Supply Chain is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores so that merchandise is produced and distributed at the right quantities to the right locations and the right time in order to minimize systemwide cots while satisfying service level requirements.
It takes into consideration every facility that has impact on cost and plays a role in making the product according to customer requirements.
It is to be efficient and cost effective across the entire system; total systemwide, from transportation and distribution to inventories of raw materials, work in progress and finished goods are to be minimized.
It encompasses the firm’s activities at many levels, from the strategic level through the tactical to the operational level.
What makes Supply Chain difficult?
1. Supply Chain strategies cannot be determined in isolation. Development chain – set of activities associated with new product introduction. Aligned with organizations goals.
2. It is challenging to design and operate a supply chain so that total systemwide costs are minimized and systemwide service levels are maintained. Global optimization is the process of finding the best systemwide strategy.
3. Uncertainty and risk are inherent in every supply chain. Customer demand can never be forecast and travel times can never be certain also machines breakdown.
Development Chain
Is a set of activities and processes associated with new product introduction such as design phase, associated capabilities and knowledge that need to be developed internally, sourcing decisions and production plans. Decision made in the development chain will have an impact on the supply chain whereas supply chain must have an impact on product design strategy and development chain.