1. Supply Chain Management - University of （1。）.pdf

OPRE 6366. SCM : 1. Introduction 1. Supply Chain Management Supply Chain Mangement is primarily concerned with the efficient integration of suppliers, factories, dis- tribution centers, warehouses and stores so that merchandise is produced and distributed in the right quantities, to the right locations and at the right time to minimize total system cost subject to satisfying some service requirements. Suppliers, factories, distribution centers (DCs), warehouses are the physical entities of a Supply Chain (SC). These entities relate to each other through the flow of merchandise; Raw materials are bought from suppliers, they are processed into products at factories, products are sent to DCs/warehouses for storage until delivered to customers. It is generally understood that factories/plants process the materials whereas warehouses/distribution centers can only store the materials. 1.1 Material, Information and Money Flows The part of the supply chain that is close to the customer is called downstream supply chain. Downstream supply chain includes retailers and stores. The other part that is close to the suppliers is called the upstream supply chain. Downstream and upstream are relative terms; A DC is downstream with respcet to a plant but it is upstream with respect to a retailer. Materials in a SC, like water, often flow from upstream to downstream. Since the material flow is visible, most of us are already familiar with the concept of interaction among facilities via material flow. What many people are not familiar with is the information flow in SCs. Efficient SCM requires access to accurate information, for information is the input for all managerial decisions. Our concept of information is very broad to the extent that it includes indicators (e.g. on-off machines and stock out situation), quan- tities (e.g. inventory levels, production capacities and all cost figures),