CHAPTER 3

4 basic components of supply chain management 

Production

Production is a key element of supply chain management. This element focuses on what products the market is demanding and what products customers want. In the element of production, many aspects are considered. A company first decides what products to make. The company then determines how many to make and what aspects of production will be outsourced.

1.     Supply and Inventory

o    The second key element of supply chain management is supply. This element focuses on the abilities and capacities of the company's plant operations. The company determines how much is economically and efficiently feasible to produce. This is where the company begins looking into outsourcing. Many companies outsource a portion of the production needs to other companies. This occurs when it is determined that this is the most feasible option. Within this element, companies also begin finding suppliers to provide raw materials for production. In choosing a supplier, many attributes are compared including the cost of the goods and the quality.

o     

Location and Transportation

o    Location and transportation are elements of supply chain management that work together. An organization determines the best locations to produce the desired goods. The company focuses on the best methods for producing, stocking and distributing the goods produced. This decision is based on the available resources and current customers. If a huge customer is located near one of the company's plants, the company may choose to manufacture the goods that company purchases, at the plant located nearby. Other factors included in this decision are the location of suppliers. Within this element, companies decide what methods of transportation are most suitable for delivering goods. Some options include using air transport, sea or rail. The company tries to choose the method that would provide the smoothest distribution of goods as possible.

Information

o    The final element of supply chain management is information and how it is used. Companies utilizing supply chain management must implement methods of recording and passing information that are effective and accurate. This includes using computerized software and linking all computer systems together.

Four components of supply chain management

Supply chain strategy  

Company must know what customer needs and find a way to achieve needs (satisfy customers)

Supply chain partner

Example : company partner > supply :develop , identify partnership 

Supply chain operation

·                     Determine when to buy the customer goods from supplier

When we want to buy things ( customer)

Supply chain logistics 

Involve delivery , transportation