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The Supply Chain Management

Supply Chain Fundamentals

The Core Process

The supply chain is the entire process of moving goods or services from their initial source to the final consumer. Managing the supply chain efficiently helps meet customer demand while controlling costs and maintaining quality. We will focus on the key stages and their impact on profitability.

Stages of the Supply Chain

1

Procurement

Acquiring necessary goods and services (Sourcing & Purchasing).
2

Logistics

Moving, storing, and delivering goods (Transportation & Warehousing).
3

Stock Control

Managing inventory to balance supply and demand.

Key Terms and Definitions

🤝

Procurement

The process of acquiring goods and services that the business needs.
🚚

Logistics

Involves moving, storing, and delivering goods through the supply chain.
⏱️

Just in Time (JIT)

Purchasing and producing only what is needed when it is needed.
📦

Stock Control

Managing a business’s inventory to balance supply and demand.

Stock Control: Traditional vs JIT

✅
Traditional (Pros)Keeping buffer stocks to avoid running out; ensures availability of supplies.
❌
JIT (Cons)Requires precise timing; can risk production stoppages if delivery is late or inconsistent.

Coordination of Functional Areas

🤔
How does Marketing influence Purchasing?
🦉
Marketing provides information on customer demand, influencing how much stock is needed.
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And Finance's role?
🦉
Finance manages budgets and cash flow related to purchasing and inventory. All functions must work together.

Impact of Supply Decisions on Cost

Poor choices increase costs from expensive suppliers, wastage, or storage, directly affecting profitability.

Operational Expense Source Reduction
Total Annual SC Costs $100,000
Savings from New Supplier ($15,000)
Savings from Reduced Waste (JIT) ($5,000)
New Total SC Costs $80,000

Impact Summary of Decisions

Decisions about suppliers, storage, and stock levels affect multiple business factors and stakeholders.

Factor Decision Outcome Stakeholder
Cost Global Sourcing Lower Input Cost Shareholders
Quality Rushed Delivery Reduced Product Quality Customers
Reliability Late Delivery Damage to Customer Trust Customers/Partners
Risk Choosing Global Longer Delivery Time Risk Production

Pro Tip: Strategic SC Management

💡

Adapt Your Strategy: Businesses must choose supply chain strategies suited to their size, product type, and market. Effective supply chain management is crucial for meeting customer expectations and maintaining profitability.

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The Supply Chain Deck
Term
Supply Chain

What is the supply chain?

Answer
Definition

The entire process of moving goods or services from their initial source to the final consumer.

Term
Procurement

What is procurement in the supply chain?

Answer
Definition

The process of acquiring goods and services a business needs, including sourcing suppliers and purchasing supplies.

Term
Main Activities in Logistics

What are the three main activities in logistics?

Answer
Activities

Transportation, warehousing, and distribution.

Term
Just in Time (JIT)

What is Just in Time (JIT) stock control?

Answer
Definition

Purchasing and producing only what is needed when it is needed to reduce storage costs and waste.

Term
Marketing and Supply Chain

How does marketing relate to the supply chain?

Answer
Relation

It provides information on customer demand that influences stock needs.

Term
Impact of Poor Decisions

Name one impact of poor supply chain decisions.

Answer
Impacts

Increased costs, reduced quality, delayed deliveries, or damaged reputation.

Term
Computerized Stock Control

Why is computerized stock control useful?

Answer
Benefits

It tracks stock levels, predicts demand, and automates purchasing.

Term
Supply Chain & Pricing

How can supply chain management affect price?

Answer
Effect

Changes in supply costs may require businesses to adjust their prices.

Term
Role of Finance

What is the role of finance in the supply chain?

Answer
Role

Managing budgets and cash flow related to purchasing and inventory.

Term
Global Sourcing

Why might large manufacturers use global sourcing?

Answer
Reason

To lower costs by purchasing from suppliers worldwide.

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🌸 Nature Quiz

1. What does procurement involve?

Procurement focuses on sourcing and purchasing required supplies.

2. Which of the following is NOT part of logistics?

Purchasing supplies is part of procurement, not logistics.

3. What does Just in Time (JIT) stock control aim to do?

JIT reduces storage costs by matching purchasing to production demand.

4. Which functional area provides information on customer demand for the supply chain?

Marketing gathers customer demand data that influences stock levels.

5. What is a potential risk of choosing global suppliers?

Global sourcing may bring risks such as longer delivery times and quality variation.

📊 Results

  • Notes and Quiz
  • Business
  • GCSE
  • Business Operations
  • WJEC