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SCM : A supply chain is the stream of processes of moving goods from the customer order through the raw

w materials stage, supply, production, and distribution of products to the customer. There are six key elements to a supply chain: Production: Strategic decisions regarding production focus on what customers want and the market demands. This first stage in developing supply chain agility takes into consideration what and how many products to produce, and what, if any, parts or components should be produced at which plants or outsourced to capable suppliers. Supply: an organization must determine what their facility or facilities are able to produce, both economically and efficiently, while keeping the quality high. Inventory: strategic decisions focus on inventory and how much product should be in-house. A delicate balance exists between too much inventory, which can cost anywhere between 20 and 40 percent of their value, and not enough inventory to meet market demands. This is a critical issue in effective supply chain management. Location: Location decisions depend on market demands and determination of customer satisfaction. Strategic decisions must focus on the placement of production plants, distribution and stocking facilities, and placing them in prime locations to the market served. Transportation: Strategic transportation decisions are closely related to inventory decisions as well as meeting customer demands. Using air transport obviously gets the product out quicker and to the customer expediently, but the costs are high as opposed to shipping by boat or rail. Yet using sea or rail often times means having higher levels of inventory in-house to meet quick demands by the customer. It is wise to keep in mind that since 30% of the cost of a product is encompassed by transportation, using the correct transport mode is a critical strategic decision. Information: Effective supply chain management requires obtaining information from the point of end-use, and linking information resources throughout the chain for speed of exchange.

Dell Case Study:

A supply chain is dynamic and involves the constant flow of information, product and funds between different stages. When a customer purchases online from Dell Computer, the supply chain includes, among others, the customer, Dells Web site that takes the customers order, the Dell assembly plant, and all of Dells suppliers and their suppliers. The Web site provides the customer with information regarding pricing, product variety, and product availability. Having made a product choice, the customer enters the site to check the status of the order. Stages further up the supply chain use customer order information to fill the order. That process involves an additional flow of information, product, and funds between various stages of the supply chain.

Why Integrated ? Several departments exist within the Supply Chain organization that work together closely to ensure the availability of quality materials in a timely manner, at a reasonable price. Material Finance and Administration Material Requirements Planning Stores Procurement Production Control and Logistics The integrated supply chain is an evolving concept focusing on merging a buyers requirements directly into a suppliers production schedule. The objective is no less than to ensure the timely deliver of a properly configured product, to the right place, at the right time.
Manufacturers world over are frantically trying to improve efficiencies in their operations, the urgency further accelerated by the shrinking global economy. Falling customer demand, tighter credit, rising input prices and the economic uncertainty are forcing companies to re-evaluate their business plans especially with respect to investments in new capacities, markets and products. At the same time, there is a renewed focus on making current assets work harder and maximize the return on the already invested dollar. However, achieving operational efficiencies requires more than reducing costs, high utilization mandates, strict inventory control and rationalizing capacity or manpower. There is no denying the usefulness of these steps, but the key is to ensure every bit of the supply chain is performing towards meeting a single objective right product at the right place in the right quantity at the right time. This requires all operational entities within the enterprise to be integrated through business processes and technological enablers.

It quickly becomes apparent that the challenge of successfully creating an integrated supply chain system resides primarily with the buyer. The buyer is creating the demand the seller is trying to satisfy. If key participants in the buyers organization disagree on what the seller is to deliver, the integrated supply chain will become an integrated claims chain. This would be a clearly undesirable outcome from both the buyers and sellers perspective though probably less problematic for the seller.


And who are those key participants in the buyers organization whose activities will impact the integrated supply chain? How about considering the activities performed by the departments and functions shown in Table 1. Business Development Production Contract Admin Engineering Finance Quality Subcontract Admin Testing and Acceptance Purchasing Scheduling and Planning Legal Data Requirements Risk Management Design Program Management Configuration Control Cost and Price Analysis Table 1 Business Departments and Functions It does not take a great deal of imagination to see that unclear requirements provided by any one of these departments will greatly reduce the likelihood the seller will produce a conforming product. The intent of the integrated supply chain concept is to generate benefits for both the buyer and the seller. The benefits ideally include: Eliminating non-value added activities in the buy-sell relationship Minimizing inventory investments at all levels within the supply chain Ensuring the right part, is at the right place, at the right time, in the right configuration thereby eliminating assembly, wait, and rework time

Allowing sellers to schedule work using the buyers actual requirements Facilitating the implementation of lean manufacturing concepts Moving selected responsibilities down the value chain