“The concept of Supply Chain Management is based on two core ideas. The first is that practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain. The second idea is that while supply chains have existed for a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains.” (Handfield)
In conclusion, the ability to accurately predict customer demand is at the heart of every company’s effort to achieve superior supply chain performance, and the way most companies evaluate forecasting performance tells them the magnitude of their error. The new challenge is to identify causes of the error or potential for improvement to sustain a highly productive and efficient supply chain.
In selecting an appropriate forecasting technique, a company should first understand the dimensions that are relevant to the
Ewalt, D. M. & Hayes, M., (2002, Sep 30). Supply-chain management: Pinpoint control InformationWeek. Manhasset, 16-19
This article adds value to the class by going into detail and providing examples of every pitfall the supply chain management can encounter, by doing so, it makes it easier to understand and visually how the supply chain management works. The supply chain management has various parts to it, and it can be hard to understand, but after reading this article and having so many different examples of situations, I see all the opportunities that come from pitfalls and I am aware of all the problems that can happen in order to avoid making them.
The Beer Game simulates the flow of supply chain management that occurs in the real world. While playing the practice round Beer Game and the two rounds with a group, the “bullwhip effect” was a clear malfunction in our supply chain. As backlog started to accumulate and an exponential amount of inventory began to pile up, it was evident we were affected by the bullwhip effect. The bullwhip effect is describes to be the increasing variation of demand going upstream the supply chain from consumers to suppliers. Coordination between the manufactures, wholesaler, distributor and retailer was key to playing a successful round. However, by not communicating with one another and not understanding the demand that exists, increase of costs and backlogs begin to spiral out of control. Each player controls their particular section in the supply chain, though, each player can influence the supply chain as a whole by not ordering enough or perhaps ordering too much. It was obvious that the decisions made by each player was impacting the performance of the other in the chain. We found that the longer the lead time, the larger the variation. This extended lead time impacts the manufacture to worry, and then causes them to increase their production in order to meet their forecasting predictions. Their forecasting predictions are then a result of assumptions that never really existed in the first place. As playing the role of the Retailer, I was unable to meet the consistent demands of consumers. The bullwhip effect was noticed as my level of inventory increased to over 111, and shooting up my costs to over $2,400. Thus, it was clear and obvious that every division in the supply chain plays a key role. It ultimately became a domino effect w...
David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi, Designing and Managing the Supply Chain (2nd ed.), E-text Edition, OSC/300 Strategic Supply Chain Management University of Phoenix, McGraw-Hill, 2003 New York, NY.
Worthen, Ben (2006). ABC's of Supply Chain Management . Retrieved Sunday, February 11, 2007 from http://www.cio.com/research/scm/edit/012202_scm.html
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
Wu, C., & O?Grady, P., (2001). Internet lab: Supply chains. Retrieved June 12, 2005, from http://www.engineering.uiowa.edu/~pjogrady/Internetlab/supply.htm
WISNER, J.D., TAN, K. and LEONG, G.K., 2009. Principles of supply chain management : a balanced approach / Joel D. Wisner, Keah-Choon Tan, G. Keong Leong. Mason, OH : South-Western Cengage Learning, 2009; 2nd ed. pp 111-113,262
Managing the volatility of demand is known to be one of the biggest challenges faced by supply chain managers. According to Gerard Cachon, Taylor Randall, and Glen Schmidt, the bullwhip effect is when “the variance of the flow of material to the industry (what macroeconomists often refer to as the variance of an industry’s “production”) is greater than the variance of the industry’s sales” (457). Chen, Drezner, Ryan and Simchi-Levi state that,
3. Marien, Edward J. Demand Planning and Sales Forecasting: A Supply Chain Essential. Supply Chain Management Review, 1999
Forecasting is an integral part in planning the financial future of any business and allows the company to consider probabilities of current and future trends using existing data and facts. Forecasts are vital to every business organization and for every significant management decision. Forecasting, according to Armstrong (2001), is the basis of corporate long-run planning. Many times, this unique approach is used not only to provide a baseline, but also to offer a prediction into the corporation's future. In the functional areas of finance and accounting, forecasts provide the basis for budgetary planning and cost control. Marketing relies on sales forecasting to plan new products, compensate sales personnel, and make other key decisions. Production and operations personnel use forecasts to make periodic decisions involving process selection, capacity planning, and facility layout, as well as for continual decisions about production planning, scheduling, and inventory. Planning problems, whether dealing with services or merchandise, can cause any manager headaches easily solved by forecasting. It is important that any manager realizes that the past is a key to the future. Although no long-term plan is perfect, using the correct forecasting tool, along with continual evaluation, allows the manager to review and update corporate financial plans.