Elements of Manufacturing, Distribution and Logistics: Quantitative Methods for Planning and Control

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In many cases, the supply chain includes the collection of goods after consumer use for recycling. Including third-party logistics or other gathering agencies as part of the RM re-patriation process is a way of illustrating the new endgame strategy. Supply-chain management is a cross-functional approach that includes managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the end consumer.

As organizations strive to focus on core competencies and become more flexible, they reduce their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other firms that can perform the activities better or more cost effectively.

The effect is to increase the number of organizations involved in satisfying customer demand, while reducing managerial control of daily logistics operations. Less control and more supply-chain partners lead to the creation of the concept of supply-chain management. The purpose of supply-chain management is to improve trust and collaboration among supply-chain partners thus improving inventory visibility and the velocity of inventory movement. Organizations increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy.

In recent decades, globalization, outsourcing, and information technology have enabled many organizations, such as Dell and Hewlett Packard , to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories.

From a systems perspective, a complex network structure can be decomposed into individual component firms. Therefore, the choice of an internal management control structure is known to impact local firm performance. In the 21st century, changes in the business environment have contributed to the development of supply-chain networks. First, as an outcome of globalization and the proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier " just-in-time ", lean manufacturing , and agile manufacturing practices.

Many researchers have recognized supply network structures as a new organisational form, using terms such as " Keiretsu ", "Extended Enterprise", "Virtual Corporation", " Global Production Network ", and "Next Generation Manufacturing System". Supply-chain management is also important for organizational learning. Firms with geographically more extensive supply chains connecting diverse trading cliques tend to become more innovative and productive.

Supply-Chain Management draws heavily from the areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach. Six major movements can be observed in the evolution of supply-chain management studies: creation, integration, and globalization, [34] specialization phases one and two, and SCM 2.

The term "supply chain management" was first coined by Keith Oliver in However, the concept of a supply chain in management was of great importance long before, in the early 20th century, especially with the creation of the assembly line. The characteristics of this era of supply-chain management include the need for large-scale changes, re-engineering, downsizing driven by cost reduction programs, and widespread attention to Japanese management practices.

However, the term became widely adopted after the publication of the seminal book Introduction to Supply Chain Management in by Robert B. Handfield and Ernest L. Nichols, Jr. This era of supply-chain-management studies was highlighted with the development of electronic data interchange EDI systems in the s, and developed through the s by the introduction of enterprise resource planning ERP systems. This era has continued to develop into the 21st century with the expansion of Internet-based collaborative systems. This era of supply-chain evolution is characterized by both increasing value added and reducing costs through integration.

A supply chain can be classified as a stage 1, 2 or 3 network.

In a stage 1—type supply chain, systems such as production, storage, distribution, and material control are not linked and are independent of each other. In a stage 2 supply chain, these are integrated under one plan and enterprise resource planning ERP is enabled.

A stage 3 supply chain is one that achieves vertical integration with upstream suppliers and downstream customers. An example of this kind of supply chain is Tesco.


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It is the third movement of supply-chain-management development, the globalization era, can be characterized by the attention given to global systems of supplier relationships and the expansion of supply chains beyond national boundaries and into other continents. Although the use of global sources in organisations' supply chains can be traced back several decades e. In the s, companies began to focus on "core competencies" and specialization. They abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. This changed management requirements, as the supply chain extended beyond the company walls and management was distributed across specialized supply-chain partnerships.

Study information

This transition also refocused the fundamental perspectives of each organization. Original equipment manufacturers OEMs became brand owners that required visibility deep into their supply base. They had to control the entire supply chain from above, instead of from within. Contract manufacturers had to manage bills of material with different part-numbering schemes from multiple OEMs and support customer requests for work-in-process visibility and vendor-managed inventory VMI.

The specialization model creates manufacturing and distribution networks composed of several individual supply chains specific to producers, suppliers, and customers that work together to design, manufacture, distribute, market, sell, and service a product. This set of partners may change according to a given market, region, or channel, resulting in a proliferation of trading partner environments, each with its own unique characteristics and demands. Specialization within the supply chain began in the s with the inception of transportation brokerages, warehouse management storage and inventory , and non-asset-based carriers, and has matured beyond transportation and logistics into aspects of supply planning, collaboration, execution, and performance management.

Market forces sometimes demand rapid changes from suppliers, logistics providers, locations, or customers in their role as components of supply-chain networks. This variability has significant effects on supply-chain infrastructure, from the foundation layers of establishing and managing electronic communication between trading partners, to more complex requirements such as the configuration of processes and work flows that are essential to the management of the network itself.

Supply-chain specialization enables companies to improve their overall competencies in the same way that outsourced manufacturing and distribution has done; it allows them to focus on their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency.

The ability to quickly obtain and deploy this domain-specific supply-chain expertise without developing and maintaining an entirely unique and complex competency in house is a leading reason why supply-chain specialization is gaining popularity. Outsourced technology hosting for supply-chain solutions debuted in the late s and has taken root primarily in transportation and collaboration categories.

This has progressed from the application service provider ASP model from roughly through , to the on-demand model from approximately through , to the software as a service SaaS model currently in focus today. Building on globalization and specialization, the term "SCM 2. The growing popularity of collaborative platforms is highlighted by the rise of TradeCard 's supply-chain-collaboration platform, which connects multiple buyers and suppliers with financial institutions, enabling them to conduct automated supply-chain finance transactions.

Web 2. At its core, the common attribute of Web 2. It is the notion of a usable pathway. SCM 2. It is the pathway to SCM results, a combination of processes, methodologies, tools, and delivery options to guide companies to their results quickly as the complexity and speed of the supply-chain increase due to global competition; rapid price fluctuations; changing oil prices; short product life cycles; expanded specialization; near-, far-, and off-shoring; and talent scarcity.

Successful SCM requires a change from managing individual functions to integrating activities into key supply-chain processes. In an example scenario, a purchasing department places orders as its requirements become known. The marketing department, responding to customer demand, communicates with several distributors and retailers as it attempts to determine ways to satisfy this demand.

Information shared between supply-chain partners can only be fully leveraged through process integration. Supply-chain business-process integration involves collaborative work between buyers and suppliers, joint product development, common systems, and shared information. According to Lambert and Cooper , operating an integrated supply chain requires a continuous information flow. However, in many companies, management has concluded that optimizing product flows cannot be accomplished without implementing a process approach.

The key supply-chain processes stated by Lambert [38] are:. Much has been written about demand management.

One could suggest other critical supply business processes that combine these processes stated by Lambert, such as:. Integration of suppliers into the new product development process was shown to have a major impact on product target cost, quality, delivery, and market share.

The 5 essential stages in developing a successful supply chain

Tapping into suppliers as a source of innovation requires an extensive process characterized by development of technology sharing, but also involves managing intellectual [41] property issues. There are gaps in the literature on supply-chain management studies at present [ citation needed ] : there is no theoretical support for explaining the existence or the boundaries of supply-chain management. A few authors, such as Halldorsson et al. However, the unit of analysis of most of these theories is not the supply chain but rather another system, such as the firm or the supplier-buyer relationship.

Course plan for students – MSc in Logistics

Among the few exceptions is the relational view , which outlines a theory for considering dyads and networks of firms as a key unit of analysis for explaining superior individual firm performance Dyer and Singh, In the study of supply-chain management, the concept of centroids has become an important economic consideration.

In the US, two major supply chain centroids have been defined, one near Dayton, Ohio , and a second near Riverside, California. The centroid near Dayton is particularly important because it is closest to the population center of the US and Canada. In addition, the I corridor is home to the busiest north-south rail route east of the Mississippi River. In , Wal-Mart announced a big change in its sourcing strategy. Initially, Wal-Mart relied on intermediaries in the sourcing process. To cut these costs, Wal-Mart decided to do away with intermediaries in the supply chain and started direct sourcing of its goods from the suppliers.

Blockchain Approach for Supply Chain Additive Manufacturing Parts

The company later engaged the suppliers of other goods, such as cloth and home electronics appliances, directly and eliminated the importing agents. The purchaser, in this case Wal-Mart, can easily direct the suppliers on how to manufacture certain products so that they can be acceptable to the consumers. In other words, direct sourcing reduced the time that takes the company to source and stocks the products in its stock.

Wal-Mart adopted this strategy of sourcing through centralizing the entire process of procurement and sourcing by setting up four global merchandising points for general goods and clothing. The company instructed all the suppliers to bring their products to these central points that are located in different markets.

The procurement and sourcing at centralized places helped the company to consolidate the suppliers. The Essential Controller. Equity Press. Cost Accounting Fundamentals: Sixth Edition. Amir Schragenheim. Inventory Best Practices. Project Control. Wayne J. Del Pico.