Page 274 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes Explain e-commerce
Discuss requirements for supply chain management
Explain performance optimization
Describe JIT and Lean operations

Discuss JIT in services

Introduction

Supply chain management encompasses both physical distribution and supply management.
Supply or material management activities focus on the upstream portion of the supply chain
and are mainly concerned with suppliers and inbound logistics. Physical distribution activities
involve that part of the supply chain where work-in-process becomes finished goods and moves
toward customers. Understanding the relationships between the terms is important to being
able to conceptualize a holistic supply chain.

This change was driven by a number of macro level forces: an empowered consumer; a shift in
economic power toward the end of the supply chain; deregulation of key industries; globalization;
and technology, especially the phenomenal developments in data processing and communication
technologies. These forces elevated the importance of supply chain management as a strategic
weapon for competitive advantage.
The supply chain not only includes the manufacturer and suppliers, but also transporters,
warehouses, retailers, and customers themselves. In this unit, we will discuss the supply chain.
Despite its importance, inventory is not universally well understood. It is variously characterized,
both positively and negatively, as an economic asset to a non-income-producing use of capital
funds. We will also discuss about Just-in-Time concept, and its relevance in services.

13.1 Benefits and Need for Supply Chain Management

'Supply Chain Management' is defined as the integration-oriented skills required for providing
competitive advantage to the organization that are basis for successful supply chains. A typical
supply chain may involve a variety of stages. These supply chain stages include:
1. Customers

2. Retailers
3. Wholesalers/Distributors
4. Manufacturers
5. Component/Raw material suppliers

Figure 13.1: The Supply Chain

Supplier Manufacturer Distributor Retailer Customer

Product/Services
Information
Finances

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