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Summary Guide to Supply Chain Management - International Supply Chain Management 1 (1000IS1_22)
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This is a summary of the book, chapters 1,3 and 4
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International Supply Chain ManagementChapter 1: introduction to supply chain management
1.1 what starts a supply chain?
Flow of materials—these are depicted in the middle part of the diagram.
- They range from raw materials work in progress finished goods.
This good flow encompasses the supplier’s supplier through the end consumer.
Flow of information—order confirmation or dispatch advice.
There are also reverse flows.
- Goods
- Information
- Packaging material
- Transportation equipment
Reverse flow of funds.
- This is money that flows back into the supply chain.
Two forces in the chain of goods, information and funds, which are:
1) Product supply
2) Customer demand
The supply chains can be triggered by product supply (commodities) or by costumer demand (customized
products).
The degree of customization dictates how much and in which format the supplying company holds inventory.
1.2 A functional view of supply chain management
1.3 Supply chain architecture
in its simplest format, a supply chain consist of three nodes.
In an extended supply chain, we consider three additional supply chain nodes.
On the upstream side (towards supply), there is the supplier’s supplier or the ultimate supplier.
At the downstream side (towards demand), there is the customer’s customer or the end consumer.
- the distinction here is the different kind of customers that exist between your company and the end
consumer.
Customers in supply chain can be distributors, wholesalers or retailers.
There are entire categories of companies that are service providers to other nodes in the supply chain. These
perform services in areas such as:
1) Transportation
2) Warehousing
3) Finance
4) Market research
5) New product design
6) Technology
7) Sustainability
1.4 supply chain dynamics
ideally, supply chains react to changes in their environments.
It is important that the rate of supply mirrors the rate of demand; otherwise the outcome will be very unfavorable
for Las Vegas.
Their task is to balance the rate of product supply chain in accordance with the rate of customer demand.
- External influences will affect the equilibrium.
Chapter 3: guide to source in supply chain management
, 3.1 Introduction to sourcing
examples of direct and indirect items
Direct Indirect
Glass Factory security
Label Consultants
Sugar Cleaning products
Closure (cap) Electricity
Flavoring Protective clothing
Carbon Dioxide Stationery
Sourcing in product companies generally involves dividing products or services into two distinct groups: direct and
indirect.
Direct items are directly related to the product’s manufacturing process.
Indirect items describe all other products and services that are needed to run the company.
- In organizations, sourcing is not exclusive to the supply chain, as it is deployed in all companies regardless of
whether they have a supply chain or not.
Different organization refer to sourcing by different names.
3.1.1 The purchasing process: pre-order steps
The purchasing process is also known as the purchase-to-pay process.
NeedSpecificationsourcingTendering negotiation selectioncontracts
3.1.2 The purchasing process: Post-order steps
Placing and handling orders Progressing and delivery Payment and review Performance indicators
3.1.3 Tactical sourcing
The purchasing process of pre-order and post-order steps will continue on an operational basis daily.
Tactical sourcing activities may be used in conjunction with the pre- and post-order steps or may sit outside.
- Market research
- Commodity analysis
- Forecasting requirements
- Supplier performance analysis and benchmarking
- Price and cost analysis
Continual market research is essential to establish what is happening in the market for a particular item or
commodity.
Suppliers efficiency can be raised by communicating better forecast requirements.
by improving supplier efficiency, reduced costs and improved service are juxtaposed for both parties.
3.2 Strategic sourcing initiatives
The category sourcing concept also aims to achieve a shift in customer and supplier relationship, striving for joint
benefits and co-ownership of the sale.
Category sourcing (CS) or Category management (CM) are concepts where the products or services an
organization requires are broken down into discrete groups.
The steps for a category sourcing process adapted from O’Brian (2009) are:
1. Profile the category group
2. Select the sourcing strategy
3. Generate the supplier portfolio
4. Follow the purchasing process
5. Negotiation
- going back to step one of the category sourcing process, the sourcing
strategy matrix adapted from Kraljic (1983) is a tool to segment the
different category groups.
3.2.2 Supplier Relationship Management
breaking down functional barriers and functional mindsets
promoting innovation and joint thinking for “doing things better”
Improving supply chain visibility for buyer and supplier
Sharing assets across supply chain, removing duplications
Enhancing forward looking visibility giving more reliability to all parties.
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