Supply Chain Management
Dept. of Industrial Engineering
State University of New York at Buffalo
Submitted in partial fulfillment of the requirement of CSE 712,
"Seminar on E-Commerce," Spring Semester 2000
Instructor: Dr. Aidong Zhang, State University of New York at Buffalo
Technology improves day by day. What is the latest Technological trend today will eventually be an outdated one tomorrow. Man, ever since evolution has found new things and transformed himself from the Stone Age to an Age called the "Information Age". Now we live in a world where Information in the right ...view middle of the document...
The Entities in a Supply Chain are Suppliers, Manufacturer, Middlemen(Wholesaler and Retailer) and finally the Customer.
So the demand of the Customer is satisfied by supply of value added goods that travel through the Supply Chain entities.
What is Supply Chain Management?
Supply Chain Management deals with the total flow of Materials through the various entities in the supply chain (i.e. from Suppliers to Customers) so as to maximize profits , minimize costs for the entities in the supply chain while providing maximum delight to the customer.
What is the Supply Chain Process?
A Supply Chain Process consists of various Orders like Procurement Order , Manufacturing Order , Factory order , Distribution Order, and Customer Orders. The main concern of Supply Chain Management is how and when and in what quantity are these orders to be placed by each entity of the supply chain to his adjacent entity so as to achieve the objectives mentioned in the definition of Supply Chain Management.
What is the Scope of Supply Chain Management?
The following diagram explains the Scope of Supply Chain Management. The arrow marks in the diagrams indicate orders placed by adjacent Supply Chain entity to his predecessor. The triangles indicate the Inventory of goods each entity has.
Why are these Orders for products and its Supply important?
This can be explained by a Diagram called the "Feast or Famine" Diagram.
Let us consider the demand and supply curves for a product, We see that at one point of time we have excessive inventories and at another point of time we have a stock out and thereby we are unable to meet the demand. So both these result in either huge amount of losses and capital blockage for the supply chain entities or results with Dissatisfied customers.
What is the time involved in the Process?
The time involved in a traditional supply chain process is enormous. As there are many orders which are placed by each entity to his adjacent entity, each order(demand) and supply process takes its own time. For ex. The procurement order time in a company was as follows:
So each order and supply cycle alone might take a vast amount of time thus delaying the Supply Chain Process (traditional).
How can we effectively manage the Supply Chain Process?
Next comes the question of how well a Supply Chain and its Process can be managed in order to achieve our aims and ambitions. Effective Supply Chain Management involves in
• Managing the whole supply chain as a single entity.
Our aim is to Optimize the Supply chain as a single entity (as a whole). i.e. We try to
optimize the profits of each and every entity in the supply chain and not just one of
them alone and at the same time provide the utmost value to the customers.
• Recognizing end user (Customer) service requirements as a function of time, Quantity
and place .
i.e. Customer Utility = f...