Chapter 12, Problem 1DQ

Summary Introduction

Interpretation: The methodology of improving the performance of the supply chain while reducing its costs is to be discussed.

Concept Introduction: Every organization needs timely and quality inputs in the form of materials, services, knowledge and information, etc. The organizations providing such inputs are termed as suppliers. This entire network of suppliers with the logistics is called the supply chain. The objective of the supply chain management is to make available to the organization the required/specified inputs at the needed time.

Explanation of Solution

The performance of the supply chain means timely inputs at optimum cost.

The cost consists of the input costs, transportation costs, administrative costs, holding costs (of money and space). Thus all such costs need to be controlled and continually reduced while ensuring the output of the supply chain, i.e., inputs of the right quality in the right quantity and preferably just in time.