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Transcript of Supply Chain
Definition of Supply
Just-in-time (JIT) inventory system:
strategy companies use to increase the efficiency and decrease waste by receiving goods only as they are needed in the production process, which deuces inventory costs. This process requires the producers to be able to accurately demand the specific items they need. For ex: suppliers will make and ship whatever the factories or retailers requires quickly enough so that the goods at the workstation, factory floor or retail stores are there as needed.
When a company expands by gaining control of their entire supply chain. This type of integration can move forward toward the end consumer, or backwards to the raw materials for goods production. For example, if Joe's Fluffy Flour company processes wheat from farmers into flour, he can vertically integrate by doing business with the farmers.
When a company merges with other companies that do the same thing. So, if Joe produces flour in Calgary and Jenny produces flour in Winnipeg, they can merge and make their companies bigger.
there are only four places that the goods will be stored at:
Place where the goods are made
Place that receives the goods
Companies are hesitant to be responsible for storage of goods because it takes up space or it is stolen/damaged. Stockrooms deny retail stores of selling space. Storage areas take away production space from factories. Warehouse space needs costly real estate. Due to these reasons, each link in the supply chain passes the goods on as quickly as they can.
Can remodel the warehouse space into more retail sales floor space without expanding the physical store.
Manufacturer gets more space to produce goods
Companies will more likely be focused on producing the goods and looking after the customers rather than stocking merchandise
A company may not be able to immediately meet the requirements of a massive and unexpected order, since it has few or no stocks of finished goods.
A supplier that does not deliver goods to the company exactly on time and in the correct amounts could seriously impact the production process.
Computer manufacturers use just-in-time inventory to control the manufacturing and ordering of their computer systems. Rather than a warehouse filled with pre-assembled computers, the companies places orders for computer parts as customers make purchases. The computer firms by their parts from various suppliers.
Cash Flow Management:
is the financial management of a business. By planning the amount of cash they should have at hand and planning the future requirements of cash; they can avoid financial crisis. This planning is important because if the business runs out of money or they are not able to obtain new finance, it will become insolvent.
Third-party logistics (3PLs):
outsource supplier coordination and distribution functions to logistic companies that can perform activities more effectively. 3PLs increase the number of links in the supply chain, but reduces management control of everyday logistic operations.
A Point-of-Sale Terminal:
when it records the code or stock number on each store's stock-
keeping units (SKUs).
An inventory control program with minimum inventory levels is
the minimum stock level, the program reminds the store owner to order more. Some
often built into the point-of-sale terminal. When an item reaches
point-of-sale terminals will actually send the stock reorder
Pros and Cons of Just-in-Time Inventory System
Within the supply chain, cash flow management involves negotiating when the payments for the goods are required and how the payments should be made (by letter of credit, money transfer, etc) and arranging any exchange of funds across the links of the supply chain.
Payment for raw materials
Machinery and equipments
Trust plays an important role in this management. How can you trust the other businesses and make transaction with them.
In business, Canadian law protects the buyers and the sellers within the country only. Supply chain managers are involved in cash flow management if transaction takes place between businesses in two different countries. The supply chain manager has to deal with how to either make or collect a payment. If Halifax Company sells $5000 worth of products to a Vancouver business, the company will pay Halifax Company with a cheque. In this case supply chain manage is not involved. If Halifax Company sells $5000 worth of good to a company in Cape Town, how will the payment take place? How can we trust that Cape Town business will pay the Halifax Company back?
Letter of credits is a financial guarantee, issues by the buyer’s bank, that the buyer has sufficient amount on deposit to pay for the shipment. The Cape Town Company would apply for a letter of credit from a bank in Cape Town. That bank, after approving the credit of the buyer, would forward the letter to Halifax Company’s bank. This bank will let the Halifax Company know of the letter and once they figure out about the letter they will ship the goods. When the Cape Town Company receives the goods, Halifax Company’s bank will collect the $5000 from Cape Town bank using the letter of credit.
Letter of Credits:
Supply chain is the total sum of all activities involved in moving raw materials, processed
goods, and finished products out of the
organization toward the end consumer.
The main links are:
An example of supply chain is Gap Inc. The company has factories over 50 countries and many retail stores around the world. This shows how much management is needed to satisfy customers all over the world.