Understanding Your Supply Chain

A defirrition of the supply chain from the APICS Dictionary, Eighth Editiorr, 1995 is  

1) The processes from the initial raw rrraterials to the ultimate consumption of the finished product linking across supplier-user companies. 

2) The functions within and outside a company that enable the value chain to make products and provide services to the crrstomer. 

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This is an area where the complete supply chain must be understood. You must understand the material flow, but you should also understand the flow of money. A supplier in your supply chain several levels upstream can run out of cash due to a long time being taken by a customer to pay bills. When the credit line that is available is used up, the only option the supplier may have is to shut down until a payment is received. A move like this can cause an entire supply chain to stop or shut dowm... 

The concepts in this book have been tested on over a thousand students, and the book includes new cases developed to illustrate contexts based on my consulting and research experience. Several of the chapters are motivated by the content of research papers, which I have adapted to be accessible to students in a business school or an industrial engineering course. The problem sets provide many contexts to test your ability to apply the tools we will learn. The applications are highlighted with specific case studies, references to websites that provide updated content, and trade and government publications to let you gauge the financial impact of choices. Through this work, I hope you will be convinced and understand that supply chains can and do have a significant impact. 

Drills. Practice the simulation of supply chain disasters. While the calamity that will strike your supply chain may not be the same one that you train for, the understanding of how... 

Chemical companies are also weak at looking for opportunities downstream of their own operations. Whilst most would recognise the need to understand the business of their customers, few look further downstream and try and understand their customer s customer. However, if your materials can reduce energy consumption or waste production in a final product, you reduce the costs further downstream and potentially change the value distribution across the entire supply chain. If you understand how your products are used downstream, you can share that value with your customers. 

Now that you have an understanding of how your business operates, you can begin to look at the supply chain. 

Using the quality tool of process mapping, a picture of the supply chain can be developed. When this process is started you must look at where the process begins and ends. This requires a good understanding of where your... 

It is important to understand where your organization fits into the supply chain then you can begin to see the impact that other customers and suppliers can have on your business. An example of this would be in the mid 90s when General Suharto, the President of Indonesia, ruled that no more palm kernel oil could be exported from this country. Indonesia at... 

I wish each of you success on your quest for a world-class supply chain. As you progress, remember that it is a journey, not a sprint. It requires leadership, tenacity, a deep understanding of the fundamentals, and a commitment to be in it for the long haul. 

For understanding Registration, Evaluation, Authorisation and Restriction of Chemicals (REACFi) and the obligations that fall upon you, it is very important to indentify your role and define where you stand in the supply chain. Companies dealing with chemicals may have more than one role depending on what they do with a single substance (or different substances) they handle. 

As soon as you have come to an understanding with your first supply chain partner, you can both dispense with double and thereby unnecessary overhead activities (Fig. 88). 

At this point you have a fairly detailed example of what a Supply Chain Management step chart should look like. What you stiU need to do is to customize the step chart for your organization. Chart 2.9 presents an example of the customization of this step chart for the logistics operation of a large manufacturer. From this example you should be able to better understand what is expected in order for you to develop your own organization-specific step chart. 

If you have a conversation with the finance department or on Wall Street, you will hear different views of what value means. The definition of value from a finance person would include, of course, money. Within this book, we will begin to understand different perspectives on what value means and show how supply chain management and operations affect an organization s financial performance. In the next chapter, we will discuss the monetary value of a firm in greater depth, but for now, taken together, firm value includes ROIC, growth rate, and cost of capital. It is incredibly beneficial for supply chain professionals to understand how these factors are affected by supply chain activities. In the end, you will not only know how operational metrics are affected by your decisions but you will also grasp how financial metrics are influenced by your decisions. 

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