ISCM ch.1

Supply Chain Management

managing the flows of information,finances and materials from raw material suppliers through factories and warehouses to the end customer (to deliver superior customer value at less cost)

What flows exist?

• Money (payments)

• Information (orders, forecasts)

• Goods (products)

• Reverse flows (returns, recycling)

What STARTS a supply chain?

Two possibilities:

1. Product supply driven (forecast → stock)

Customer demand driven (order → produce)

SCOR MODEL (CORE FRAMEWORK)

1. Plan

2. Source

3. Make

4. Deliver

5. Return

👉 This is the structure of the entire course

Supply chain structure

• Supplier → Company → Customer

• Extended:

  • Supplier’s supplier

  • Customer’s customer

DYNAMICS

Supply chains are NOT stable

Important:

• Demand changes

• Supply changes

• Leads to imbalance

Bullwhip Effect

Small demand change → HUGE upstream effect

Causes:

• Poor communication

• Forecast errors

• Delays

Key trade-off

Inventory vs Service level