SCM 492

I. Ch.1 – Introduction to Supply Chain Management
A. Introduction
 Large firms find vertically integrated firm (business boundaries include former suppliers and/or customers) is difficult to manage.
 Firms focus on core capabilities, while creates collaborative approach (alliances/strategic partnerships with suppliers, transportation and warehousing companies, distributors and customers who are good at what they do) is most effective and efficient way for firms to stay successful – central to practice of SCM
 Communication and information exchange (ERP) make global partnerships and teamwork possible to compete in markets.

B. Supply Chain Management Defined
 Supply chain starts with raw materials, turning them into materials for manufactures to assemble the finished products, sell these to wholesalers or distributors, who resell to retailers and then the end-product to consumers.
 Consumers buy products based on cost, quality, availability, maintainability and reputation factors to satisfy their requirements and expectations.
 Reverse logistics activities are return products, repairs or recycle them are included in the supply chain.
 Direct suppliers and customers of focal firm (end-product assembly firm) are first-tier suppliers and customers.
 Making products and services available to consumers – including production, delivery and recycling of materials, components, end products and services – is a supply chain.
 The only source of income for all supply chain organizations are end customers.
 The key to develop effective SCM programs is keeping the customer in mind.
 Ignoring interest of end customer and other SC transfer risks – costs and additional waiting time along SC; leading to higher end-product prices; lower SC service levels and eventually lower end-customer demand.
 Many service providers (indirectly involved in SC)