The idea of supply-chain management is to apply a total systems approach to managing the entire flow of information, materials, and services from raw-materials suppliers through factories and warehouses to the end customer. The focus is on those core activities that a business must operate each day to meet demand. | Chapter 10 Supply Chain Strategy Supply-Chain Management Measuring Supply-Chain Performance Bullwhip Effect Outsourcing Value Density Mass Customization OBJECTIVES 2 Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together What is a Supply Chain? Suppliers Inputs Suppliers Service support operations Transformation Manufacturing Local service providers Localization Distribution Customers Output Customers Services Supply networks Manufacturing What is Supply Chain Management? Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer Formulas for Measuring Supply-Chain Performance One of the most commonly used measures in all of operations management is “Inventory Turnover” In situations where distribution inventory is dominant, “Weeks of Supply” is preferred and measures | Chapter 10 Supply Chain Strategy Supply-Chain Management Measuring Supply-Chain Performance Bullwhip Effect Outsourcing Value Density Mass Customization OBJECTIVES 2 Supply-chain is a term that describes how organizations (suppliers, manufacturers, distributors, and customers) are linked together What is a Supply Chain? Suppliers Inputs Suppliers Service support operations Transformation Manufacturing Local service providers Localization Distribution Customers Output Customers Services Supply networks Manufacturing What is Supply Chain Management? Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer Formulas for Measuring Supply-Chain Performance One of the most commonly used measures in all of operations management is “Inventory Turnover” In situations where distribution inventory is dominant, “Weeks of Supply” is preferred and measures how many weeks’ worth of inventory is in the system at a particular time 17 Example of Measuring Supply-Chain Performance Suppose a company’s new annual report claims their costs of goods sold for the year is $160 million and their total average inventory (production materials + work-in-process) is worth $35 million. This company normally has an inventory turn ratio of 10. What is this year’s Inventory Turnover ratio? What does it mean? Example of Measuring Supply-Chain Performance (Continued) = $160/$35 = Since the company’s normal inventory turnover ration is 10, a drop to means that the inventory is not turning over as quickly as it had in the past. Without knowing the industry average of turns for this company it is not possible to comment on how they are competitively doing in the industry, but they now have more inventory relative to their cost of goods sold than before. 17 Bullwhip Effect Order Quantity Time Retailer’s Orders Order Quantity Time Wholesaler’s Orders .
