Supply chain management


Supply chain:  the physical and organizational transfer of materials, components, and products from their sources to processing to manufacturing and distribution to points of sale and final use.

Supply chain management (SCM):   policies and practices undertaken by each organization in the chain in an attempt to minimize its costs of procurement, transportation, and holding inventory -- while maintaining an inventory sufficient for its needs.  Each separate organization must make a profit:  what are the influences on how much profit each organization makes?

Bowen [2008: 379]:  "SCM integrates the previously fragmented activities associated with materials management and physical distribution, including
demand forecasting
purchasing
inventory management
warehousing,
materials handling,
packaging,
order processing, and
transportation.
"All of these activities have been tied together through the use of information technology (IT) to enable SCM decision-making based on real-time information about demand, production, and the location of raw materials and finished goods in transit."

Decisions in SCM:
  • Procure from outside organizations, or own the previous stage in the chain?
  • Procure from whom?
  • Procure under what terms?
  • Procure when?
  • Maintain inventory where?
  • Deliver?
  • Sell to outside organizations, or own the next stage in the chain?

Questions from the reading

Bowen, J.T.  2008.  Moving places: the geography of warehousing in the US.  Journal of Transport Geography 16: 379-87.
  1. How does Bowen contrast warehouses and distribution centers (DCs)?
  2. Why has there been such an increase in DCs?
  3. What seem to be the major influences on the location of warehouses and DCs?  On the location of large warehouses and DCs?

Basker, E.  2007.  The causes and consequences of Wal-Mart's growth.  Journal of Economic Perspectives 21(3): 177-98.
  1. What does Basker list as the sources of Wal-Mart's advantages over other retailers?
  2. What are the impacts of a Wal-Mart on local labor markets, local competitors, local consumers, and suppliers?
  3. Wal-Mart relies heavily on huge DCs.  What can other retailers do to compete?




copyright James W. Harrington
revised 1 June 2011