Quiz 10: Supply Chain Management Strategy and Design

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A supply chain is a network of suppliers, manufacturers, warehouses, distributors, and retailers who, through coordinated plans and activities, develop products by converting raw materials to finished goods inventory. It encompasses all the activities associated with the flow of materials and information in the transformation of goods and services from raw materials to end consumers.

Supply chains require close collaboration, cooperation, and communication among members to be effective. The responsiveness of supply chains to changing market requirements and their overall efficiency are important issues in supply chain design and management. Build-to-order (BTO) systems are successful business strategies in managing market-responsive supply chains. Build-to-stock (BTS) or make-to-stock (MTS) supply chains fill customer orders from stocks of inventory of finished products that are kept at various points in the network. Supply chain members carry buffer (or extra) inventory at various stages of the supply chain to minimize the negative effects of uncertainty and to keep goods and services flowing smoothly from suppliers to customers. The bullwhip effect occurs when slight to Medium demand variability becomes magnified as demand information is transmitted back upstream in the supply chain.

Sustainability has become one of the most visible recent trends in operations and supply chain management. The impetus for, and commitment to, sustainability generally comes from downstream in the supply chain and moves back upstream to include suppliers. Companies have found that suppliers can account for as much as 80% of the resources consumed in a product's supply chain, and so many must work with and guide suppliers to reduce the inefficient use of resources, reduce the use of raw materials, reduce waste, and recycle; for example, improving fuel efficiency in a distribution fleet, having employees telecommute, using eco-friendly packaging materials, and building energy-efficient facilities.