Suppl yChai n:l i
nk e
ds etofc omp a niestha tperformo rsuppo rtthed eli
ver
yo fac ompany’sprod uctsors er
vice
stocust
omers(3+c o
mp ani
esl
ink
ed
byon eormo reoft heu pst
ream flo wso fpro ducts
Deliversvalue:t otheen dusero fpr o ductsatt herightplac eandt ime
Cutc ostsprovideinno vat
ion,en sureq uali
ty,an dd e
liverproducts
Downs t
ream:flo wofp r
oduc tstot h ecustome rs
Upst r
eam:t heflo woffin anc i
alr esourc e
st hatmo vefro mth ec ust
omert ot hecompaniesthatwe r
ea rtoft
hesuppl
yc ha
in
DistributionCha nne l
s(Ma r
ke tingChanne l
)ar ewho l
esalers
,d ist
ribut
ors,an dreta
ile
rs,throughwhi c htheflo wofproduct
strave
ls
Value:ma k eitavaila
bletos hipt oth ene xts t
ep,takeor ders,shiptot heproduc ttonextst
ep
Sup pl
yChai nI ntegrat
ion:be t
te rcu stome rservice,reducedc osts,effic ientr e
source
s,respondt oc hange
fie ntat
ion:p hil
osophyt hatguid est hea cti
onsofc omp anyme mbe rsto
wa rdth egoalofactiv
elyma nagingtheupst
rea
ma ndd ownst
rea
m flo wsof
good s
,a nds er
vice,fina nces,a ndi nfo
SupplyCha inMa n
a gement:action st hefrimt akestoc oordinateth evari
ousflo wswi t
hinas uppl ychain
(ExWa lmartRe tai
lLi nk;sett
ingu pt hetec hnologyise nablingthei nfosharing)
InventoryCa rryingCos ts
:ma kin go rbu y i
ngt hepr oduct( Taxes,in s
urance,spa ce)
Int
eg r
a t
edSup plyCh ai
n:*Re lations hipBa sedSt rat
egiesre al
izemu lt
ipl
ebe nefit sr
educedc osts,bett
ers er
vice
,effic ien
cy )
Comp anie
smus tbewi lli
ngtoe mbr acer el
a ti
onship-baseds tr
ategies
Suppl yCha i
nSt rategi es:
PushSt rat
egy( Spe cul at on)
i :*Lo we rcos ts/go odsb asedons alesforeca s
t,putsthoseg oo dsintostoragewait
sforacust
omert
oordert
hepr
oduct
1. Ac hiev eEc ono mi eso fSc ale:t ranspor t
.c anmo v efulltr
u cksl o
we rsper-unit
2. Pos iti
ve l
yAffe ctCu s t
ome rSe r
vicebcg oodsa rea l
readyins tock
Disad vant
ages :Ina cc urates alesf orec a
st ;toomu c
hi n ventor y
Re spo nds lo wl ytode ma ndc h ang e
In vent oryc arr yingc o st
sa ree xpe nsive25- 30%
Thepr omot onp
i us hs trate gyr e l
ie sont h es al
e sfo rcea ndpr omota cti
cstop ushpr oduc t
st owho lesal
ers
PullStrate
gy( Re spo ns i
v eSu ppl y):c ustome ror de rsdr ivema nu f
acturinga ndd i
stributi
ono ps.*CUSTOMI ZED
1. El imi na tesr iska s soc iatedwi thp roduc i
n gun wa ntedp r
oduc t
s
2. Cu stomi z ep ro duc tst oc us t
ome rr equireme n ts
3. I nve ntoryc arry ingc ostsa remi nimi zed
4. Fi rmc a nre sp ondr ap idlyt oc ha ngingma r
k etc ond i
ti
ons
Disad vant
ages :Ca nn otus ee c on omi esofs cale
Fle xib i
lityi sha rdt oa c hi
e ve
Thepr omotionpu llst rategyi nvo lveshe a vys pendi ngf ora dsa ndp romo ,tocreated ema ndt hatpul
l sprodu
ctsthr
oughthec
hanne
ls
Hybr id(Push- Pull):s alesf or eca stinitials tageso fth es upplyc haino perateonapu shs ystem,BUTc omplet
ionofprod
ucti
sbase
donPullSys
tem
1. Combi ne st hee co nomi e sofs c al
eoft hepu shs tr
a t
egywi ththefle xi
bi l
ityoft hepu ll
2. Pr o du cesa c cura tes alesf oreca stb cfir mst e ndt obemo rea ccurat
ea taggr e
g at
el e
v el
Disadvan tage:NOTc o stc ompe ti
tive
Inc urc os tstos tor ec o
mp one ntsi nin vent
ory
De v elopdi str
ibu tions ystemt hatc and eli
verp roductstoa voidcompl a
ints
Selec
tingAp pro priateSt rateg y
1. St abi lityo fDe mand:i fitcantpr edictde ma ndsi tcantcreatea ccura
tes al
e sforecast
(*
Int r
o ,gr
o wths ta ges )Choo sePu ll/Hy br i
d
2 .De gr eeo fCo stCo mpe titivenes s:ifc ostre duc ti
oni sag oalt h
a nPu shStrategyi sgood
3 .De gr eeo fCus tomi za tion:Pu ll/Hybr idc hoi cef orc ompa n
yt ha tcomp et
e son
A.a bili
tytode l
ive rcu stomp ro duc ts
B.hi ghlevelo fc ustome rs e rvice
4 .Spe eda tWhi chCus to me rsbuyPr oduc t:Pus hs trat
e gy
LeadTi me:ti
mef rom pl ace me nto ftheo rdertode liveryoft hegoods
Lo gist
ics :ma na gementth atp lans,impl e
me nts,andc o ntrol
st heflo wo fgoods,servic
esa ndin
formati
onbetwee nthep oi
ntofori
ginandthefina
l
custome r
Logi s
ticians:s upervisi
ngt ruc kinga ndwa rehousep ersonn el
De terminingi n v
e ntoryin
gs houldbes t
or ed
Ana lyzingh o wmuc hproducttos hi
pf r omd i
str
ibuti
onc ente
rsa ndstore
sa ndwhen
Ar rangingforma t eri
alsandp r
o ductstobebou ghtandmo v
ed
Ac hieve:“ th
es ev enRso fLo gisti
c s”
De li
veringt heRI GHTp rodu ct,tot heRIGHTp la
c e
,t ot heRI GHTc ustome r
,att h
eRI GHTt i
me,intheRIGHTqu anti
ty,intheRIGHTc ondi
ti
on
anda ttheRI GHTpr ice
(Ca nserv ea sthec omp et
i t
ivea dva ntage)
Impac to fLo gisti
cs:TheFo urP’ ’s
Plac :De
e liveri
n gprodu ctsands erv i
cestothec orre
c tloc a
tion,andinat imelyma nner
(Satis
factioni sak e
yt oinc r
e asingma rke
ts ha
re)
Pric :Effe
e ctsp r
icethro ughe ffic ientpurchasing ,inventorywarehousing,andt r
ansport
ati
onproces
sesthatkeepc ost
sdo wn
Pro duct:I sin flue nc edb yi nputf roml ogi
sti
c sma nag ersa b
utp acka
gingne edsfors a
feeffic i
entst
orage
Pro motion :Promosl e adtoi nc re
as eins a
lesvolume .En suresuffic ientma t
er i
als
,inventor
y,st
orage
,andtransporta
ti
ona reava
ila
bletohandl
e
Ma nufac turingOpe rations :rece i
v i
ng,stori
ng,a ndr etrie
vingma t
eri
alsn e
ededi nproducti
on
, Fi
nanc:a
e mountofin
vent
oryacompan
yholdsa
ndt
heco
stsofwar
ehousi
nga
ndt
ran
sport
ati
onaffe
ct(
ROI
)
Cust
omerSe
r vi
ce:howwellma
nger
sperf
ormaffec
tsc
usto
me rs
ervi
cewhi
cha
ffe ctr
evenue
Al
igningLo gis
ticswSup plyCha i
nS tr
ate
gie:
s
Comp aniest hatpu r
suePus hSt ra
tegy:ha
vetose tupl ogist
icsopsthathandlelargerv ol
ume( *Benefitfrom)
Mo desoftra nsportatio
n;c ontainershi
psrai
lroa
dsa n dc heaplyhandlelar
gea mount sofproduct
Largewa r
e hous ese qui
ppe dt oeffic i
entl
ystore,retrieve,andloadgoodson tov ehic
lesontovehi
cl
esatfas
tpa
ce
Comp aniest hatpu r
suePul lStrat
egy:Est
abli
sho pso ns ervicequal
ity,
innovati
on ,fle xibil
it
y
Suppli
e r
sth atp roducea ndd eli
v e
rq ui
ckl
y.Ma n
a gerstryt ofin dsuppli
ersthatcanoffe rshortl
eadti
me s
Transport
ationt oe nsureo nt i
mede li
very
Advanc e
dt ec h
no logyt oinc r
easerespons
ivene
ssa ndfle xibil
it
yoflogist
icsope rat
ions
EnterpriseRe sour cePlanni ngSy st
em:d a
tama nag eme ntsyste
mst hati
ntegra
tei nformati
ona c
rossal
ldept
s,
EDI:ERPs y s
temsc anco mmuni catewit
hITs ystemso fo thercompa n
iesby;Ena blingana l
most-i
nst
ant
aneoust
rans
ferofi
nfor
mat
ionf
rom one
comp a
n y’
sc omput ertoano therREACTI NGTOCUSTOMERDEMAND
ThirdPar tyLo gist
ics( 3PLS :c
) ompa niespe r
forms omeo ra llofitslo gisticsacti
vitiesforo t
he rco mpanie
s
(Spe ci
a l
izeint ranspor t
atio
no rwa r
e h
o usingforothercompa nies)re turna ndr epairpr oducts,customsc l
eara
nce
Lo gisti
cFunc tions :
Ma n agingI n
v entories:cust
ome rservicewi l
lsuffe rifthei n v
e n
tor yi sn otproperlyma naged
Type sofI nv entorie s:
Cy cli
ca lInventor :afir
y mc a r
ri
estome etaveragede ma nd
Pipe l
ineI nventory:*MOSTLI MITEDi nventoryINTRANSI Tbe twe ens upp l
iersa ndc ust
ome rs.(Promise
datala
terda
teduetohi
ghdeman
d)
*Ant i
cipativeSt ock:pr oducedorp urch a
sedwhe nac omp an yexpe ctss omee ventt hatwi l
lNEGATI VELYa ffects
toc
kavail
abi
li
ty
*Se asonalSt oc k:go odsafir ms ell
son lyatc er
taintime so fthey e arord urin
gc e rt
ains easons
Obs oleteI nvent ory:* LeastDe s
ira
blec ann olongerb eso ld,expired ,red esigned,o ver-
or d
ere d
Inve ntoryCos ts:
Purc hasingCo sts:co st
st oplaceandpr ocessordersma teri
a lsandfini shedg oods
Inventor y
-Ca rryingCos t
s:NEGATI VELYi mpa ctprofit s( Calculatedba sedonACTUALCOSTf oreachpar
t)
Out -of-
Stoc k:Stock outoc cur
swhe nac ompan ydoesn oth avee nou ghi nv entoryav aila
bletofil lanorder
(Ba ckor derorc anc eltheorder)
Inve ntoryTur ns:#o ft i
me safir mse nti
reinventoryiss olda ndr ep laced;c alc
ula tedbydi vidingt heCOGSbyt hecompany’sav
erag
einv
ent
ory
Da ysofSuppl y :estima t
eo fhowma nyd aysthefir msc u rrentinve ntorywi l
llast;c a
lculat
e dby
dividingt heCur r
e ntinv e
ntorybyt hea verageda il
yus ag eo rs ales
Pur
c h
asing:s
ourcinga ndp r
ocureme nto frawma t
eri
als
,compone nt
s,a
n dpart
s,fin i
shedgoodsandse
rvi
ces
-Mater
ialsac
countfor4 0-60% ofCOSTS
-Se
lect
ingsuppli
erstha tcanprovideh igh-qual
itygoodsandservi
c e
senablescompet
it
ion
-Havi
ngg oodsuppli
erse arl
yimpr ove sproductdesi
gn
-So
urcingma t
eri
alsfromr e
li
ables uppliersensure
sthattheflo wofg oodsinasuppl
yc ha
inme e
tsde
ma n
d
PurchasingActi
vitie
s :
Sel
ectandQua l
ifyAp pr opr
iat
eSupp lier
s
Negoti
ateContra
cts:forPu rch
a s
eOr ders:buyingstu
ff
MonitorSuppli
erPerfor mance:qua l
ity,on-ti
mede li
ver
y
Devel
opSupp li
ers:organizesuppliertrainingbycompa nyexpe
r t
sorprovi
defina n
cialas
sis
tanc
e
Re
-Shoring:s our
cinggoodsa n
ds e
rvic
esdome sti
cal
lyt
hatwereonc
epur
chas
edi
ntl
.
Mat
erialMa n age
me nt
:ma nagi
n gmate
ria
lsforma nu
fact
uri
ng
Ware
h ous
ing :holdi
nginventor
iesofbot
hintermedia
tema t
eri
al
sandfinis
hedg
oods
Di
str
ibuti
on :trans
port
ingg oodsfr
om wareh
ous etocus
tomers
*Ma teri
alsMa nag eme nt:inbo undinvolveme ntands t
orag eofma t
eria
lsinpreparat
ionf o
rt hos
ema t
eri
al
stoentera
ndflo wthr
ought
he
manufacturin
gp r
oc es
s
FourBe nefit s:
1. Re du cesprocur eme nt,tr
ansport
ation,andpr oductionthroughe conomieso fscal
e
2. Coor di
na t
essu pplya ndd emandf orma terials
.Cy cl
ical,saf
ety,a
nda ntic
ipativ
e
3. Su ppo rt
sma n
uf acturingacti
vates
4. Su ppo rt
sma n
uf act.Ob j.
byma kings uretha tgood sa r
ea vai
labl
et oshiptoc us
tome rsi
na neffic i
entmanner
Wa r
e h
ou si
ngFun cti
ons:
Storage:ho l
di n
gi nvent
o riesun ti
ltheyarene eded.Pr oduc tmu stbewa rehousedprope r
lytoe ns
ureth
ereisnodamage.
Mu stbeea
sil
yfo
undb
yst
ock
pic
ke r
s
Mo veme nt:Re ceivi
ng;un loa dinggoodsfromc arr
ier,upd atingin v
entoryandi nsp
e c
tion
Put-
Awa y:mo vi
ngg oodst ot he i
rtemporarys t
oragel ocationa ndupd ati
ngi nv
entory
Shipping:l
oa dingp i
ckedi temson t
ot r
ansportati
onv e hi
c l
e s
,up dati
ngr eco
rd s
Produc t
ion:a ssemb l
yofpr od uct
s,custo
mi zingpro du c
ts,re f
u r
bishingret
urnedg oods
Dist
r i
bution:s hipsitsg oodsf rom awa r
ehou setoi tsstoresa ndc us
tome r
s
Dist
r i
but i
onCe nter:typeo fwa re
h o
useu seds pec
ific all
yt ostoreandsh i
pfin ishedg oods