Supply Chain Management (3rd Edition) Ch1 Summary

1887 WordsSep 9, 20128 Pages
Traditional View: Logistics in the Economy (1990, 1996) Supply Chain Management (3rd Edition) Chapter 1 Understanding the Supply Chain Freight Transportation Inventory Expense Administrative Expense Logistics Related Activity $352, $455 Billion $221, $311 Billion $27, $31 Billion 11%, 10.5% of GNP Source: Cass Logistics © 2007 Pearson Education 1-1 © 2007 Pearson Education 1-2 Traditional View: Logistics in the Manufacturing Firm Profit Logistics Cost Marketing Cost Manufacturing Cost 4% 21% 27% 48% Manufacturing Cost Profit Logistics Cost Marketing Cost Supply Chain Management: The Magnitude in the Traditional View Estimated that the grocery industry could save $30 billion (10% of operating cost) by using…show more content…
tal supply chain profitability, not profits at an individual stage © 2007 Pearson Education 1-13 The Objective of a Supply Chain Sources of supply chain revenue: the customer Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability © 2007 Pearson Education 1-14 Decision Phases of a Supply Chain Supply chain strategy or design Supply chain planning Supply chain operation Supply Chain Strategy or Design Decisions about the structure of the supply chain and what processes each stage will perform Strategic supply chain decisions – – – – Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systems Supply chain design must support strategic objectives Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty © 2007 Pearson Education 1-15 © 2007 Pearson Education 1-16 Supply Chain Planning Definition of a set of policies that govern short-term operations Fixed by the supply configuration from previous phase Starts with a forecast of demand in the coming year – – – – – Supply Chain Planning Planning decisions: Which markets will be supplied from which locations Planned buildup of inventories Subcontracting, backup locations Inventory policies

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