Review questions
1. Describe supply chains and explain why “supply network” may be a more accurate term.
Supply chains are commonly used to refer to a collection of companies and processes involved in moving a product from the suppliers of raw materials, to the suppliers of intermediate components, to final production, and, ultimately, to the customer.
The further out in the supply chain one looks, the more suppliers are involved. As a result the term “chain” becomes somewhat of a misnomer since it implies one-to-one relationships facilitating a chain of events flowing from the first supplier to the second to the third and so on. The flow of materials from suppliers to customers can thus be more accurately described as a supply network because of the various interrelated parties involved in moving raw materials, to intermediate components, and, finally, to the end product within the production process.
2. What are two process innovations enabled by effective collaboration within supply networks?
Two process innovation enabled by effective collaboration within supply networks are Just-in-Time production and Vendor-Managed Inventory. Just-in-Time production is used by companies who are trying to optimize their order quantities such that parts or raw material arrive just when they are needed for production. As the orders arrive in smaller quantities (but at a higher frequency), the investment in storage space and inventory is minimized. Vendor-Managed Inventory is a business model in which the suppliers to the manufacturer (or retailer) manage the manufacturer’s (or retailer’s) inventory levels based on pre-established service levels.
3. Explain how effectively managing the supply chain can help an organization be a responsible social citizen.
Product recalls and sustainable business practices are two ways an organization can effectively manage its supply chain in order to be a responsible social citizen. Product recalls occur when a company discovers a major flaw in their product, either during the supply chain process or when it has already reached the customer, that can be potentially harmful to the customer. The company will then recall the product from the supply chain, or excavate every item of that product. Sustainable business practices are certain practices implemented by the company relating to corporate social responsibility. This can be anything from “greener” products or rules relating to ethical treatment of employees.
4. How does SCP differ from SCE?
Supply chain planning (SCP) involves the development of various resource plans to support the efficient and effective production of goods and services. The four key processes generally supported by SCP modules are: Demand planning and forecasting, Distribution planning, Production scheduling, and Inventory and Safety Stock planning.