Supply Chain Management: Concepts, Techniques and Practices, Enhancing Value Through Collaboration (371 pages)

A Supply Chain encompasses all activities in fulfilling customer demands and requests as shown in Figure 1.1. These activities are associated with the flow and transformation of goods from the raw materials stage, through to the end user, as well as the associated information and funds flows. There are four stages in a supply chain: the supply network, the internal supply chain (which are manufacturing plants), distribution systems, and the end users. Moving up and down the stages are the four flows: material flow, service flow, information flow and funds flow. E-procurement links the supply network and manufacturing plant, e-distribution links the manufacturing plant and the distribution network, and e-commerce links the distribution network and the end users. The supply chain begins with a need for a computer. In this example, a customer places an order for a Dell computer through the Internet. Since Dell does not have distribution centers or distributors, this order triggers the production at Dell's manufacturing center, which is the next stage in the supply chain. Microprocessors used in the computer may come from AMD and a complementary product like a monitor may come from Sony. Dell receives such parts and components from these suppliers, who belong to the upstream stage in the supply chain. After completing the order according to the customer's specification, Dell then sends the computer directly to the users through UPS, a third party logistics provider. This responsive supply chain is illustrated in 4 Figure 1.1. In this supply chain, Dell Computer is the captain of the chain; the company selects suppliers, forges partnerships with other members of the supply chain, fulfills orders from customers and follows up the business transaction with services. Now, consider a case of purchasing a pack of Perdue chicken breast at Sam's Club. When customers buy trays of chicken breast at Sam's Club, the demand is satisfied from inventory that is stocked in a Sam's Club distribution center. Production at a Perdue Farms manufacturing facility is based on forecasted demand using historical sales data. Perdue Farms runs a vertical supply chain starting from the eggs, to the grains that feed chicks proceeding to manufacturing, packaging, and delivery. Packaging materials come from suppliers. This is an efficient supply chain and is illustrated in Figure 1.1. These two different types of supply chain, responsive supply chain and efficient supply chain, will be discussed in detail in Section 1.4. Supply …