CH 9: Using Supply Chains to Create Value for Customers

MKT 2010`

The supply chain

includes all of the organizations that impact products before, during, and after their production

sourcing

hiring and evaluating suppliers

procurement

purchasing the necessary goods and services

purchasing agent

a person responsible for sourcing and procurement in supply chain

why outsource?

• sometimes outside organizations can provide more value

• it is less costly and quicker than making it yourself

• customers should be the focus of any insourcing and outsourcing decisions companies make

deman planning

the process of estimating how much a good or service a customer will buy

production scheduling

the management of the resources, events, and processes needed ro create an offering

lead time

the amount of time it takes for a customer to receive a good or service once it’s been ordered.

Sourcing decisions, deciding which suppliers to use, are generally made ____ and ____ _____.

periodically ; less frequently

key inventory terms

• safety stock

• shinkage

• just-in-time inventory

• vendor-managed inventory (VMI)

Forecasting decisions must be made ____ ____.

more frequently

safety stock

backup inventory that serves as a buffer in case of a surge in demand

• avoids stock outsor unexpected delays in supply.

shinkage

used to describe a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors, and supplier fraud

Just-in-time inventory

a system in which a firm keeps very little inventory on hand. Instead, suppliers ship inventory as needed

Vendor-managed inventory (VMI)

The practice of having your suppliers manage your inventories

warehourses

• needed to accommodate supply and demand changes for products

• trends towards smaller warehouses

distrubution centers

warehouses or storage facilities where the emphasis is on processing and moving goods on to wholesalers, retailers, or consumers rather than on to storage

robots

pick products, which are identified by their SKU (stock keeping unit)

cross docking

products from suppliers are unloaded from incoming trucks and immediately loaded onto outbound trucks with little or no storage in between

• computer driven

what are the modes of transportation?

• trucks

• water

• railroads

• air

• pipelines

trucks

most common mode of transportation

water

especially key in international trade

railroads

sped and cost of rail between trucks and water

air

high cost of air limits it use to time sensitive products

pipelines

least expensive for oil, natural gas, and other liquid chemicals

what do track and trace systems do?

they electronically record the paths shipments take

Most product shipments (tracking individual packages is harder) can be traced using what methods?

• GPS

• RFID (radio frequency identification)

• Bluetooth

• Barcodes

reverse logistics

running products and materials backwards through the supply chain to extract value from them

• “turn trash into cash”

• can be huge

• recycling

recycling

The process to extract value from waste and using it to create new products