Supply Chain Management

Supply chain management (SCM) involves integrating and managing the flow of supplies throughout the inputs, transformation processes (throughput and value adding) and outputs in order to best meet the needs of customers

There are 3 key aspects to supply chain management. In order of processing, these are:

Sourcing, including global sourcing
E-commerce
Logistics

Sourcing (procurement’ or ‘purchasing )

• Assess consumer demand so that the volume of inputs required is known.

• Determine the quality of inputs that match the quality of the products that the business would like to deliver to the market in produced goods.

• Assess how responsive (flexible) and timely the supplier is with respect to changes in demand.

• Evaluate the cost of supplies/inputs from the supplier against other suppliers offering supplies of similar quality.

Global sourcing is a broad term that refers to businesses purchasing supplies or services without being constrained by location. In the supply chain management activity, global sourcing means buying or sourcing from wherever the suppliers are that best meet the sourcing requirements

Car Parts, Chips, Sunflower Oil: War in Ukraine Threatens New ShortagesThe Russian invasion has shut down auto factories, hit supplies for the steel industry and severed transportation routes. Commodity prices are soaring, including for sunflower oil, natural gas and wheat. The two countries combined account for 80% of the world’s sunflower oil.

It’s not easy buying green: How to win at sustainable sourcingSustainable materials like green steel and recycled plastic are getting scarcer. Here’s how leading companies are preparing for the squeeze.

Ukraine: Can Apple solve this new supply chain challenge?The invasion of Ukraine may impact the technology supply chain, which depends on it for critical raw materials used in chip manufacturing.

Apple removed 12 suppliers from chain over mineral sourcing in 2021Apple says that it removed 12 suppliers from its chain in 2021 as part of its continued commitment to responsibly source minerals used in its products.

E-commerce

E-commerce involves the buying and selling of goods and services via the internet. With reference to supply chain management, e-commerce is relevant to particular forms of sourcing.

E-procurement, or the use of online systems to manage supply, allows suppliers direct access to the business’s level of supplies

The increasing use of e-commerce by consumers also has an effect on the supply chain. Businesses may opt to sell directly to consumers in transactions called business-to-consumer — B2C

Logistics

Logistics is a term broadly referring to distribution but includes transportation (including transportation modes), the use of storage, warehousing and distribution centres, materials handling and packaging.

Distribution refers to the ways of getting the goods or services to the customer

Transportation and distribution

This aspect of logistics is concerned with the physical movement of inventories. Various modes of transportation can be used and each has its own strengths and weaknesses

Storage, warehousing and distribution centres

Storage involves finding a secure place to hold stock until it is required.

Warehousing

Warehousing is defined as the use of warehouses for the storage, protection and, later, distribution of stock.

Distribution centres (DCs)

A distribution centre is slightly different to a warehouse in that it is not intended for long term storage. Rather, distribution centres are strategically located so as to minimise the time it take to supply stock to retail outlets. The use of distribution centres is an important operations strategy and requires mangers to balance the cost of such centres with the time saved in logistics. Distribution centres may be air conditioned and/or have cold storage facilities, and they may also be co-located with transportation hubs.

https://www.youtube.com/watch?v=bfFsqbIn_3E

Examples- Major retailers such as Aldi, Coles and Woolworths use a network of distribution centres to assist with inventory management, distribution and costs management. The location of the centres is very carefully assessed and they are often highly technologically advanced facilities. The location of the centres is designed to lower lead times and also avoid stock out (shortages).

Materials handling and packaging

A final aspect of logistics concerns materials handling and packaging. Materials handling is an important aspect of the movement and storage of goods, and therefore particular standards and methods of operating need to be applied. This is because some products require particular skills, care or attention when being moved. For example, delicate glassware needs to be transported and stored carefully, and it needs to be packaged in a way that protects it from damage. Similarly, some goods can be dangerous (such as chemicals and fuels)

https://www.youtube.com/watch?v=B_1Eu3Ss6AY

HSC Questions

2012

11 Which of the following is an essential aspect of logistics?

(A) Undertaking a skills audit

(B) Checking the quality of all output

(D) The creation of a budget for new machinery

2013

23 Casey owns and operates an independent discount fuel and convenience store.

(a) Outline ONE way that ecommerce could assist Casey with supply chain management. 2 marks

(b) Explain ONE performance objective that is relevant to the operations function of the business. 3 marks

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