What Is a Supply Chain

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service. 

A supply chain is dynamic and involves the constant flow of information, product, and funds among different stages. In our example, Walmart provides the product, as well as pricing and availability information, to the customer. The customer transfers funds to Walmart. Walmart conveys point-of-sales data and replenishment orders to the warehouse or distributor, which transfers the replenishment order via trucks back to the store. Walmart transfers funds to the distributor after the replenishment. The distributor also provides pricing information and sends delivery schedules to Walmart. Walmart may send back packaging material to be recycled. Similar information, material, and fund flows take place across the entire supply chain. 

In another example, when a customer makes a purchase online from Amazon, the supply chain includes, among others, the customer, Amazon s website, the Amazon warehouse, and all of Amazon s suppliers and their suppliers. The website provides the customer with information regarding pricing, product variety, and product availability. After making a product choice, the customer enters the order information and pays for the product. The customer may later return to the website to check the status of the order. Stages further up the supply chain use customer order information to fill the request That process involves an additional flow of information, product, and funds among various stages of the supply chain. 

A typical supply chain may involve a variety of stages, including the following  

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So what is a supply chain manager This individual is someone who can identify the critical resources that move through the supply chain someone who can identify the forces that come into play and that affect the performance of these resources and someone who can use this information to develop goals, objectives, and a strategy around which to optimize the flow of the supply chain. This sounds like a big task, and it is. But numerous tools are available to help you with this task, and as we move forward we will learn more about these tools. 

What good is a supply chain that consists of optimized individual firms ... 

Key issues What is the supply chain, and how is it structured What is the purpose of a supply chain ... 

What some companies try to do is extend their p ment terms so they p over an extended period of time thus they are using the supplier s money for a while. This might work for a short time but in the long run it will damage the supply chaiir As organizations in the supply chain are not paid and they nm out of cash, they rrr be forced to file for barrkruptcy or go out of business. This can destroy the supply chain for mary other businesses as well. 1 saw a sitnation where one member of a supply chain, a vehicle manu-factnrer, would not pay their bills for materials. A plastic extruder extended their credit to the limit as he continued to operate and finally was ordered by the bank to cease production imtil some of the credit was paid. This... 

The focus of a company is to be competitive in the marketplace and thus be profitable. A competitive supply chain has to provide customers with the expected or superior performance. But what does it mean to be competitive The competitiveness of a supply chain refers to two aspects of the supply chain (1) the link between a supply chain s choice of its competitive metric and the corresponding choice of its architecture and (2) the impact of competitors on a supply chain s performance. While successful firms in every industry often have unique capabilities, an important question for every firm is to adjust its supply chain architecture to remain competitive in the presence of a changing environment. 

Most companies understand that supply chains have complex processes. They also know all too well that the underlying processes are growing more complex. They live it every day. However, what most companies fail to realize is that supply chains are complex systems with finite trade-offs. These choices happen up and down the supply chain. Leaders make them consciously while laggards make them by default. They are both horizontal (cross-functional) and vertical (within a function). They are also intra-enterprise (within the company) and inter-enterprise (external to the company within a trading network). 

Leaders are still seeking a clear definition of supply chain excellence. Despite 30 years of investment in supply chain management, the definition is not clear, ft remains a holy grail. In interviews, we asked, "What company defines supply chain excellence "... 

Before applying the five focusing steps, it is important to define the system or the scope of the process to be synchronized. The system could be a plant, a value stream within a plant, or a supply chain composed of several plants including suppliers and the customer. In any case, it is important to first decide what the boundaries of the system to be synchronized are. Next, we must describe the purpose of the system and decide how to measure it. As stated earlier, we must know just what we are seeking and we must set up measurements to achieve those results. It cannot be overemphasized that the measurements will determine the performance, so we had better be monitoring the important things and not just the traditional cost accounting factors such as efficiency and utilization. 

This model is based on the concepts of constraints management and synchronous flow, which are rooted in the fundamental laws of physics. (See Chapter 7 for a further description of Constraints Management.) Focusing on a single control point and subordinating all other resources and processes to that point can synchronize any system. The obvious point to use as the control of a supply chain is the market that it serves. It makes no sense to produce or process any more than the market demands and it is fully intuitive that the entire system should be focused on producing just what the market wants. While this seems like a statement of the obvious, there is ample evidence that the business world does behave in this manner. To quote Mark Twain Common sense is not very common. ... 

The balance of power among a supply chain s members plays a significant role in designing and operating a supply chain. SMEs, as more minor members ofthe chain, often have little input. So if they want to be members of the chain, they must accept what is imposed on them. 

Through the use of collaboration tools, the questions ofhowto create awin-win situation between suppliers, distributors, the supply chain members, and to what extent collaboration tools are used become a concern for supply chains. Littler, Lev-erick, Bmce (1995) questioned the suitability of supplier collaboration maybe his question needs to be further extended, and it should be worded as to what extent/level supply chain collaboration is considered to be beneficial ... 

When the agents involved in a supply chain adopt the satisficing objectives, it is not obvious as to what the objective function of the supply chain entity should be. In our research, we adopt the general definition of supply chain coordination with contracts proposed by Gan, Sethi, and Yan... 

Pull-based ATP Models Pull-based ATP models perform dynamic resource allocation in direct response to actual customer orders. Models of this type can range from a simple database lookup to sophisticated optimization. The purpose of pull-based ATP models is to make best use of available resources (including raw materials, work-in-process, finished goods, and even production and distribution capacities) to commit customer order requests over a period of time across a supply chain. The time horizon in pull-based ATP models is usually so short that a company can assume full knowledge about the availability of production resources. Pull-based ATP models are responsible for matching complicated customer requests with diversified resource availability. The specific decisions usually involve which orders to accept and, for each order, what quantity and which due date to promise. 

Before we formally define supply chain engineering, we begin with the defini-hon of what a supply chain is. 

Indeed, the method used to generate the demand forecast at each stage in the supply chain can have a significant impact on the stream of orders placed upstream. Vollmann et al. (2005) provide a simple example to demonstrate the existence of the bullwhip effect. This example is repeated here, with some extensions, and shown in Table 3.6. Specifically, we extend what is a 10-period example from Vollmarm et al. to 20 periods that cover two repeating cycles of a demand stream with slight seasonality. In addition, we institute a few policy rules (1) that orders must be non-negative, (2) that... 

The need for info-partnering is emerging as the foundation of an information-sharing strategy (ISS), which precisely specifies the circumstances under which a link within a supply chain will share information and to what extent. Two aspects are taken into consideration information transfer and coordination. The first is focused on providing the partners with adequate information related to their functions. The latter takes into account the intended result of collaboration between supply chain links to assure the targeted boost in operational efficiency (Hung et al. 2011, pp. 112 and 113-114). 

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