What are supply chain drivers

Boston, MA: Pearson Prentice-Hall. 1 6/2/2017 Facilities • Facilities – Physical locations where products are stored, assembled, or fabricated in a supply chain network • Two major facility types are: – Production sites – Storage sites • Roles, locations, capacities, and flexibilities of facilities – Significantly impact supply chain performance (responsiveness and efficiency) • For example, increasing the number of warehouses near customers will: – Increase responsiveness • Company can quickly satisfy customer demands due to short distances between the warehouses and the customers – Reduce efficiency • It is more expensive to build and maintain the warehouses and vice versa Inventory • Inventory – All raw materials, work in process, and finished goods in a supply chain • Inventory policy – Dramatically changes supply chain performance (responsiveness and efficiency) • For example, stocking a large number of products in warehouses will: – Increase responsiveness • Company can increasingly satisfy customer demands by reducing stockout rate – Reduce efficiency • It is more expensive to hold a large amount of inventory, which may also increase oversupply and vice versa (Source) Supply Chain Management: Strategy, Planning, and Operation. Sunil Chopra and Peter Meindl. (2013) 5th Edition. Boston, MA: Pearson Prentice-Hall. (Source) Supply Chain Management: Strategy, Planning, and Operation. Sunil Chopra and Peter Meindl. (2013) 5th Edition. Boston, MA: Pearson Prentice-Hall. Transportation • Transportation Information • Information – Methods to move inventory from point to point in a supply chain – Takes various combinations of modes (e.g., by truck, air, rail, etc.) and routes • Each mode and route has its own performance characteristics • Choice of a transportation mode and a route – Has a large impact on supply chain performance (responsiveness and efficiency) • For example, shipping products using FedEx will: – Increase responsiveness • Company can delivery products faster – Reduce efficiency • It is more expensive to use FedEx compared to a first class mail and vice versa (Source) Supply Chain Management: Strategy, Planning, and Operation. Sunil Chopra and Peter Meindl. (2013) 5th Edition. Boston, MA: Pearson Prentice-Hall. – Consists of data and analysis of: • Facilities, inventory, transportation, costs, prices, and customers throughout a supply chain • Information – Can be the biggest driver of supply chain performance because it affects other drivers – May improve both responsiveness and efficiency of supply chain • For example, information on customer demand may: – Increase responsiveness • Company can produce and stock products in anticipation of customer demands – Increase efficiency • Company can improve the accuracy of demand forecast and produce only the required amount (Source) Supply Chain Management: Strategy, Planning, and Operation.