profitability of the company.
Two factors need to be considered when designing a distribution network; customer needs to be met and the cost of meeting customer needs. When thinking of customer needs it’s important to consider what the distribution directly influences, which is response time, product variety, product availability, and customer experience, time to market, order visibility and return ability. Things that affect the cost of the distribution design are inventories, transportation, facilities and handling, information, sourcing and pricing. As the number of facilities increases, the inventory costs increase. It’s important to decrease the number of facilities not only to save on inventory costs but also to cut down on facility costs. For transportation you have inbound and outbound with outbound being the bigger cost. Creating economies of scale in transportation is a great way to reduce costs.
There are six design options for the distribution network which include manufacturer storage with direct
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