Page 28 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 1: 21st Century Supply Chains

 SCM philosophy drives supply chain members to have a customer orientation. Notes
 Within a typical enterprise the three areas, physical distribution, manufacturing support,
and procurement overlap to provide integrated management of materials, semi-finished
components, and products moving between locations, supply sources, and customers of
the enterprise.

 The effectiveness and value of the supply chain is determined by its ability to align
with its partners, whether they are service providers, employees, suppliers or
distributors.
 Few managers question the benefits of applying the time-based strategies to supply chain
operations. However, a valid question is, How fast is fast enough? Speed simply for the
sake of being fast has little, if any, enduring value.
 Traditional distribution arrangements typically involve independent business units loosely
linked together on a transaction-to-transaction basis.
 A popular term for describing the potential benefits of reducing assets across a supply
chain is cash spin, sometimes referred to as free cash spin.

 In 21st century digital technologies enable the development of new economic models.
Gradual reduction in the production costs effects demand and supply equilibrium.
Reduction in costs leads to increase in supply.

1.8 Keywords

Cash-to-Cash Conversion: The time required to convert raw material or inventory purchases
into sales revenue is referred to as cash-to-cash conversion.
Collaborative Planning, Forecasting and Replenishment (CPFR): CPFR a trademark of the
Voluntary Inter-industry Commerce Standards (VICS) Association, is a concept that aims to
enhance supply chain integration by supporting and assisting joint practices.
Flow of Information: Information flows allow the various supply chain partners to coordinate
their long-term plans, and to control the day-to-day flow of goods and material to the supply
chain.
Funds: This is the commercial part of the supply chain, and runs counter to the direction of the
value flow.
Supply Chain Management (SCM): Supply chain management (SCM) is the management of a
network of interconnected businesses involved in the provision of product and service packages
required by the end customers in a supply chain.
Third-party Logistics (3PL): A third-party logistics provider (abbreviated 3PL, or sometimes
TPL) is a firm that provides service to its customers of outsourced (or “third party”) logistics
services for part, or all of their supply chain management functions.
Value Chain: A value chain is a chain of activities that a firm operating in a specific industry
performs in order to deliver a valuable product or service for the market.
Vendor-managed Inventory (VMI): Vendor-managed inventory (VMI) is a family of business
models in which the buyer of a product (business) provides certain information to a vendor
(supply chain) supplier of that product and the supplier takes full responsibility for maintaining
an agreed inventory of the material, usually at the buyer’s consumption location (usually a
store).

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