Page 157 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes Figure below shows the supply chain as a network and also as a part of the value chain.
Figure 8.3: Supply Chain is Part of the Value Chain

The appropriate design of the supply chain will depend on both the customer’s needs and the
role of the stages involved. In some cases, a manufacturer may fill customer orders directly.

Example: Dell has been one of the most successful examples of effective supply chain
management. Dell builds-to-order, that is, a customer order initiates manufacturing at Dell.
Dell does not have a retailer, wholesaler, or distributor in its supply chain. While other computer
companies must stock a month of inventory, Dell carries only a few days worth. In fact, many of
the components are delivered within hours of being assembled and shipped to the customer. It
plans orders and signals suppliers every two hours, which enables it to manufacture and deliver
exactly what its customers want.
In other cases, such as in a mail order business like Amazon.com, the company maintains an
inventory of product from which they fill customer orders. In the case of retail stores, the supply
chain may also contain a wholesaler or distributor between the store and the manufacturer.

Task Describe the supply chain that might exist for a two-wheeler manufacturer and
discuss the sort of information that might flow through the supply chain. How would this
differ from that of a hotel?

Self Assessment

Fill in the blanks:
1. The flow of goods and information goes both ways which means that the participants in a
supply chain are both customers and ……………… .
2. Supply chain is an integral part of the ……………… .
3. Supply chain activities begin with a ……………… and ends when a satisfied customer has
paid for his or her purchase.

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