Page 95 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes It would also cost $800,000 each year to operate the equipment. Cost of labour in UK is
twice that of Hong Kong. Moreover, they would have to keep in hand about six month
supply of inventory of basic jeans and the inventory carrying cost is presently pegged at
about 30%.
Questions

1. Evaluate the case just as the consultant would have done. What is your
recommendation?
2. Can you think of any other alternatives that Pepe should consider?

Source: Narayan.P, Subramanian.Jaya (2008). “Inventory Management: Principles and Practices”. Excel Books Pvt. Ltd.

6.4 Summary

 A supply chain is a system of organizations, people, technologies, activities, information
and resources involved in moving a product or service from supplier to customer.
 Traditional Procurement, Physical Distribution Management and Materials Management
in the 1970s, evolved into Logistics Management in the 1980s.
 Companies saw the benefits in the creation of alliances or partnerships with their customers.
In time, when market share improved for its customers’ products, the result was more
business for the firm.
 A business process addresses the question of how work is organized and managed across
the organization i.e. grouping similar activities together. A business process does not
include the organizational component responsible.

 Supply Chain Management (SCM) focuses on globalization and information management
tools which integrate procurement, operations, and logistics from raw materials to customer
satisfaction.

 Supply Chain Management is involved in the process of planning, implementing and
controlling operations for serving customers as efficiently as possible.
 The value a supply chain generates is the difference between what the final product is
worth to the customer and the effort the supply chain expends in filling the customer’s
request.

 The things a company can do and the ways that it can compete in its markets are all very
much dependent on the effectiveness of its supply chain.

 The flows of the supply chain that occur within the individual organization are called the
internal supply chain.
 The decisions, to purchase a product or service from external suppliers, are the basis for
the external supply chain.
 The effective implementation of a supply chain management in an organization requires
adherence to the 7 principles of supply chain.

6.5 Keywords

Aggregate Planning: Sales, revenue, inventory and production planning done at total
organization, facility or family levels is known as aggregate planning.

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