Supply chain management is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption (Wikipedia, 2006). This concept has become increasingly popular and those organizations who are recognizing the importance of effective supply chain management are gaining significant competitive advantage over their competitors because of way they are configuring and managing their supply chain.
Recommendation to improve the supply chain management
A. Capacity Planning
Capacity planning is a part of supply chain. "A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm." By Terry Harison.
There is a long lead-time involved in many capacity decisions so they require a great deal of accurate planning. Concepts of efficiency and utilization
Efficiency = Actual Output/Effective Capacity
(Utilization = Actual Output/Design Capacity
Best Operating Level = the operating point in terms of utilization that minimizes total manufacturing costs per unit. Producing below this point and you are not fully utilizing your manufacturing overhead. Producing above this point you start to have higher breakdown costs ...
What are some opportunities to improve the supply chain management process?
Process Improvement: Transportation and Logistics
Based on the attached reading, answer the following:
How is process improvement important to achieving transportation excellence? How might process improvement be extended to other areas of logistics planning?