Production Planning

Supply Chain

 the network of individuals, firms and resources business operations and technologies involved in the creation and sale of a particular good. 

Supply chain management

the sequence of activities from a production of a good or service to it being delivered to the end customer. SCM is the art of managing and controlling these logistics which must be efficient and cost effective for a business to be profitable.

ADVS of Supply chain management (2)

• SCM can prevent mistakes that would otherwise adversely affect the business and its profits

•  SCM ensures that an appropriate supply of stocks is used to meet the level of customer demand.

DIS of SCM (3)

• With increased globalization and more international trade, the SCM process becomes more complex. There are more partners in the supply chain to deal with, perhaps from various parts of the world, dealing in different languages and time zones. Time lags and potential cultural conflict delay

• Greater interdependence means that a single problem in the supply chain can cause major disruptions. Having global operations will increase the chances of something going wrong

• The process may require more time and resources to manage supply chains.

ADVs of large supply chain (2)

• Having a broad or global supply chain enables businesses to spread risks. If an area has a severe natural disaster..

• Global supply chains can make it easier for businesses to sell to customers around the world. A multinational company that has operational bases in other parts of the globe 

buffer stock

 extra inventory kept to meet unexpected demand or supply chain disruptions, ensuring a continuous supply and stabilizing prices

just-in-case

This is a traditional stock control system that requires businesses to have large quantities of stock, in the event that it is needed for an unexpected order or in case there is a problem with the supply chain.

ADVs of just-in-case (3)

• Ensures that there is always sufficient stock available to meet customer demands, making sure there is no loss in potential to make profits 

• It reduces down-time caused by a stock-out as there is no need to wait for delivery of stocks to arrive

• It enables a business to take advantage of purchasing economies of scale

DIS of just-in-case (3)

• High costs of storage, including costs of insurance and maintenance

• Some stocks are perishable buffer stocks are not feasible whilst other inventories are subject to damage or theft

• There is an opportunity cost of money being tied up in stocks (money might have been used more profitably elsewhere in the business)