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WK #1 (SC): Supply Chain Management Definitions PDF Print E-mail

Supply Chain: In-house and supplier inventories, people and manufacturing capacity, and logistics resources available at any given time to meet customer demand for Company’s goods/services.

Supply Chain Management: Decisions that impact the supply chain structure, cost, and ability to respond to customer demand:

  • Vendor selection, sourcing, and supply agreements,
  • Capacity decisions,
  • Make/buy and outsourcing decisions,
  • Inventory planning strategies, and
  • Engineering and design of product lines.

The Supply Chain Cost Structure: The Supply Chain total cost is made of a variety of elements that are typically broken up into Labor, Material and Overhead.  However, there is a great deal of overlap and complexity in the cost structure which can be categorized as:

  • Internal: Products, Plant, Equipment, People, Systems, Inventory, Capacity
  • External: Suppliers, Material, Systems, Capacity
  • Logistics: Transportation Cost, Lead-time.

Outsourcing:  Make/buy decision to procure a product or process from an outside supplier.  Decision can be made when developing a new product, or it may involve an item/process that was previously manufactured/processed in-house.

In-Sourcing:  The opposite of outsourcing.

Re-Sourcing:  The process used to continually review the supplier(s) value proposition, with an objective to improve cost, lead time, quality, or inventory exposure.

Shelter Outsourcing:  Offshore CEM provides US Manufacturer with space and utilities, hires labor, and provides all necessary HR, administrative and import/export services, and bills US company for labor and other expenses.  US Company consigns materials, equipment, and components to Shelter.

Turnkey Outsourcing:  This is the same as shelter subcontracting, except that the offshore CEM assumes responsibility for all manufacturing and material procurement and planning, and charges a per piece amount on delivery FOB Client destination.

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