Page 86 - DMGT525_MATERIALS_MANAGEMENT

Unit 6: Supply Chain Management

8. …………………. management encompasses all activities involved in sourcing, Notes
procurement, conversion and logistics.
9. Members of the supply chain act as partners who are “linked” together through both
physical and …………… flow.
10. The need of supply chain is to maximize the overall ………………. generated.

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Caselet Five Supply Chain Trends that Shaped 2012

upply chain technology continued to evolve throughout 2012 as companies realize
that a highly visible supply chain is necessary for success in today’s business climate.
SBut there are other trends specific to supply chain that came to the forefront in 2012:
1. Improved Customer Service Levels Over Cost Cutting: This was the foremost trend
during 2012 and will continue through 2013. Supply chain costs have been
continuously cut since the recession began four year ago but customers have begun
pushing back on the cost cutting measures that negatively affected service levels.
Companies are now focusing on how to improve service levels while simultaneously
decreasing costs.
2. Execution Moves Ahead of Demand & Supply Planning: Demand and supply planning
has been rightly focused on as this is a critical point for supply chain success. However,
the ability to execute on the plan when forecast errors occur – a constant issue –
results in the need to focus more and more on execution. Forecast errors, or the
difference between what is planned and what occurs, are driven by every day issues
of “abnormal” supply chain events that can cause major disruptions. The ability to
react efficiently and effectively is critical to every supply chain and primarily relies
upon end to end supply chain process visibility at the transaction level. This was a
theme that came up again and again in 2012.
3. Resurgence of Contingency Planning: As supply chains have gotten leaner, the reduced
inventory levels require the ability to react quickly when abnormal events occur or
stock outs will increase exponentially. Because these events are occurring more
frequently, responding to them in an effective manner is a must or companies will
face severe revenue losses. The result is that we have seen resurgence in contingency
planning this year to ensure that supply chain functions continue even in emergency
situations. Companies are focused on developing contingency plans, executing those
plans and understanding in real time if their plans are effective.
4. End-to-End Partner Communication & Collaborative Execution: All partners in the
supply chain from retailers through raw material providers must constantly
collaborate on what events are occurring, the data behind those events and how
they can execute as a unified group to respond to the challenges as they unfold.
Solving a problem by pushing costs to another supply chain partner is an antiquated
proposition as companies realize that cost shifting is not a sustainable, competitive
solution.
5. Big Data is Becoming Mandatory: Big data was the big IT story in 2012. And
combining the data of multiple supply chain partners, turning that data into
information and being able to react and execute accordingly requires a lot of data.

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